Introduction to France’s New Tax Proposal

French lawmakers have recently approved a proposal to replace the country’s property wealth tax with a broader levy on ‘non-productive wealth.’ This measure would affect assets such as Bitcoin, jewelry, art, yachts, and real estate, applying a flat 1% annual tax even if the assets haven’t been sold.

Understanding the Tax Proposal

According to Source 1, the proposed tax would be a 1% flat tax for every year, specifically applying to the amount of assets above the euro two million limit. This measure would impact owners of cryptocurrencies, including capital assets that have shown value increase but have not been sold, thus allowing for the taxation of unrealized gains each year.

Implications for Crypto Holders

Source 3 warns that this could set a dangerous precedent for taxing ‘paper profits.’ Experts argue that the bill lacks distinctions between passive investors and ecosystem builders, potentially penalizing founders whose tokens represent long-term project alignment. Instead of taxing crypto holdings as ‘unproductive,’ policymakers should recognize their role in funding startups, decentralized infrastructure, and digital innovation.

Expert Insights and Analysis

Experts like Yin argue that ‘by lumping digital assets like Bitcoin with yachts and art under a ‘tax on unproductive wealth,’ France is sending a message that capital held in crypto is idle rather than dynamic. That is inaccurate and shortsighted.’ This perspective highlights the need for a more nuanced approach to taxing crypto assets.

Technical Analysis

The proposed tax amendment introduces a radically different principle: taxing unrealized gains on crypto holdings annually, even when investors haven’t sold their coins. This raises concerns about the potential impact on the crypto market and the precedent it may set for other countries.

Conclusion and Future Implications

In conclusion, France’s proposed tax on unrealized crypto gains has significant implications for the crypto market and the broader economy. As Source 5 notes, France is ready to tax crypto like art while contemplating stacking it like gold. This dual approach reflects the complex and evolving nature of crypto assets and their role in the global economy.