11. French Capital Gains Tax

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

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11.4. Capital Gains on Shares and Personal Property

Capital gains tax on shares and personal property is called plus values mobilières.

i. Shares

The tax is payable by anyone resident in France at the rate of 30.1% (18% CGT + 12.1% social charges) on the gain realised from the sale of share dealings.

No capital gains tax is payable if the sale value is under €25,730 a year (2009).

You can also carry forward losses to offset later gains.

The rules are different if you are a professional punter as all gains are taxable at the rate of 30.1%, 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 €25,730 must be declared on your French income tax return.

Accordingly if you sold shares valued at €25,000, having realised 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 €270, 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.

There are certain types of share dealings which are exempt from capital gains tax, and it may also be possible to exceed the €25,730 limit in exceptional circumstances, e.g. redundancy pay. You would need to discuss with your financial advisor the concessions that apply.

If you are not resident in France then the rules will depend on the terms of any double taxation treaty with your home country.

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

ii. Personal Property

In relation to capital gains on personal property other than real estate, such gains are exempt 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 works of art or antiques are charged a flat rate of 5% without allowances. You can also elect to choose the standard form of capital gains tax if you so wish, against which you can offset eligible costs.

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