France does not yet tax unrealized crypto gains, but the Dutch case and constitutional levers available to French lawmakers are reshaping the debate on taxing digital assets held without selling.
Key Takeaways
- The Netherlands scrapped unrealized crypto taxation, shifting to realization-based rules from 2028
- Article 79 of the 2022 Finance Law offers a choice between flat tax and progressive scale
- Tax lawyer Alexandre Lourimi says crypto-to-crypto swaps could trigger taxable events
- France caps total tax at 75% of income, limiting fiscal overreach risk
- DAC 8 will make comprehensive crypto account reporting mandatory by January 2026
The Dutch Case: A Reform Rolled Back
The Dutch government had initially proposed reforming Box 3 of its tax system, which covers crypto assets among other investments. The original plan would have added unrealized gains to the annual taxable return, forcing investors to pay tax on paper appreciation of their holdings every year, even without selling. Facing backlash from investors and the business community, the government revised its approach. In a letter dated September 29, the Dutch executive ultimately proposed that from 2028, investment gains would be taxed primarily upon realization rather than in latent form. This reversal highlights the ongoing tension between state fiscal ambition and crypto holders’ resistance.
The Dutch episode has reignited the question in France: could the country one day tax unrealized crypto gains? The answer hinges on the constitutional levers available to the legislature and the existing tax framework.
Legal Levers Available to French Legislators
In France, Alexandre Lourimi, a tax lawyer at ORWL, explained to Cryptoast the tools the legislature could use to tighten crypto taxation without necessarily running afoul of the Constitution. According to him, “the legislator considers that staying in crypto is a taxpayer’s choice”. A swap from Bitcoin to Ether could therefore be treated as a sufficient disposal to trigger gain recognition, even in the absence of a conversion back to euros.
“This does not prevent the recognition of a realized gain, since the appreciated asset has been disposed of”
Alexandre Lourimi, Tax Lawyer at ORWL
The current exemption for crypto-to-crypto swaps is thus a legislative choice, not a constitutional constraint. Another scenario would involve taxing the value of the crypto portfolio directly. The key issue would then be less about whether the cryptocurrencies have been sold and more about ensuring that the tax does not claim an excessive share of the taxpayer’s resources. “The tax on wealth is capped at a certain percentage of income, currently 75%“, Lourimi noted. France could therefore tighten crypto taxation without replicating the Dutch model exactly.
France’s Current Crypto Tax Framework
Since January 1, 2023, the tax treatment of realized gains on digital assets depends on the seller’s status. For individuals selling on an occasional basis, capital gains are subject to the flat tax (PFU) of 31.4%, composed of 12.8% personal income tax and 18.6% social contributions. The option to choose between the flat tax and the progressive scale was introduced by Article 79 of the 2022 Finance Law.
Taxpayers may opt out of the PFU and select the progressive income tax scale if more advantageous. The progressive scale is particularly attractive for taxpayers with low overall income or those whose marginal tax rate (MTR) is 0% or 11%. Beyond a marginal rate of 30%, the flat tax generally becomes the better option.
For professional traders, two regimes apply depending on the nature of the activity. If the buying and reselling of digital assets falls within a commercial activity as defined by Article L. 110-1 of the Commercial Code, profits are taxed as industrial and commercial profits (BIC). If the operations are carried out under conditions analogous to those characterizing a professional activity without constituting the main activity, profits fall under the non-commercial profits category (BNC). The tax authorities use a set of indicators to determine professional status, including qualitative criteria such as the use of sophisticated tools (algorithmic trading, bots, APIs) and quantitative measures such as transaction frequency and volume.
| Regime | Rate | Condition |
|---|---|---|
| Flat tax (PFU) | 31.4% | Individual, occasional activity |
| Progressive scale | Up to 45% | Option for low-income earners |
| BIC | Commercial profits | Commercial activity (Art. L. 110-1) |
| BNC | Non-commercial profits | Conditions analogous to professional activity |
Taxable Operations, Exemptions, and History
Not all cryptocurrency operations are subject to tax. The main operations that trigger taxation include converting crypto to fiat currency, purchasing goods and services with crypto, contributing crypto to a company, and trading derivatives. Crypto-to-crypto exchanges, such as Bitcoin for Ethereum, are not immediately taxable. Taxation only occurs upon conversion to fiat currency. Similarly, long-term holding without selling allows investors to avoid any tax event.
The exemption threshold is set at 305 euros. This amount corresponds to the sum of annual gross sale prices, not the realized gains. Below this threshold, gains are fully exempt. The capital gains calculation relies on the Weighted Average Acquisition Price (WAAP) method, which evaluates the average purchase price of held digital assets.
France’s crypto tax history has evolved gradually. Faced with a legal vacuum, the tax administration published a doctrine in 2014 that enabled tax rates exceeding 60%. In a ruling dated April 26, 2018, the Council of State partially invalidated this doctrine, holding that in the absence of legislation, cryptocurrencies used in non-habitual transactions should be taxed under the general capital gains rules for movable property, at a flat rate of 19% (36.2% including social contributions). The 2019 Finance Law finally legislated, subjecting occasional gains to a flat tax at a total rate of 30%.
DAC 8 and Mandatory Reporting
The EU directive DAC 8, transposed into French law through Article 54 of the 2025 Finance Law, introduces a new reporting obligation for crypto-asset transactions. Starting January 1, 2026, crypto-asset service providers (CASPs) operating in France must transmit detailed information on user transactions to the French tax administration. The administration will gain full identification of taxpayers and users, along with data on exchanges, sales, acquisitions, and transfers of crypto assets. This directive marks a significant step in EU crypto regulation and will strengthen the effectiveness of fiscal oversight on these assets.
Taxpayers must report capital gains on form 2086. Additionally, any individual holding a digital asset account on a platform located abroad must declare it via form 3916-BIS. Failure to declare these accounts can result in fines ranging from 750 euros to 10,000 euros per undeclared account. In cases of proven fraud, penalties are severe: criminal sanctions can reach fines of up to 15 million euros and 7 years of imprisonment for the offender and accomplices. Fiscal penalties include a tax increase of 80%.
Conclusion: A Fragile Balance
France possesses sufficient legal levers to tighten crypto taxation, including taxing certain swaps without a fiat conversion. The Dutch case, however, demonstrates that investor and business community pressure can redirect reforms toward realization-based taxation. DAC 8, by making all crypto accounts visible to the tax administration starting in 2026, significantly strengthens fiscal enforcement.
Two scenarios are emerging for the years ahead: France either maintains the current exemption for crypto-to-crypto swaps while relying on the increased transparency of DAC 8, or it follows the Dutch path toward broader taxation. In any case, comprehensive reporting of accounts and transactions will become unavoidable starting in 2026.
Sources
- Cryptoast – Unrealized crypto gains tax France
- Ramify – Crypto taxation
- LMD Avocats – Crypto Bitcoin taxation
- Lyzi – How the flat tax works for crypto
- Alex Avocats – Cryptocurrency taxation
- impots.gouv.fr – Reporting digital asset gains
This article is published for informational and educational purposes only. It does not constitute investment advice in any way. Do your own research (DYOR) before making any decision.
