France Rejects Crypto Exit-Tax Proposals as Budget Vote Faces New Delays

Assembly Blocks Exit-Tax Initiatives

French lawmakers have dealt a significant blow to the government’s revenue collection strategy by rejecting two major proposals designed to impose taxes on cryptocurrency holdings when residents transfer their tax domicile. The first measure, which received 27 votes in favor against 55 opposing votes and one abstention, sought to incorporate digital assets into France’s established exit-tax regime. This defeat represents a clear rejection of treating cryptocurrencies identically to conventional investments for exit-tax purposes.

A second proposal met similar resistance, failing by a margin of 31 supporting votes against 60 in opposition. This measure would have specifically targeted unrealized gains on household cryptocurrency holdings exceeding €800,000 when owners relocated their tax residence outside France, subject to the condition that they maintained French tax residency for at least six of the preceding ten years. The back-to-back rejections suggest Parliament recognizes fundamental distinctions in how digital assets function compared to traditional wealth categories.

Budget Process Stalls Under Amendment Burden

The cryptocurrency-focused votes represent just one aspect of broader procedural challenges confronting the National Assembly’s budget review. The scheduled vote on the revenue section has now been postponed for a second time, with lawmakers continuing deliberation on the proposal’s components. The initial delay occurred in late October when over 2,000 proposed amendments made timely completion impossible. Currently, 758 amendments remain pending examination, forcing legislators to accelerate their work to meet the November 17 deadline established for completing the first reading examination.

Should Parliament reject the revenue section entirely, the government’s original budget proposal would advance to the Senate without the modifications Parliament members have adopted, potentially streamlining the legislative timeline.

Crypto Tax Debate Continues on Multiple Fronts

While the exit-tax proposals have been defeated, the National Assembly continues wrestling with digital asset regulation through other legislative vehicles. Lawmakers remain deliberating on a proposal requiring individuals to report self-custodied cryptocurrency holdings valued at €100,000 or more to tax authorities at year-end valuations. Another pending measure would exempt gains from cryptocurrency transactions used for everyday purchases, provided annual transaction volumes remain below €1,000.

The Assembly previously approved a measure in mid-October authorizing taxation of gains realized when digital assets are converted to fiat-pegged stablecoins, though this has not yet achieved final law status. The pattern of rejections, approvals, and ongoing deliberation demonstrates that while French regulators have abandoned the most aggressive exit-tax approach, the broader regulatory environment for digital assets remains unsettled and subject to continued parliamentary revision.

For cryptocurrency holders and market participants, the rejection of exit-tax provisions removes a significant compliance burden, though ongoing proposals around reporting and transaction taxation suggest France will continue refining its digital asset tax framework.

Source: French National Assembly, via Cointelegraph. Not financial advice.