France Proposes Tax on Unrealized Bitcoin Gains

A plan to tax unrealized capital gains from cryptocurrencies, such as Bitcoin, is being considered by French lawmakers, which might change the country’s taxation strategy for digital assets. According to this plan, cryptocurrencies would be considered “non-productive property,” similar to luxury goods like yachts or inactive real estate, and would be subject to a “unproductive wealth tax,” which would take the place of the current real estate wealth tax.

The proposal, which was made during the Senate’s deliberations on the budget for 2025, represents a substantial shift from the existing structure. Currently, only realized gains—profits from the sale of assets—are subject to cryptocurrency taxes in France. Even if the cryptocurrency hasn’t been sold, the plan would tax the increase in asset value.

The proposal’s backer, Senator Sylvie Vermeillet, claimed that the reform would bring coherence to wealth taxation and pushed for treating cryptocurrencies consistently with other wealth categories.

This French idea is in line with international initiatives to tax and regulate cryptocurrencies. In an effort to alleviate perceived disparities and simplify tax laws, Denmark’s Tax Law Council last month suggested a plan that would tax unrealized profits and losses on cryptocurrency assets using an inventory taxation approach.

Other countries, however, take a more lenient stance when it comes to crypto taxes. While nations like Germany and Portugal provide tax exemptions for long-term holdings or apply less stringent classifications to digital assets, the United States only levies taxes on the sale of crypto assets.

The preliminary vote in the French Senate discussion was only attended by senators who supported the proposal, so it is not a thorough representation of the legislative agreement. The French National Assembly must approve the tax proposal before it can become law.

The idea of taxing unrealized gains is a paradigm change for a lot of investors. Unrealized gains, which are now tax-free in France, are rises in asset value prior to a sale. For instance, under the current system, no tax is due if the price of Bitcoin increases after purchase but is not sold. By focusing on paper gains, the proposed tax would alter this and add another level of complication to cryptocurrency investment plans.

This discussion highlights the difficulties governments have in striking a balance between innovation and fair taxes in the midst of an increasing worldwide attention on cryptocurrency regulation.

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