France Targets Crypto Wealth With 1% Tax On Assets Over €2 Million

TLDR

• France applies a 1% tax on net assets above €2 million, including crypto.
• Unrealized crypto gains now count toward taxable wealth in France.
• All foreign and domestic crypto wallets must be reported by residents.
• New law aims to tax idle assets like crypto, yachts, and unused homes.

France is changing how it taxes wealth by including large cryptocurrency holdings under a new rule targeting what it calls “unproductive wealth.” A new law passed by the French government now applies a 1% tax to net assets over €2 million, and this includes digital assets like crypto—even if they haven’t been sold. Authorities say the move aims to encourage more productive use of wealth and close tax gaps previously used by high-net-worth individuals.

New Tax Rule Extends to Crypto and Luxury Assets

French lawmakers have expanded wealth tax rules to include cryptocurrency, yachts, luxury cars, and vacant real estate. These are now categorized as “unproductive assets” if they are not actively used to support the economy.

The new rule applies to individuals whose total net wealth exceeds €2 million. A 1% annual tax will be charged on assets above that threshold. Lawmakers explained that the previous system only taxed real estate holdings, which they saw as incomplete. This change brings other forms of high-value, idle assets under the same tax regulation.

The tax now includes unrealized gains from cryptocurrencies. This means if the value of a person’s crypto holdings increases, that increase still counts toward the taxable amount, even if the person has not sold any of it.

Crypto Investors Must Disclose All Holdings

Under the new law, residents are required to report all cryptocurrency wallets and accounts, including those held overseas. Non-disclosure may result in financial penalties or further legal action.

Before this update, cryptocurrency was only taxed when it was sold, and profit was realized. Now, the law treats crypto as part of total wealth, similar to physical luxury goods. The rule includes digital wallets, decentralized finance platforms, and foreign exchanges.

French citizens with large crypto holdings are expected to track asset values based on the government’s chosen reference date. Investors must provide accurate reports, especially when their holdings approach or exceed the €2 million threshold.

Lawmakers Say Move Will Boost Economic Activity

Supporters of the new tax say it is designed to make the system more balanced. The government says the tax will encourage wealthy individuals to put their capital into more active use.

Officials argue that idle assets such as crypto, which can grow in value without direct involvement in the economy, should be taxed. They say this aligns the tax code with current trends in wealth storage and ensures everyone pays their share. One government official said, “We are adjusting the tax base to reflect modern forms of wealth.”

They also expect the tax to generate more revenue, which could support public services. By applying the rule to crypto, lawmakers also hope to prevent the use of digital assets as a loophole to avoid taxes on wealth.

Concerns from Crypto and Tech Communities

Critics say the move may push crypto holders to move their assets abroad. Some also argue that calling crypto “unproductive” ignores its role in funding technology and startups.

There is concern that the rule may discourage innovation, as many blockchain projects rely on early investments and token holdings. If taxes rise on those holdings, investors may move away from French platforms or delay investments.

Industry watchers say enforcement could be difficult since digital assets are often stored on decentralized platforms or across multiple international wallets. Some critics believe that the wealthy will find new ways to avoid taxes, which could shift the burden onto smaller investors.

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