Capital gains tax - impôt sur les plus values - is a French tax payable on gains arising from the sale of land or properties. Capital gains are calculated as the difference between the sale price and the purchase price or the value that was reported when the property was received as a gift or by inheritance. Rules governing capital gains tax vary in accordance with the sale price, the nature of the asset, the country of residence of the seller and how long the asset has been held. Capital gains made on the sale of assets are exempt when the sale price is under €15,000. Sale of a principal residences are totally exempt, regardless of how long the property had been owned. Capital gains achieved on properties sold when the property has been owned for 30 years or more are also exempt. In other cases, the vendor is liable to pay tax and social security charges (CSG, CRSG) on the net capital gains.
To calculate the amount of net capital gains, Gross Capital Gains can be adjusted by the following factors:
Home improvement expenses (extension, double glazing, new kitchen etc) are deductible from the sale price as long as the vendor has kept invoices and proofs of payments and has not already deducted these expenses for other purposes. Alternatively, the vendor may use a flat rate deduction equal to 15% of the purchase price. To be eligible, the vendor must have owned the property for at least five years. Sale fees can also be deducted from the sale price. These may include the costs incurred to complete the mandatory certificates and surveys (eg Energy Performance Certificate) as well as the fees the fiscal representative may charge.
Fees including stamp duties, notary and agent fees which were incurred when buying the property can be added to the purchase price. By default a flat rate of 7.5% of the purchase price can be used.
This is effectively an allowance for the duration of ownership.
Taper relief for tax purposes:
6% for the sixth to the 21st year of ownership;
4% for the 22nd year
Taper relief for social charges purposes:
1.65% for the sixth to the 21st year
1.60 % for the 22nd year
9% for the 23rd to the 30th year
The exceptional relief allowance is not currently operating. It applied to sales compleped before 31 st August 2014.
Rates applied to Net Capital Gains vary by country of fiscal residence, and the amount of Net Capital Gains. For built properties, the tax rates are as follows
|Country of fiscal residence||Tax rate (1)|
|EU countries, Norway and Iceland||34.5% (19% + 15.5%)|
|All countries outside the European Economic area except “uncooperative” counties||48.83% (15.5% + 33.33%)|
|“uncooperative” countries||90.5% (75% + 15.5%)|
Additional taxes will also apply when net Capital Gains are greater than €50,000. Additional taxes payable are calculated as follows:
|Net Capital Gains||Tax amount|
|From €50,001 to €60,000||2% NCG –(60000 –NCG) x 1/20|
|From €60,001 to €100,000||2% NCG|
|From €100,001 to €110,000||3% NCG –(110000 –NCG) x 1/10|
|From €110,001 to €150,000||3% NCG|
|From €150,001 to €160,000||4% NCG –(160000 –NCG) x 15/100|
|From €160,001 to €200,000||4% NCG|
|From €200,001to €210,000||5% NCG –(210000 –NCG) x 20/100|
|From €210,001to €250,000||5% NCG|
|From €250,001to €260,000||6% NCG –(260000 –NCG) x 25/100|
|Greater than €260,000||6% NCG|
James and Julie who reside in Belgium bought a second home in France 16 years ago for €100,000. They have made significant improvements to the house but have not kept all invoices. They achieve a sale price of €300,000 in June 2014 and incur expenses of €2,000 to market the house.
Gross Capital Gains: (€300,000 -€2,000) -(€100,000+€7,500) -€15,000 = €175,500
|Tax calculation :|
|Taper relief (@ 66%):||€115,830|
|Exceptional temporary relief (@ 25%):||€0|
|Tax due: 19% X (€175,500 - €115,830 )||€11,337|
|Social charges calculation:|
|Exceptional temporary relief allowance:||€0|
|Social charges due: 15.5% X (€175,500 - €31,853):||€22,265|