11. French Capital Gains Tax

1. 11.1. French Real Estate Exemptions
   11.2. French Real Estate Deductions
   11.3. French Tax Rate
   11.4. Shares and Other Property
   11.5. Development Land
   11.6. Your Former Home

11.4. Shares and Other Property in France

Capital gains tax on shares and certain other property, called plus values mobilières, is payable by residents of France at the rate of 29% (18% CGT + 11% social charges) on the gains realised from the sale of share dealings. This rate applies for share dealings from 2008 onwards.

You are exempt from capital gains tax in France on the sale of shares if you are non-resident.

No capital gains tax is payable if the sale value is under €25,000 a year (wef 1 Jan 08), provided you your share dealings are not a professional activity. You can also carry forward losses to offset later gains.

If you are a professional punter then all gains are taxable at the rate of 29%, or on a progressive basis under income tax rules, depending on how you elect to be taxed.

Even if you are not a professional those gains on sales under €25,000 must be declared for the purposes of income tax.

Accordingly if you sold shares valued at €24,400, including a capital gain of €500, you would not pay capital gains tax.

Conversely, if you sold shares valued at €26,000 having realised a gain of €1000, the gain would be liable to the tax!

If you hold shares longer than six years (for those held since Jan 06), then you will be entitled to a progressive reduction in capital gains tax if you later sell them, with full exemption available after eight years.

Accordingly, under the terms of this recent change, no full exemption will be available until 2012 at the earliest.

The capital gains will continue to be subject to the social welfare levy (called prélèvements sociaux ) at the rate of 11%.

There are certain types of share dealings which are exempt from capital gains tax, and it may also be possible to exceed the €25,000 limit in exceptional circumstances, e.g. redundancy pay.

It beyond the scope of these pages to go into the various different types of investment and the rules that apply.

If you are not a resident of France then the rules of capital gains tax for property other than real estate will depend on the terms of any 'double taxation treaty' with your home country.

In relation to capital gains on other property, once again it only applies to residents, and it is exempt from capital gains if the sale proceeds are under €5000. There is also 10% relief for each year owned over 2 years, granting complete relief if held for 12 years.

There is no capital gains tax payable on the sale of household furniture or your car.

Special rules apply in relation to the sale of jewellery or precious objects, where a standard tax charge is applied, whether or not you realised a capital gain. Jewellery and work of art or antiques are charged a flat rate of 5%. You can also elect to choose the standard form of capital gains tax if you so wish.