French Panel Backs Self-Custody Crypto Reporting Rule, But Budget Fight Looms

PARIS — A French parliamentary committee voted Friday to require individuals who hold cryptocurrency in personal wallets to declare holdings worth €100,000 or more, a move aimed at closing a gap that tax authorities say allows billions in capital gains to go unreported each year.

The amendment, adopted by the National Assembly’s Finance Committee, would amend the general tax code to mandate annual disclosure of self-custodied digital assets valued as of Dec. 31. Failure to report could trigger fines of up to €10,000. The measure targets crypto held outside exchanges or custodial services — assets stored on hardware wallets, software wallets, or paper keys where no intermediary files reports with the tax administration.

Lawmakers backing the proposal cited a parliamentary inquiry that found French taxpayers realized an estimated €3.5 billion in cryptocurrency capital gains in 2021, yet only €400 million in holdings were declared to authorities that year. The sponsors — Charles de Courson, Jean-Pierre Bataille, and Michel Castellani of the centrist LIOT group — framed the rule as an anti-evasion tool rather than a new tax.

The vote is an early step in a legislative process that remains highly uncertain. Hours after adopting the crypto amendments, the same committee rejected the revenue section of the government’s 2027 budget bill by a 31-3 margin. Debate on the budget’s revenue provisions opens Tuesday in the full National Assembly, starting from the government’s original draft — meaning the crypto measures would need to be reintroduced and survive a fresh round of votes.

Four other crypto-related amendments cleared the committee alongside the reporting rule. One would impose an exit tax on cryptocurrency portfolios exceeding €800,000 when a taxpayer moves abroad. Another would end the deferral of capital-gains taxes when converting crypto into fiat-backed stablecoins, treating such swaps as taxable events. A third would extend reporting obligations to foreign crypto platforms serving French residents. The fifth would create a dedicated tax regime for staking rewards.

France’s push comes as the European Union’s Markets in Crypto-Assets regulation (MiCA) takes full effect, imposing licensing and transparency rules on centralized service providers. MiCA does not cover self-custodied assets, leaving a regulatory blind spot that national governments are now moving to address individually. Germany already requires declaration of crypto holdings in annual tax returns, while Italy introduced a 26% flat tax on crypto gains above €2,000 in 2023. The U.S. Internal Revenue Service, by contrast, relies on broker reporting rules finalized in 2024 that do not reach non-custodial wallets.

Tax experts say the French proposal’s €100,000 threshold is relatively high compared to other financial reporting requirements. French residents must already declare foreign bank accounts and life insurance contracts worth more than €50,000. The crypto threshold would align more closely with the €150,000 trigger for the wealth tax on financial assets.

Enforcement poses practical challenges. Unlike bank accounts, self-custodied wallets leave no automatic paper trail. The tax administration would depend on voluntary compliance or blockchain analytics to identify unreported holdings. French authorities have contracted with chain-analysis firms in recent years, but coverage of privacy-enhancing tools and non-custodial mixes remains limited.

The amendment’s fate will be decided in the coming weeks as the budget bill moves through the Assembly and Senate. If the government invokes Article 49.3 of the constitution to force the budget through without a vote — a common tactic — the crypto provisions could be stripped unless the executive chooses to retain them. The next parliamentary session begins Tuesday.