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Home » Income from capital assets, Income from capital assets » Taxation of income from from capital assets received by individuals domicilied in France

Taxation of income from from capital assets received by individuals domicilied in France

This category covers income from variable-yield and fixed-income securities.
Income from variable-yield securities includes income from shares and similar income distributed by legal entities liable for corporation tax.
Income from fixed-income securities includes income from bonds and other negotiable debt securities and income from receivables, deposits, guarantees, shareholder advances, Treasury bills and short-term notes issued by public- or private-law legal entities.

Income from variable-yield securities (dividends and similar income)

In principle, income distributed by French or foreign companies liable to corporation tax or an equivalent tax and received by individuals is liable to personal income tax at a progressive rate, after deducting a 40% allowance and an annual fixed allowance. This income also gives entitlement to a tax credit equal to 50% of the amount of dividends received, capped according to the taxpayer’s family situation.
Since 1 January 2008, taxpayers have been able to opt for an 18% flat-rate withholding tax (excluding social levies) and thus avoid progressive taxation. The flat-rate withholding option is irrevocable and must be exercised:

• by the taxpayer at the latest on receipt of the income, where the payer is established in France, the payer paying the withholding at the latest in the first fifteen days of the month following the month in which the income is paid;

• where the payer is established outside France, by filing the declaration and paying the withholding in the first fifteen days of the month following the month in which the income is paid. These formalities are fulfilled by the taxpayer or the payer of the income, where it is established in a State party to the agreement on the European Economic Area (except Liechtenstein) and has been authorised by the taxpayer to that effect.

Taxpayers who opt for the withholding cannot apply the above-mentioned allowances and tax credit, including on other distributed income received during the same year which, if the withholding option has not been exercised, is liable to progressive rates of income tax.

Income from fixed-income securities (interest and similar income)

In principle, this income is included in the income tax base and therefore taxed at progressive rates.
However, where the income derives from French or European fixed-income securities and the payer is established in France or in a State party to the agreement on the European Economic Area (except Liechtenstein), the taxpayer may opt for a withholding, the rate of which varies according to the type of income (as a rule it is 18% excluding social levies).

The flat-rate withholding option is irrevocable and must be exercised:

• by the taxpayer at the latest on receipt of the income, where the payer is established in France, the payer paying the withholding at the latest in the first fifteen days of the month following the month in which the income is paid;

• where the payer is established outside France and in the EEA (except Liechtenstein), by filing the declaration and paying the withholding in the first fifteen days of the month following the month in which the income is paid. These formalities are fulfilled by the taxpayer or the payer of the income, where it has been authorised by the taxpayer to that effect.

Certain income is expressly exempted from income tax, especially for social reasons, such as interest on Livret A passbook accounts, popular savings accounts, youth savings accounts and sustainable development savings accounts.

The portion of accrued interest on housing savings accounts (PEL) booked to the account as of the date of the twelfth anniversary of the plan is taxed at progressive rates or, optionally, subject to the flat-rate withholding.

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Posted by on Aug 17 2010. Filed under Income from capital assets, Income from capital assets. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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