France Targets Bitcoin With New Tax In 2025
The other day I saw people on Xitter complaining about an unrealized tax being imposed on Bitcoin and crypto in Europe. At the time I didn't think much of it. Europe is pretty screwed economically so it only makes sense that they would try to employ ridiculous measures like forcing people to sell their investments every fiscal year to keep the Ponzi afloat.
However then I came across this article that specifically talks about the implementation in France (probably what was being referenced in the first place) and it was actually kind of interesting what they are trying to do and how they are going about doing it.
France Targets Bitcoin With New Tax In 2025
The French government proposes replacing the real estate wealth tax with an “unproductive wealth tax” that targets dormant assets, including cryptocurrencies, luxury goods, and other unused real estate.
Imagine how offended I was to hear that the French government is trying to classify crypto as "dormant unproductive wealth". Honestly that is just a mind-blowing level of mental gymnastics. Seriously a couple years ago crypto wasn't on a single country's radar. Now it seems that everyone and their mother is trying to wet their beak on this action. These people have no shame.
I mean sure it potentially makes sense for things like luxury goods and unused real estate that's just sitting around as someone's investment. Wouldn't it be nice if those types of assets were reallocated to something more "productive" to stimulate the economy? This is classic tax-the-rich rhetoric; which usually doesn't fly, but this day in age the poor don't have any money left and the middle class is gone. Cannibalizing the rich is all that's left. Good luck with that, Europe. You're going to need it.
The French tax laws apply a flat 30% tax on cryptocurrency gains over €305. However, in the proposed tax law for 2025, even unrealized gains on crypto are subject to tax. Under Vermeillet’s proposal, assets in custody over €800,000 shall become taxable.
Yep, that's always how it starts!
Pick a big number, say 800k Euros, knowing full well most people are going to support this because they don't have 800k Euros: so it doesn't affect them personally. Then once the law goes through that number declines until it inevitably targets everyone. Classic frog-boils-slowly technique. We've been seeing a lot of this lately.
But here's where it gets interesting:
Failure to report an external account faces a €1,500 per account, but cryptocurrency-to-cryptocurrency trades are tax-free. The new tax proposal has already passed the senate’s preliminary vote, but the legislation is not yet final.
Self Custody Reporting
There's a lot of interesting analysis to be had here even from such a brief statement. The fine clearly targets the lower and middle class, as a $1500 fine doesn't seem like a very big risk to a millionaire. And yet it is the millionaires who are being targeted with the unrealized tax (aka forced realization/selling). This creates a financial incentive for the rich to ignore the reporting law, while those with less money have to obey or they'll be fined more than their net worth.
The law itself also seems to be somewhat assuming that crypto is going to keep going up. Like hey don't worry about it your wallet doesn't even apply for this tax. One cycle later all of a sudden it does. Or perhaps what the law is really assuming is that the Euro will continued to be devalued into the dirt just like every other fiat currency. These vipers will continue to tax the devaluation of their own currency as a "gain".
It also begs questions like what is an "external account"? A seed phrase can create infinite wallets. Will a court in France one day try to fine someone €1,500 a hundred times because they did 100 Bitcoin operations and every single one automatically put the change into a new wallet? I wouldn't put it past those jackals. The devil is in the details.
Wait... and also crypto-to-crypto trades are tax-free?
That's a pretty big win for traders and other degenerates.
So what happens when you tax-free trade all your crypto into Monero and then lose it in a boating accident? Guess we'll find out.
Finance Minister Laurent Saint-Martin approves the proposal, saying exempting the top digital asset from taxation while taxing other economic assets is unfair.
Oh that's so cute.
Well if we do this one unfair tax over here it would be totally unfair if we didn't apply it to even more assets. lol. These people.
Under the current proposal, there are no taxes on crypto-to-crypto trades, allowing investors and holders to diversify their holdings with tax obligations instantly. According to its proponents and supporters, the new tax law will benefit crypto trade and expand market participation.
Another thing they are clearly doing here is trying to pump their citizens for more information. By making crypto-to-crypto trades tax-free this means the reporting requirement is going to skyrocket, as degens are trading around dozens of assets from a week to week basis knowing full well they don't have to pay taxes on those trades.
Another interesting implication from all this is the 30% flat tax. This seems to imply that there are no capital gains taxes. So a 30% flat tax is better than short-term cap gains (income tax) but significantly worse than long-term (held for 1+ years). Again, the combination of these factors creates a near frictionless ecosystem for day-traders and degens, which is interesting to say the least.
Personally it's a bit ridiculous to expect people to keep track of all this stuff by hand, but from the perspective of the government I'm sure that's totally fine... as in a €1,500 fine every time they feel like enforcing their new ridiculous law. Which I'm sure will be indiscriminate and target citizens based on purely arbitrary criteria, giving enforcement all the power in the situation as is the standard.
While the new rule may seem simple, the reporting process can be daunting for some.
Crypto holders must track transactions like lending, staking, and liquidity pools.
Yeah...
The submitted amendment also requires French taxpayers to report any crypto accounts outside the country. Failure to file a report is subject to a €750 penalty. And if the account holds more than €50,000 in assets, the penalty increases to €1,500.
Again...
What is an "account outside the country"? This has to be centralized exchanges we're talking about right? Because everything on-chain exists both within the country and outside the country. I get the feeling that a lack of clarity in many of these regards will allow judiciaries to just decide whatever they want the interpretation to be. Just like with the SEC.
Taxpayers must file their tax returns annually, even if no recorded transaction is involved.
Gross.
You may not have created any tax events but make sure to report every single wallet you own every single year no matter what or we fine you. Wild.
Conclusion
Crypto is the most productive form of wealth the world has ever seen in human history. It's an insult to intelligence for France to categorize it as "unproductive" like it's uninhabited real estate. Crypto is an alive communal ecosystem that creates its own rules and regulates itself. Government doesn't seem to like that very much. They insist that their citizens are actually debt-slaves rather than free people.
Ironically crypto is the Breaker of Chains.
