Capital Gains Tax in France or impôt sur les plus-values as it is known is a tax payable on the sale of real estate property, land, buildings, shares or other personal property. As with other types of tax, french capital gains tax can be subject to certain exemptions, deductions and allowances that maybe available but navigating this area and knowing what the best options are for you and your financial situation can be confusing.
Capital Gains Tax on Property
A French principal private residence is generally exempt from paying Capital Gains Tax in France.
A former French second residence, becoming your principal home, 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.
It is important to note that this tax, between the UK and France, is covered via the tax treaty between the two countries.
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 17.2% (or 7.5%, if applicable) in social charges.
There are allowances applied for the period of ownership, thus the weight of tax reduces over time, avoiding real estate capital gains tax after 22 years and social charges after 30 years.
When considering costs, you may consider those which may be legally offset, or use a fixed allowance, which is available to those within a certain criteria.
Please note that Kentingtons offers advice on capital gains tax, only as part of overall comprehensive financial planning and not in isolation.
Capital Gains Tax on Shares / Managed Portfolios / Funds etc.
No amount may be earned tax free on the sale of shares in France, so holding them directly is less desirable than by other means.
For UK nationals it is important to note that ISAs are not exempt from french capital gains tax, thus they will be assessed as whatever is inside them, so either cash savings, shares etc. with both Capital Gains Tax and social charges payable. We have experienced serious reporting problems with this, with ISA providers unwilling to provide tax information for an investment that is ‘tax free’.
The treatment of shares has become complicated with various options for taxation depending on how long they have been held and the level of gains dictating which tax option suits you best. You may select a flat tax (PFU – Prélèvement Forfaitaire Unique) with no allowances, or you may use your marginal rate and apply allowances, thus requiring complex calculations to ascertain which results in the lowest bill. This is hardly favourable, leaving you to learn those complex calculations, chance it on your best guess, or pay an accountant, thus potentially losing any advantage.
How Can Kentingtons Help?
The good news is that, as a leading tax and financial consultant in France, Kentingtons’ is able to provide a service to aid our French resident clients in making use of suitable investment structures and only recommend those that are completely exempt from the payment of Capital Gains Tax (clearly the smart option is not to bother with this tax at all, if you do not legally need to).
If you would like to know more about how you can simply eliminate french Capital Gains Tax from your savings, please do get in touch.
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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