No capital gains tax on investments held at least 8 years - is it true?

[Gen-eva]

I was reading on a document from the french tax office that investments held by french citizens (as in shares, equities and the like) do not attract capital gains tax when they are disposed of, provided they are held continuously for at least 8 years. Is this true? As I understand it, dividends are subject to both social tax (around 12.1%) and you can elect one of two types of income tax regimes. But equities held for this long are free of capital gains tax. Would social tax still be due on the capital gain? It just strikes me as a massive loophole, when, everything else in france, is quite heavily taxed.

 

In the same vein, I have read that capital gains made on businesses sold are capital gains tax free (but not free of social taxes) if held for 5 years or more. Is this still the case?

[Sprogster]

My understanding is that the 8 year rule only applies to quoted shares on a recognised stock exchange. This was introduced in 2006 and the holding period is taken from 1 January 2006, so shares owned prior to that date need to be retained until 2014 before full exemption will apply. However, whether this generous allowance will survive until 2014 is a good question, especially with the likelihood of a socialist President in a few months.

It certainly makes investment in real estate, other than your primary residence, far less attractive for French residents with the new thirty year rule that applies to real estate and it will be interesting to see the impact in the longer term on the French property market.

[parsnips]

[quote user="Gen-eva"]

I was reading on a document from the french tax office that investments held by french citizens (as in shares, equities and the like) do not attract capital gains tax when they are disposed of, provided they are held continuously for at least 8 years. Is this true? As I understand it, dividends are subject to both social tax (around 12.1%) and you can elect one of two types of income tax regimes. But equities held for this long are free of capital gains tax. Would social tax still be due on the capital gain? It just strikes me as a massive loophole, when, everything else in france, is quite heavily taxed.

 

In the same vein, I have read that capital gains made on businesses sold are capital gains tax free (but not free of social taxes) if held for 5 years or more. Is this still the case?

[/quote]

Hi,

      This 8 year rule was to have taken effect as from this year but it has been annulled even before it took effect.  

There are some complex reliefs available when an individual ceases to run his business and sells the assets and goodwill, but this does not seem to amount to exemption  seehere;

www.ucm.be/ucm/ewcm.nsf/0/872D443E23DD2771C125726B0052D45B/$file/taxation-plus-values-cessation-UCM.pdf

and here;

www.ucm.be/ucm/ewcm.nsf/_/872D443E23DD2771C125726B0052D45B?opendocument

[idun]

I think that you should speak to a french accountant about all this sort of thing.What if you get bad advice on here? Advice that doesn't suit your requirements?

[Sunday Driver]

The two links posted above by parsnips relate to a Belgian business advice organisation so the information available there may not reflect the taxation position in France.

 

 

[pachapapa]

[quote user="Sunday Driver"]

The two links posted above by parsnips relate to a Belgian business advice organisation so the information available there may not reflect the taxation position in France.

 

 

[/quote]

I thought the www.*********.be/    looked doubtful.