Taxonomy and Characterization of Carbon Credit Tokens (CCTs)

1.1 Direct Ownership Tokens

1.1.1 On-chain Representation of Carbon Credits Held in Custody by the Investor

Direct ownership tokens constitute the most fundamental form of carbon credit tokenization, representing a digital claim on a physical carbon credit held in custody by an accredited custodian. This structure ensures a one-to-one correspondence between the issued token and the underlying carbon credit unit, identifiable by its serial number in a recognized carbon credit registry (Verra VCS, Gold Standard, Climate Action Reserve, etc.). The custody of the physical credits is ensured by a trusted third party, often an accredited financial institution or a specialized depository, which holds the credits in an escrow account and issues the corresponding tokens on the blockchain.

This architecture guarantees the integrity of the link between the digital asset and the underlying environmental asset, a critical element for the token’s credibility and traceability. Direct ownership grants the investor full property rights over the underlying credit, including the right to hold it until maturity, retire it from the registry for voluntary offsetting, or resell it on the secondary market. On-chain traceability ensures the immutability of the ownership chain, an essential criterion for certifying the credit’s quality and calculating the CCQI (Carbon Credit Quality Indicator). For the institutional investor, the direct ownership token offers the greatest transparency and lowest legal complexity, but also involves the direct management of regulatory obligations, including tax reporting in the jurisdiction of holding and gain realization.

1.1.2 Tax Implications: Qualification as an Intangible Asset and Traceability of the Ultimate Beneficial Owner

The tax qualification of direct ownership tokens as digital intangible assets has decisive consequences for their treatment under the Pillar Two regime. This classification, consistent with the intangible nature of the carbon credit itself and its digital representation, leads to the application of specific rules for intangible assets in the calculation of the effective tax rate. The traceability of the ultimate beneficial owner, ensured by blockchain technology, facilitates tax audits but simultaneously eliminates opportunities for anonymity that could have constituted tax optimization opportunities.

For the tax authorities, this traceability strengthens the ability to verify the effective ownership of CTEs by MNEs and the correct allocation of income to the relevant jurisdictions. The French tax authority can now directly correlate token ownership with the constituent entity of the declaring multinational group, ensuring consistency between on-chain ownership data and filed GloBE returns. This enhanced transparency compels investors toward rigorous compliance and eliminates holding strategies through opaque entities in low-tax jurisdictions. For carbon credit issuers, traceability provides a competitive advantage by demonstrating the integrity of their supply chain, but it also imposes high standards of due diligence and reporting to maintain the qualification of their credits.

1.1.3 Exposure to the top-up tax according to the jurisdiction of holding and gain realization

The tax exposure of directly held tokens to the top-up tax is determined by the tax jurisdiction of the constituent entity that holds them, in accordance with the GloBE jurisdictional blending principle. If the holding vehicle is established in France and subject to the French QDMTT, the return on the token portfolio will be integrated into the calculation of the effective French rate. The absence of substantial tax credits on this income, combined with ineligibility for the SBCO, mechanically leads to an effective rate potentially below the 15% threshold, triggering the top-up tax.

The realization of gains, whether through dividend distribution, capital gains on disposal, or carbon credit offsetting, generates a taxable event attributable to the year of realization. Optimizing the timing of these realizations becomes a critical lever for tax management, particularly in a transitional phase where safeguard rules may temporarily mitigate the impact of the top-up tax. Institutional investors must precisely model the trajectory of their gain realizations in correlation with the evolution of the French and international regulatory framework to minimize the cumulative impact of the supplementary levy on the net profitability of their portfolio.