Capital gain
📒 Capital gain
Section titled “📒 Capital gain”What are the french tax rate for capital gain ?
In France, capital gains (plus-values) are taxed differently depending on whether they come from financial assets (stocks, bonds, dividends) or real estate. As of 2025, the rules remain centered around the Flat Tax system and holding-period exemptions.
1. Financial Capital Gains (Stocks, Bonds, Dividends)
Section titled “1. Financial Capital Gains (Stocks, Bonds, Dividends)”Since 2018, the default system for financial income is the PFU (Prélèvement Forfaitaire Unique), often called the “Flat Tax.”
The Flat Tax (PFU)
Section titled “The Flat Tax (PFU)”The total rate is 30%, which is broken down as follows:
- 12.8%: Fixed-rate Income Tax.
- 17.2%: Social Security Contributions (prélèvements sociaux).
The Progressive Scale Option
Section titled “The Progressive Scale Option”If you are in a low income bracket, you can opt-out of the Flat Tax and choose to be taxed according to the standard Progressive Income Tax Scale (0% to 45%).
- Warning: If you choose this option, it applies to all your investment income for that year.
- Benefit: You still pay the 17.2% social charges, but a portion of the CSG (6.8%) becomes tax-deductible from your total income.
2. Real Estate Capital Gains
Section titled “2. Real Estate Capital Gains”Real estate taxation is more complex because it depends on how long you have owned the property. The total tax is composed of 19% Income Tax and 17.2% Social Charges.
Key Exemptions
Section titled “Key Exemptions”- Primary Residence: The sale of your main home is 100% tax-free, regardless of the gain or how long you’ve owned it.
- First Sale of a Secondary Residence: Can be exempt if you use the proceeds to buy your primary residence within 2 years (under specific conditions).
Holding Period Reductions (Allowances)
Section titled “Holding Period Reductions (Allowances)”For secondary residences or rental properties, the tax decreases the longer you hold the asset.
| Years of Ownership | Income Tax Reduction | Social Charges Reduction |
|---|---|---|
| 0 to 5 years | 0% | 0% |
| 6 to 21 years | 6% per year | 1.65% per year |
| 22nd year | 4% (Total 100%) | 1.60% |
| 23 to 30 years | Exempt | 9% per year |
| After 30 years | Exempt | Exempt |
3. The Surtax on High Gains
Section titled “3. The Surtax on High Gains”If your net taxable capital gain on real estate exceeds €50,000, an additional surtax applies. This tax is progressive and ranges from 2% to 6% depending on the amount of the gain.
| Taxable Gain | Surtax Rate |
|---|---|
| €50,001 to €100,000 | 2% |
| €100,001 to €150,000 | 3% |
| €150,001 to €200,000 | 4% |
| €200,001 to €250,000 | 5% |
| Above €250,000 | 6% |
Summary of Total Tax Burden
Section titled “Summary of Total Tax Burden”| Asset Type | Standard Total Rate | Fully Exempt After… |
|---|---|---|
| Stocks / Dividends | 30% (Flat Tax) | Never (unless in a PEA/Life Ins.) |
| Primary Residence | 0% | Immediately |
| Real Estate (Other) | 36.2% (+ possible surtax) | 22 years (Tax) / 30 years (Social) |
Would you like me to calculate the specific tax for a sale you are planning, or explain how a PEA (Plan d’Épargne en Actions) can reduce these rates for stocks?
📒 Individual versus Company
Section titled “📒 Individual versus Company”The taxation of capital gains in France varies significantly between an Individual (Personne Physique) and a Company (Personne Morale), specifically those subject to Corporate Tax (IS - Impôt sur les Sociétés).
While individuals benefit from tax-free holding periods, companies are generally taxed on the actual accounting gain, often at a lower nominal rate but without the same exemptions.
1. Financial Capital Gains (Stocks & Shares)
Section titled “1. Financial Capital Gains (Stocks & Shares)”For Individuals
Section titled “For Individuals”The default is the Flat Tax (PFU) at 30%.
- Composition: 12.8% Income Tax + 17.2% Social Charges.
- Tax-Advantaged Envelopes: If held in a PEA for 5+ years, the 12.8% tax is waived (only 17.2% social charges remain).
For Companies (IS)
Section titled “For Companies (IS)”The tax depends on the nature of the shares:
- Standard Rate: Capital gains are treated as ordinary profit and taxed at the standard corporate rate of 25%.
- Participation Shares (Titres de Participation): If the company holds at least 5% of the subsidiary for more than 2 years, the gain is 97% exempt.
- The company only pays tax on a “quote-part” (fixed portion) of 3% of the gain.
- Effective Rate: .
2. Real Estate Capital Gains
Section titled “2. Real Estate Capital Gains”This is where the difference is most dramatic, particularly regarding depreciation and holding periods.
For Individuals
Section titled “For Individuals”-
Rate: 19% Income Tax + 17.2% Social Charges (36.2% total).
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Allowances: The taxable base is reduced over time.
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Fully exempt from Income Tax after 22 years.
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Fully exempt from Social Charges after 30 years.
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Calculation: Selling Price - Purchase Price (plus some fixed costs).
For Companies (IS)
Section titled “For Companies (IS)”- Rate: Standard Corporate Tax of 25% (or 15% on the first €42,500 for small businesses).
- No Holding Period Allowance: You pay 25% whether you sold after 2 years or 50 years.
- The Depreciation Trap: Companies must add back the depreciation claimed during ownership to the capital gain.
- Formula: .
- Example: You buy for €500k, depreciate €200k over 10 years (Net Book Value = €300k). You sell for €600k. Your taxable gain is €300k, not €100k.
3. Comparison Summary Table
Section titled “3. Comparison Summary Table”| Feature | Individual (Personne Physique) | Company (Subject to IS) |
|---|---|---|
| Financial Rate | 30% (Flat Tax) | 25% (Standard) or ~0.75% (Subsidiaries) |
| Real Estate Rate | 36.2% | 25% |
| Holding Period Discount | Yes (0% after 30 years) | None |
| Depreciation Impact | None | High (increases taxable gain) |
| Social Charges | 17.2% (Included in Flat Tax) | None (Integrated into IS) |
Key Takeaway: Which is better?
Section titled “Key Takeaway: Which is better?”- Individuals are better for long-term real estate (buy and hold) because of the 30-year full exemption.
- Companies (IS) are often better for short-term trading or reinvesting profits into new assets, as the tax rate (25%) is lower than the individual top brackets, and dividends are only taxed when you actually pull money out of the company.
Note on SCI (Société Civile Immobilière): An SCI can choose to be taxed as an Individual (IR - transparent) or as a Company (IS). Most “family” SCIs choose the Individual (IR) regime to benefit from the 30-year exemption.
Would you like me to run a numerical simulation comparing a real estate sale through an SCI-IR (Individual) versus an SCI-IS (Company)?
📌 progressive tax
Section titled “📌 progressive tax”What are the tax brakets for french individual revenues ?
In France, the income tax (Impôt sur le Revenu) is a progressive tax. This means your income is divided into slices (brackets), and each slice is taxed at a higher rate as your income increases.
The brackets are updated annually by the Finance Act. Here are the rates for 2025 (based on income earned in 2024 and generally used as the basis for 2025 withholding tax):
1. The 2025 Tax Scale (for 1 “Part”)
Section titled “1. The 2025 Tax Scale (for 1 “Part”)”The following table shows the rates for a single person with no children (1 “part” of the family quotient).
| Fraction of Taxable Income (per “part”) | Tax Rate |
|---|---|
| Up to €11,294 | 0% |
| From €11,295 to €28,797 | 11% |
| From €28,798 to €82,341 | 30% |
| From €82,342 to €177,106 | 41% |
| Over €177,106 | 45% |
2. How the “Family Quotient” Works
Section titled “2. How the “Family Quotient” Works”French tax is not calculated on your total household income directly, but on your Net Taxable Income per Part. This is the “Family Quotient” (Quotient Familial).
- Single person: 1 part.
- Married/Civil Union (PACS): 2 parts.
- First two children: 0.5 part each.
- Third child and beyond: 1 part each.
The Calculation Formula:
Example: If a married couple with no children earns a total taxable income of €60,000, they have 2 parts. The tax is calculated on €30,000 (1 part). That €30,000 is taxed at 0% for the first bracket, 11% for the second, and 30% for the remainder. The result is then multiplied by 2.
3. Additional Taxes for High Earners (CEHR)
Section titled “3. Additional Taxes for High Earners (CEHR)”In addition to the standard brackets, there is a “Exceptional Contribution on High Incomes” (Contribution Exceptionnelle sur les Hauts Revenus). This applies to the portion of income exceeding certain thresholds:
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For a Single person:
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3% extra between €250,000 and €500,000.
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4% extra above €500,000.
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For a Couple:
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3% extra between €500,000 and €1,000,000.
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4% extra above €1,000,000.
4. Social Charges (CSG/CRDS)
Section titled “4. Social Charges (CSG/CRDS)”It is important to remember that the income tax scale above does not include Social Charges.
- On Salaries: Usually around 9.7% (partially deductible from taxable income).
- On Rental Income/Capital Gains: A flat 17.2%.
Summary Checklist
Section titled “Summary Checklist”- Net Taxable Income: This is usually about 10% lower than your gross salary (after the standard 10% professional expense deduction).
- Progressive Nature: Entering the 30% bracket does not mean all your income is taxed at 30%; only the portion above €28,798 is.
- Tax Credits: Many expenses (childcare, home services, donations) can reduce the final tax amount through credits (crédits d’impôt).
Would you like me to calculate an estimate of your total tax bill based on a specific income and family situation?