The article discusses the taxation of investment income in France. Income from investments such as dividends, interests, and returns from insurance policies have a 30% withholding tax. This includes 12.8% for income tax and 17.2% for social security contributions. If one opts for the flat tax rate (PFU) instead of the progressive income tax rate, this taxation becomes final, meaning there is no additional tax to pay on investment income. The article also mentions that for capital gains from the sale of securities, the same tax rates apply, but no withholding tax is deducted at the time of sale.
To calculate the taxable amount for capital gains from securities, individuals must offset gains with losses incurred in the same year. Any net gain can then be reduced by losses accumulated over the past ten years. If there is a positive result from this calculation, it will be subject to the flat tax rate and must be paid the following September. On the other hand, if there is a negative result, the losses can be carried forward for ten years. It is important to indicate this on the tax return.
There is an option to opt out of the flat tax rate and choose the progressive income tax rate for investment income and capital gains. This choice applies to all income subject to the flat tax, including dividends, interests, and returns from insurance policies, as well as capital gains. Individuals can make this choice by ticking a box on their tax return form. If they do not choose this option when it is more beneficial for them, they will be prompted to reconsider.
Overall, the article provides a guide on how investment income and capital gains are taxed in France, including the difference between the flat tax rate and the progressive income tax rate. It highlights the importance of offsetting gains with losses and carrying losses forward, as well as the option to choose the tax rate that best suits one’s financial situation. The article also emphasizes the need for careful consideration and proper reporting on tax returns to optimize tax efficiency.
