News - France

France - March 2014

France amends (again) the tax regime of capital gains derived from the sale of shares

The Finance Bill for 2014 creates a new tax regime for capital gains on the sale of shares, replacing the rules set forth by the Finance Bill for 2013, which therefore never actually applied.

Capital gains resulting from the sale of shares are now subject to personal income tax at progressive rates up to 45% (until now, the applicable rate was 19%), but the taxable base may be reduced by an amount calculated by reference to the  length of the holding period.

Two types of rebates

Where shares have been held for a minimum of 2 years, 50% of the gain is removed from charge to tax and where shares have been held for between 2 and 8 years 65% of the gain is removed from charge to tax.  This treatment applies to all types of shares. This rebate also applies to the sale of shares in collective investment vehicles where at least 75% of the vehicle’s portfolio is made up of companies’ shares.

Capital gains derived from the sale of shares in small and medium sized enterprises (“SME”), where the SME was less than 10 years old at the date of purchase of the shares), benefit from a specific relief as follows

  • 50% of the gain is not taxable  if the shares were held between one year and four years
  • 65% of the gain is not taxable  if the shares were held between four years and eight years
  • 85% of the gain is not taxable  if the shares were held for eight years or longer

Special relief also applies in case of the sale of such shares by “SME” managers upon retirement.

Social security contributions

The above rebates only apply for the calculation of personal income tax. Social security contributions remain due at the global rate of 15.5% on the whole capital gain.

For further information or to discuss any of the issues raised, please contact Stéphanie Le Men-Tenailleau on +33 1 42 56 38 45 at Lexcom Avocats -


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