A New Direction for Taxing Wealth
France is quietly testing a big idea that could ripple far beyond its borders: what if certain kinds of wealth—especially assets that don’t directly fund the real economy—were taxed every year, even if you never sell them? In a first reading of the 2026 budget, lawmakers in France’s lower house approved a proposal to classify some holdings, including crypto, as “unproductive wealth,” subject to an annual levy.
If you hold significant digital assets and live in France, this isn’t just a policy curiosity—it could change how you track, value, and plan your portfolio. In this article, we’ll break down what’s been proposed, how it differs from current rules, what it could mean in practice for crypto holders, and how to prepare while the measure works its way through the legislative process.
How the Proposed Tax Would Work
What the Proposal Actually Says
At the heart of the proposal is a new 1% annual tax on “unproductive wealth” for individuals whose net taxable wealth exceeds €1.3 million. Unlike capital gains tax, which applies when you sell an asset for profit, this levy would apply to the value of certain assets each year—regardless of whether you’ve realized any gains.
Crypto is explicitly included in the list of assets considered “unproductive,” alongside items like gold, art, and yachts. The version passed in the lower house also includes an allowance for a primary residence—up to €1 million—though details could still change as the budget moves through the Senate and final negotiations.
To understand the shift, it helps to compare it with the current system. Until now, France has generally taxed crypto only when a taxable event occurs—typically when you convert it into fiat or use it for purchases that trigger a gain. Under the proposed rules, crypto holders could face an additional annual tax layer based purely on valuation.
Imagine a resident holding €2 million in crypto that they haven’t touched for years. Even without selling a single token, they could owe €20,000 annually under this proposal, assuming the full amount is subject to the levy. That’s a fundamental change in how digital assets are treated.
The Reasoning Behind “Unproductive Wealth”
Why Governments Are Looking at “Unproductive Wealth”
Supporters of the measure argue that it serves two main goals: raising revenue and encouraging capital to flow into more “productive” areas of the economy, such as businesses, infrastructure, or job-creating investments.
The idea isn’t entirely new. Wealth taxes have existed in various forms across Europe, but many were scaled back due to complexity, capital flight, or administrative challenges. France itself previously had a broader wealth tax (ISF), which was later narrowed.
What’s different now is the inclusion of crypto. Governments are increasingly aware that digital assets can represent large concentrations of wealth that are mobile, global, and sometimes lightly taxed until realized. Including crypto in a wealth-based framework is one way to address that gap.
Critics, however, raise several concerns. First, the threshold of €1.3 million may affect not just ultra-wealthy individuals but also what some call “paper millionaires”—people whose asset values have risen but who may not have significant cash flow. Second, volatile assets like crypto can swing dramatically, making annual valuations tricky and potentially unfair. Third, there’s the risk of capital relocation, where investors move assets—or themselves—to more favorable jurisdictions.
A useful visual here would be a simple comparison chart showing “Current Taxation vs Proposed System,” highlighting when taxes apply (sale vs annual value), types of assets included, and potential cash flow implications.
What It Means for Crypto Holders
What This Means for Crypto Holders in Practice
If the proposal becomes law, compliance won’t just be about paying a new tax—it will require more structured reporting and record-keeping.
French residents already have obligations when it comes to digital assets, including declaring foreign accounts using Form 3916 or 3916-bis. Non-compliance can lead to fines, and enforcement has become more sophisticated in recent years.
Under the new framework, crypto holders would likely need to determine the fair market value of their holdings at a specific point each year. That means aggregating balances across multiple wallets, exchanges, and possibly even DeFi protocols.
Consider a trader who uses three exchanges, a hardware wallet, and several DeFi platforms. To comply, they would need to:
Track balances across all locations at year-end
Convert those balances into euros using a consistent valuation method
Document the methodology used in case of audit
Integrate this data into their broader wealth calculation
This is where things can get complicated. Crypto markets run 24/7, prices vary slightly across platforms, and some assets may have limited liquidity. Establishing a consistent and defensible valuation approach will be key.
An infographic could be helpful here, showing a “Year-End Crypto Valuation Workflow,” from data collection to reporting.
Preparing and Staying Compliant
A Step-by-Step Approach to Getting Ready
Even though the measure is not yet law, preparing early can reduce stress and potential errors later. Here’s a practical way to approach it:
Start by calculating your total net wealth. Include all assets—real estate, investments, savings, and crypto—minus liabilities. This will help you see whether you’re near or above the €1.3 million threshold.
Next, map out all your crypto holdings. List every exchange account, wallet, and platform where you hold assets. This step alone often reveals gaps in tracking.
Then, establish a consistent valuation method. Decide how you will determine the euro value of each asset at year-end—whether using a specific exchange, an average price, or a recognized index.
After that, implement a tracking system. Many investors use specialized crypto tax tools to tag transactions, distinguish disposals from holdings, and generate reports. The key is consistency and auditability.
Finally, consult a tax professional. Rules can evolve during the legislative process, and individual situations vary widely. Professional guidance can help you avoid costly mistakes.
Practical Tips for Navigating the Change
If you’re holding significant crypto in France, a few habits can make a big difference:
Maintain a year-end snapshot of all holdings, including screenshots or exported reports from exchanges and wallets.
Keep a clear distinction between realized transactions (sales, swaps, payments) and unrealized holdings.
Document your valuation sources and methods—consistency matters more than perfection.
Review your residency status and reporting obligations, especially if you have cross-border ties.
Plan for liquidity. If an annual tax applies, you may need to set aside funds or periodically rebalance to cover it.
A table could be useful here comparing “Good vs Risky Practices” in crypto record-keeping and valuation.
The Bigger Picture and What Comes Next
Why This Could Be Bigger Than France
France’s proposal may be an early signal of a broader trend. As governments refine their approach to digital assets, they are moving beyond simple capital gains frameworks toward more comprehensive systems that capture different forms of wealth.
Other countries are watching closely. If the policy proves effective in raising revenue without driving capital away, similar measures could emerge elsewhere. On the other hand, if it leads to unintended consequences, it may serve as a cautionary example.
Either way, the direction of travel is clear: crypto is no longer operating in a regulatory gray zone. It is increasingly being integrated into traditional tax systems, with all the complexity that entails.
Conclusion
The proposed French tax on “unproductive wealth” marks a significant shift in how digital assets could be treated. Moving from a system that taxes crypto only upon sale to one that also taxes annual value introduces new challenges—especially around valuation, reporting, and cash flow.
While the measure still needs to pass through the rest of the legislative process, it’s not too early to prepare. Understanding your total wealth position, improving your record-keeping, and seeking professional advice can put you in a stronger position if the rules take effect.
More broadly, this proposal highlights a global reality: governments are catching up quickly to crypto. Staying informed and organized is no longer optional—it’s part of responsible investing.
References and Further Reading
For readers who want to explore further, consider reviewing official publications from the French Ministry of Economy and Finance, updates from the French tax authority (DGFiP), and analysis from international tax advisory firms.
Crypto-focused tax platforms and compliance guides can also provide practical insights into tracking and reporting obligations.
Following legislative updates on France’s 2026 budget will be essential, as the final version may differ from the current proposal.