According to a recent report by the Court of Auditors, there are some gaps in cryptocurrency tax monitoring in France. On the agenda: declaration of self-hosted wallets and targeted monitoring of social media. This poses an obvious security risk given the increase in kidnappings of crypto players.
The Court of Auditors highlights the tax challenges associated with cryptocurrencies
The Court of Auditors is the main French institution responsible for overseeing public funds. In this context, it has just published a report dated December on the corrections to be made to “distortions in wealth taxation.”
The 200-page document includes a chapter addressing the sensitive subject of cryptocurrencies, and more specifically “the challenge of detecting undeclared digital assets.” This is particularly relevant in the context of profits made “in the form of capital gains, remuneration, and donations.”
These capital gains largely concern people in their thirties, with more than 4,000 tax households referenced in the report. The problem? A discrepancy described as “significant” between Chainalysis’ estimates of capital gains for French cryptocurrency holders in 2021, estimated at €3.5 billion, and the figures from the DGFiP, which mention a total declaration of €400 million involving 20,000 taxpayers over the same period.
As a result of this finding, the reporting obligations of cryptocurrency holders and crypto service providers (PSANs) have been gradually strengthened. However, there are still some gaps to be filled, according to certain points in this report highlighted by Henri Gauthier on the X network.
Some ideas for improving the monitoring of cryptocurrency holders
The first point highlighted in this report concerns the entry into force of the “DAC 8” directive, scheduled for 2026. This text requires European PSANs to report certain information relating to transactions carried out through them to the tax authorities of the Member State to which they belong.
However, the Court of Auditors indicates that this requirement “will not apply to PSANs hosted in France.” It therefore believes that this situation needs to be remedied by aligning the obligations of French PSANs in this area with those of their European counterparts.
The report also highlights what it calls regulatory “blind spots,” particularly due to the total lack of response to requests from the tax authorities by certain non-European PSANs based in Singapore or Hong Kong.
At the same time, the Court of Auditors clearly points out the lack of resources available to the French tax authorities to carry out these checks, which are in the hands of “a few experts.” And for good reason, “digital assets are not yet a focus of tax audits per se.”
On the agenda: declaration of self-hosted wallets and monitoring on social media
The main recommendation in this report involves the introduction of a “requirement to notify the tax authorities of the holding of self-hosted crypto-asset portfolios above a defined value threshold.”
According to Henri Gauthier, this procedure could involve mentioning the addresses concerned in the Cerfa declaration.
Finally, the Court of Auditors indicates that the tax investigation department is currently conducting “an experiment allowing it to use non-public data from social media to detect undeclared digital asset transactions.”
This increased surveillance raises many issues, particularly in terms of security for cryptocurrency holders, who are currently exposed to a rise in kidnappings for ransom. Their personal data could fall into the wrong hands, either through hacking or through the complicity of certain members of the administration, as has been the case recently.
