Imagine it: you've just sold your apartment in Paris
and now have millions of Euros in your bank account. You're excited about how you'll spend it all but, before you can, the government is asking for some tax. More specifically, your capital gains tax. When you sell property in France, you're going to have to pay the country's capital gains tax too. It's not just an obligation, but a requirement too. But how much do you have to pay for your French capital gains tax? How will you even know your tax rate for this? Well, this post will answer all your questions and more!
What Does it Mean?
You've probably heard about capital gains tax before, right? It's among the most important types of taxes
out here and most countries have it. Here in France, it's called impôt sur les plus values
and it's a tax that's payable on the sale of land, property, shares, and other assets. In fact, these three things make up the three different kinds of capital gains tax in France. For lands and buildings, there's Impôt sur les plus values immobilières
. For personal property, there's mpôt sur les plus-values biens meublés
. And for shares, there's Impôt sur les plus-values mobilières
Who is Taxable for Capital Gains Tax?
Now, you're probably wondering who has to pay the capital gains tax in France, particularly when it comes to property, right? Well, according to French-Property.com
, both individuals and companies have to pay the capital gains tax. But there are, however, different rules to each of them. For individual persons, for instance, any transfer or sale of real estate in France they make is liable to capital gains tax, even when the transaction is made via life annuity. So as long as you profit from selling your property in France, you'll need to pay the capital gains tax.
What are Your Taxable Properties in France?
It's important to note that not all of your properties in France are taxable for the capital gains tax. Your main home, for instance, is exempt from this tax. Let's say you moved to Paris
and are now living in, a luxury apartment here. Since it's your place of residence, you don't have to pay capital gains tax on it. However, the moment you move out and you sell it to another person, then you'll have to pay the capital gains tax. Moreover, any second home you own within the country is also liable for this tax.
What is The Basic Rate for France's Capital Gains Tax?
If you're a resident of France, your applicable capital gains tax rate is 36.2%. This is how much of the profit you earned from your property sale that you need to pay to the French government. You may be confused since others will tell you that the standard tax rate for capital gains tax is 19%. As of this writing, this is true. But there are also the social charges you need to pay too, which can commonly amount to 17.9%. Hence, what you pay is 36.2% all in all.
Is There Supplementary Tax?
You'll need to be careful about possible progressive surcharges on your capital gains tax too. Or, as what many would call it, supplementary taxes. Depending on the size of your additional gains, the applicable tax rates range from 2% to 6%. It's 2% when your gains are between €50,000.00 to €100,000.00. 3% for when it's between €100,000.00 to €150,000.00. It's 4% when it's between €150,000.00 to €260,000.00. 5% when it's between €200,000.00 to €260,000.00. And any gains above €250,000.00 would be 6%.
When Do You Pay The Capital Gains Tax?
It's easy to get confused as to when you have to pay the capital gains tax in France. But the truth of the matter is it's already part of the sale process. When you sell your property in France and you earn the money from the buyer, the tax is already applied right then and there. In fact, it's likely already deducted from the total sales price before you get your check. Your notary in France
will handle it so you don't have to worry about it all that much.
Who are Exempted From The Capital Gains Tax?
As already mentioned, there are some properties that are exempted from the capital gains tax in France. Moreover, there are also some people, depending on their age, residency status, and the like, that are also exempted from this tax. Senior citizens who are already receiving their pension are exempted from France's capital gains tax, especially if they didn't have any wealth tax liabilities before or within the time of the sale. Former France and EU residents who left the continent five years within the time of the sale are also exempted. And if you didn't have a main home in France and decided to invest money into a new one (buying new property
) during the time of the sale, you're exempted too!
If you want to sell your property in France, know that you will have to pay the country's capital gains tax. But before you do, you ought to know more about it. Only then can you pay it properly and not get in trouble with the law!