FRANCE Law and Practice Contributed by: Anthony Roustan and Cédric Dubucq, Bruzzo Dubucq
ing on the duration of ownership of the company. This deduction is only applicable for shares acquired before 2018. Social contributions at the rate of 18.6% are appli - cable in both cases, and are calculated on the gross base before any deduction for duration of ownership. Non-residents are only subject to capital gains on shares if: • the underlying company’s assets are composed of more than 50% of French real estate property; or • the taxpayer owns more than 25% of the share capital in the underlying company. The tax rate for non-residents is 12.8% without social contributions. If the company’s assets are composed of more than 50% French real estate property, the capital gain is taxed as a real estate capital gain (19% and social Capital gains on French property are taxed at 19%. An additional progressive tax between 2% and 6% might be applicable on gains exceeding EUR50,000. Capital gains are also subject to social contributions at the rate of 17.2% (7.5% for individuals affiliated with another EU/Switzerland social security system). The tax base is equal to the difference between the selling price and the price of acquisition. If amorti - sation and depreciation have been deducted from income tax (furnished property), they are deducted from the acquisition price and thus increase the capi - tal gain. The acquisition fees and the work that have not been deducted from income tax can increase the price of acquisition for the calculation of the capital gain. The net capital gain can benefit from a deduction depending on the duration of ownership of the prop - erty. Capital gain is fully exempt from income tax after 22 years and from social contributions after 30 years. contributions at the rate of 17.2%). Capital gains on real estate property
Capital gain exemptions exist – in particular for the main residence of the taxpayer, which is exempted from capital gains tax. Non-residents from a country outside the EU must appoint a tax representative to report their capital gains tax. The tax representative is jointly liable for the payment of the tax with the taxpayer. Other capital gains Other capital gains (eg, jewellery, cars, art, etc) are only taxed if the selling price exceeds EUR5,000. The tax base benefits from a deduction of 5% per year of ownership after the second year, leading to a total exemption after 22 years. The tax rate is 19%, and the capital gains are also subject to social contributions at the rate of 18.6%. Corporate Participation Exemption Employment income is taxed at progressive rates with a 10% standard allowance on the tax base for pro - fessional expenses. Cross-border situations generally follow the OECD Model’s employment income article (Article 15), with specific frontier worker provisions in certain treaties – notably those with Germany and Belgium. Inbound Expatriate Regime France’s inbound expatriate regime provides partial exemption on the expatriation premium and foreign- source passive income for up to eight years. This applies to employees who were not previously French tax residents, and represents a significant incentive for attracting international talent. Remote Working Remote working raises specific cross-border issues. Bilateral agreements with Belgium, Germany, Luxem - bourg and Switzerland address the allocation of taxing rights for cross-border teleworkers. For employers, a home office used by an employee may constitute a permanent establishment under the relevant treaty. See 3.2 Business Profits . 3.5 Employment Income General Framework
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