France is moving toward a significant shift in its cryptocurrency tax policy with the introduction of amendment I-CF1826. This proposal seeks to redefine taxable disposals, potentially ending the current tax-deferred status of crypto-to-stablecoin exchanges. If enacted, the changes would take effect on January 1, 2027, forcing investors to pay closer attention to the timing of their trades and the nature of the assets they receive.
Taxing the Move to Stability
A major pillar of the proposal is the removal of tax deferral for swaps involving e-money tokens as defined by the EU’s MiCA regulation. Currently, French investors can move between volatile assets like Bitcoin and stablecoins without triggering an immediate tax liability. Under the new rules, a swap into a stablecoin like USDC would be considered a taxable disposal, even if the funds remain within a digital wallet or exchange account. Legislators justify this change by closing what they describe as a legislative loophole that allowed investors to de-risk their portfolios without settling their tax obligations.
A Shift in Cost Basis Calculations
The amendment also introduces a fundamental change in how gains are calculated, moving away from a total portfolio-based formula. Instead, the tax authority would focus on the specific assets disposed of, utilizing a weighted-average acquisition value for calculations. For assets held before the 2027 deadline, investors are offered a one-time, irrevocable choice between two transition routes. They can either use documented actual acquisition costs or allocate their existing portfolio's cost basis across their holdings based on market value at the end of 2026. This decision will have a direct impact on the amount of gain or loss recognized during the first taxable event under the new regime.
Reporting and the Impact of Market Losses
While the proposal updates the definition of a disposal, it does not allow for the carry-forward of crypto losses into future years. This means that a gain triggered by a stablecoin swap in one year cannot be offset by a loss incurred in a subsequent year, potentially increasing the total tax burden. As a result, the timing of trades becomes a critical component of a taxpayer's strategy to avoid permanent losses on tax-advantaged offsets. Investors will also face increased administrative requirements, needing to maintain precise evidence of acquisition costs and weighted averages for every individual asset. The final legislative outcome remains pending as the proposal continues to move through discussions in the National Assembly.
