Tax on securities
Tax residents of France who make a profit by selling securities must pay tax on these capital gains.
Certain capital gains are exempt, subject to conditions (e.g., if covered by an equity savings plan (PEA) or the PEE and PERCO employee savings plans).
Taxable capital gains are equal to the difference calculated between the sale price and the purchase price of securities (e.g., a free share).
Capital gains on the sale of shares are subject to a single flat-rate levy (PFU) of 30%, also known as flat tax. This is comprised of:
- Income tax at a rate of 8%
- Social security contributions at a rate of 20%.
One can opt for the sliding income tax scale to be applied instead of the PFU for the entire tax household. The rate varies depending on the holding period:
- 50% allowance for a holding period of 2 to 8 years
- 65% allowance for a period of more than 8 years
Taxable capital gains are added to other income on the tax return. The household’s total taxable income is subject to the sliding income tax scale (link to tax bracket table)
It is also mandatory to pay social security contributions at a rate of 17.2% , calculated on the basis of the capital gains earned before any allowance is applied.
The option must be exercised each year when filing the tax return. The capital gains earned must be reported via form 2074, in addition to income tax return form 2042.