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Tax on dividends
A share dividend is taxable as income from securities. It must therefore be included in your tax return. There is a tax deduction on income from shares of 1,220 euros for a single person of 2,440 euros for a married couple filing a joint return.
Tax credit
A tax credit is granted to shareholders receiving a dividend distributed by share capital companies with their headquarters in France. For individual shareholders, the tax credit is 50% of the dividend. Effective January 1st 2005, the tax credit system will be phased out. It will be replaced by a 50% deduction of the dividend received, and by an income tax credit of a maximum of 115 euros for a single tax payer and 230 euros for a couple. The tax deduction of 1,220 euros for a single person and 2,440 euros for a couple will remain unchanged.
Stock market tax and VAT
The stock market tax is deducted directly from your share buy and sell transactions. It is 0.3% of the gross amount of the operation and only applies to transactions above 7,668 euros. Above 153,000 euros, the tax is 0.15% VAT of 19.6% is levied on brokerage fees on market operations invoiced to you by your financial institution.
Capital gains tax on sales
Capital gains on sales (difference between the sell price, less expenses and taxes, and the buy price), when in excess of 15,000 euros, are taxed at a special annual rate of 26% since January 1st 1998. In the event of a loss, the amount can, at the shareholder’s request to the tax authorities, be deducted from capital gains of the same kind for the current year or the ensuing five years. To benefit from this measure, the sale of the shares must exceed the tax threshold.
The case of a PEA
Shares held in a PEA-share-savings plan are not taken into account when calculating the tax threshold for capital gains. The dividend paid on shares held in a PEA for five years are not subject to income tax, providing they remain in the account for the prescribed period. The PEA can therefore be used to manage a portfolio of French shares without paying any tax, providing no withdrawal is made in the five years. PEA accounts are limited to 132,000 euros for a single person and twice that amount for a married couple. |
