French Tax Increases for 2010
Thursday 15 October 2009
The government is to increase the taxation of capital gains made on shares and certain types of life insurance policies.The proposals are contained in the draft social security budget for 2010.
Shares
At the present time, no social charges are payable on capital gains on shares, provided the amount sold in the year does not exceed €25,730.
Under the proposals contained in the draft budget this threshold will be removed, so that social charges of 12.1% will be payable on the capital gain of any shares or bonds sold in the year.
Those who are not resident will escape these charges, which are only payable by persons fiscally resident in France.
The measure will apply to all shares sold from 1st January 2010, whatever the date of original purchase.
Life Insurance
The same principle is to apply to gains made on life insurance policies that currently escape the payment of social charges.
Assurance vie policies can be held in two types of investment funds:
- i. A monosupports contrat en euros in which your capital is guaranteed through investment in bonds or;
- ii. A unités de compte contrat multisupports in which the performance of the fund is linked in part or in whole to the performance of the basket of shares held in it.
In the case of the monosupports contrats en euros social charges are payable each year on the gain, while in multisupports they are only payable when the policy expires.
In the event of death of the assured, contrats multisupports are completely exempt from social charges.
With effect from next year, this exemption will cease, so that social charges of 12.1% will be payable on the capital gains of all types of assurance vie and in all circumstances.
The new rule will apply to all existing, as well as all future assurance vie policies.
These insurance policies should not be confused with death policies that pay out a fixed sum on the death of the assured. Assurance vie is primarily a savings product for the living!
Whatever type of life insurance you take out, one of their great advantages is that they are exempt from French inheritance tax up to a value of €152,500 per beneficiary.
You can read more in our guide to Life Insurance in France and our guide to Bank Savings Schemes in France.
This article was featured in our Newsletter dated 15/10/2009
