In France, investment income and capital gains are subject to taxation under distinct regimes. Investment income is taxed as revenus de capitaux mobiliers (investment income), while capital gains follow the gains nets de cession (net capital gains) regime.
Who must declare investment income and capital gains
Declaration is mandatory for individuals tax-resident in France who receive distributions of capital gains from FCPR (Fonds Commun de Placement à Risques), FPCI (Fonds Professionnel de Capital Investissement), or equivalent foreign entities, as well as investment income from OPCVM (Organisme de Placement Collectif en Valeurs Mobilières), FCP (Fonds Commun de Placement), FPI (Fonds de Placement Immobilier), and capital gains from the sale of movable assets realized within 1 year of acquisition.
Exempt from the declaration requirement are holders of carried interest from FCPR/FPCI and distributions from FCP with participation exceeding 10%.
Which income and capital gains to declare
Investment income
Gross investment income received must be declared, including dividends, interest, and other distributions from OPCVM, FCP, FPI, and other collective investment schemes, provided they are not reinvested. This income is classified as revenus de capitaux mobiliers and contributes to the calculation of global taxable income.
Capital gains on movable assets
Net capital gains from disposals must be declared if derived from the sale of units or shares in OPC (Organismes de Placement Collectif), FCPR, SCR (Sociétés de Capital-Risque), and other movable assets. Capital gains realized within 1 year of acquisition are taxed as income, while those realized after more than 1 year benefit from a preferential tax regime.
Required documents for exemptions
To qualify for exemptions on capital gain distributions from FCPR, FPCI, or SCR, it is necessary to retain and submit a certificate of commitment to hold and reinvest, as provided for under Articles 163 quinquies B and 163 quinquies C of the French Tax Code (CGI).
Uplift for unjustified income
Undisclosed or insufficiently justified investment income or capital gains are subject to an uplift for the purpose of determining taxable income. This uplift is governed by Article 111 of the CGI and applies in the event of an audit by the tax authorities.
International conventions
International tax treaties with Monaco and Switzerland provide specific rules for the taxation of investment income. For example, residents of Monaco who are tax-domiciled in France are not subject to withholding tax, while Swiss residents may benefit from reduced withholding tax rates on dividends and interest.
Errors, exceptions, and limits
Distributions of capital gains from funds must be made within 5 months of the end of the financial year. Exemptions are conditional on compliance with holding and reinvestment commitments. Additionally, capital gains on movable assets are taxed only if realized within 1 year; otherwise, they benefit from a preferential regime.