The French government’s tax policy imposes a single flat-rate levy of 30% on capital gains from investments, including dividends, interest, and gains on the sale of securities. This rate consists of 12.8% for income tax and 17.2% for social contributions.
Key Aspects of the Tax Policy:
– Taxation of Capital Gains: The 30% flat-rate levy applies to various types of investments, including shares, bonds, and other financial products.
– Option for Progressive Tax Scale: Taxpayers can opt for taxation under the progressive income tax scale if it’s more favorable. In this case, the taxable capital gain is added to other income and subject to the progressive tax rates, which range from 0% to 45%.
– Allowances and Exemptions: Certain exemptions and allowances apply, such as the exemption for gains on the sale of a primary residence or allowances for long-term holdings of securities.
– Social Security Contributions: The 17.2% social contribution applies to capital gains, regardless of the taxpayer’s income tax situation.
Implications for Investors:
– Predictable Tax Liability: The flat-rate levy provides predictability for investors, allowing them to better manage their tax liability.
– Flexibility: The option to choose between the flat-rate levy and the progressive tax scale gives taxpayers flexibility in managing their tax obligations.
– Importance of Tax Planning: Investors should consider the tax implications of their investments and plan accordingly to minimize their tax liability.
Special Considerations:
– Non-Residents: Non-residents are subject to different tax rules, and tax treaties may modify the rates or exemptions applicable to capital gains.
– Specific Investment Products: Certain investment products, such as employee savings plans or equity savings plans, may have specific tax rules or exemptions.
