France introduces tax on unrealized Bitcoin capital gains

France has decided to shake things up in its tax system, and this time, Bitcoin is on the chopping block. The government’s latest regulation targets so-called “unproductive wealth”—a category that includes assets like private jets, yachts, luxury cars, and now, Bitcoin.

These are things that don’t directly generate income, according to French authorities. The logic? If it doesn’t contribute to the economy or create cash flow, it should be taxed harder. But analysts say this could hit Bitcoin investors hard and scare off innovation in the crypto space.

How France taxes Bitcoin today

France is no stranger to taxing crypto. Back in 2019, the country rolled out rules for taxing digital assets under Article 150 VH bis of the General Tax Code. If you live in France and make more than €305 in profit from selling Bitcoin or any other crypto in a year, you owe taxes.

Below €305? You’re off the hook—but you still have to declare every last transaction.

Here’s how it works: France uses a flat tax system for crypto profits. That means you’re hit with a combined tax rate of 30%. It breaks down to 12.8% for income tax and 17.2% for social security contributions. Sounds simple enough, right? Not so fast.

In 2023, France added a progressive tax scale to the mix. Starting with the 2023 tax year (reported in 2024), people in the lowest tax brackets (those earning under €27,478) get a slight break. They’ll pay a maximum of 28.2%, compared to the usual 30%.

But it’s not just about how much you pay—it’s also about what you have to report. Every crypto account you hold outside of France has to be declared. And let’s face it, most crypto exchanges aren’t exactly based in Paris.

The reporting process involves completing a Cerfa 3916-bis form along with your annual tax return. Miss this step, and you’re looking at penalties of €750 per undeclared account, or €1,500 if the account’s value tops €50,000.

The devil in the details

Here’s where things get even trickier. Not all crypto transactions are taxable in France, a la crypto-to-crypto exchanges. This exception might sound like a loophole, but it’s really a way to encourage portfolio diversification without punishing investors every time they make a move in the market.

Still, every taxable transaction has to be meticulously recorded and reported. France’s tax authorities can audit records for up to three years—or up to ten if they suspect fraud or undeclared activity.

Income from staking, lending, or masternodes is taxable, and it needs to be reported. The same goes for capital gains from selling assets like NFTs or participating in liquidity pools.

If you fail to declare your taxable gains, you could face penalties ranging from 10% to 80% of the undeclared amount. For intentional tax evasion, the stakes are even higher. You’re looking at fines of up to €3 million and a potential seven-year prison sentence.