Capital Gains Tax
Capital Gains Tax, on the sale of quoted shares or collective investments, is a separate tax regime.
As of 1st January 2011, there is now no allowance applied to the sale of shares in France. Prior to this change it was possible to sell €25,830 of shares and reporting the sale on the declaration was not required, making a small shareholding desirable. However, with this new legislation it is no longer desirable to hold shares directly.
A French principal private residence is exempt from paying Capital Gains Tax in France, although in certain cases, the gain may be included in assessing certain tax reliefs.
A former French second residence is free from Capital Gains Tax once the owner has completed at least one tax return from that address (some notaires request two years) demonstrating fiscal residence of France.
As of January 1st 2010, France has the right to tax the sale of UK property owned by French residents, with credit given for any tax paid in the UK. Tax will be taken at 19% with a further 15.50% in social charges, thus 34.50%.
Given that the UK will not charge any Capital Gains Tax (the UK does not apply this tax to non UK residents), there will never be any credit, thus it is now only French rules that matter.
The time of ownership now required to avoid capital gains tax is now 30 years. The details are as follows:
-2% for each year of ownership beyond the fifth year;
-4% for each year of ownership beyond the seventeenth year;
-8% for each year of ownership beyond the twenty-fourth year.
Pre-budget, there was also a €1,000 euro allowance applied as part of the calculation. Although this did not make an enormous difference, this also being removed certainly adds to the cost.
A flat rate of 7.5% may be used when assessing the acquisition cost of the property.
Where the taxpayer sells a property after five years of ownership is not able to provide the justification for home improvement expenditures, a fixed allowance of 15% of the purchase price may be used (CGI 150VB 4).
A declaration now needs to be made to the tax authorities within one month of the sale.
The information on this page is intended only as an introduction only and is not designed to offer solutions or advice. Kentingtons can accept no responsibility whatsoever for losses incurred by acting on the information on this page.
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