11. French Capital Gains Tax

1. Scope of the Tax
2. Exemptions on Sale of Property
3. Allowable Costs on Sale of Property
4. Shares and Personal Possessions
5. Taxation of Building Land
6. Fiscal Representative for Non-Residents
7. Sale of Property Abroad

11.4. Capital Gains on Shares and Personal Property

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

11.4.1. Shares

If you are resident in France you are liable to French taxation on the sale of shares in whichever country they are held.

Since January 2018 a single rate tax, called the Prélèvement Forfaitaire Unique – PFU, applies on the sale of shares.

The tax is actually made made up of two components:

• Income tax at the rate of 12.8%
• Social charges at the rate of 17.2%

The latter rate is the result of the general increase that has occurred in the social charge CSG of 1.7%, increasing the total level of social charges on investment and rental income and capital gains from 15.5% to 17.2%.

It ends the tax allowance for duration of ownership (relief at the rate of 50% or 65%) that was available under the previous tax regime on the sale of shares. Only shares purchased prior to 2018 can continue to benefit from this relief and be taxed according to income tax scale rates.

However, it remains possible to opt to be taxed using income tax scale rates for shares purchased since 2018, but without any allowance for duration of ownership. The social charges continue to apply.

If you take this option it applies to all your investment income; you cannot pick and choose which income to be taxed using the PFU and which income should be taxed using the income tax bands and rates.

Special provision remains for retiring owners of a company when they sell their business and realizes a capital gain, when there if total exemption if the sale value is less than €500,000. Between €300,000 and €1,000,000, the exemption is partial. These allowances apply from 2022.

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.

France also has an 'Exit Tax', payable by partners in a business who relocate from France. However, the tax is widely misunderstood and affects few individuals. You can read about it in our article in France Insider at What is the 'Exit Tax'.

11.4.2. Personal Property

As a general rule there is no capital gains tax payable on the sale of household furniture or your car.

Nevertheless, a vintage car that is classified as a 'voiture de collection' is potentially liable, where the sale value is greater than €5,000. Not all such vehicles are subject to CGT, as the vehicle must have participated in a vintage car competition and hold a trophy from such a competition.

In relation to capital gains on personal property (biens meubles) other than real estate, such as horses, boats, classic cars and wine the general rule is that there is 5% relief for each year owned over 2 years, granting complete relief if held for 22 years.

There is no tax on such gains if the sale proceeds are under €5,000.

Special rules apply in relation to certain personal property, where a standard tax charge (taxe forfaitaire) is applied, whether or not a capital gain was realised. The rates are for 2021/22.

• Jewellery, including watches, is charged a flat rate of 6.5% if the sale value of the item is over €5,000.

• Precious metal objects (gold, silver and platinum) originating prior to 1800 are charged at the rate of 11.5%, irrespective of sale value. The category includes coins originating prior to 1800.

• Works of art, are taxed at the rate of 6.5% if the sale value is over €5,000. The same applies to furniture and antiques over 100 years old. The category also includes signed art photographs where no more than 30 examples were made.

• It is also possible for a vintage car to be taxed on the same basis, where sale value greater than €5,000, at the rate of 6.5%.

You can also elect to choose the standard form of capital gains tax if you so wish, against which you can offset eligible costs, and obtain the standard allowance for duration of ownership, although proof of purchase is required.

Next: Capital Gains on Sale of Building Land

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