TLDR: In France, capital losses incurred by individuals in the management of their private assets, due to the non-repayment of participatory loans (granted from 1 January 2016) or minibonds (subscribed from 1 January 2017), can be offset against certain investment income. The offset is subject to strict temporal conditions, caps, and exclusions.
Who can benefit from the offset?
The offset is reserved exclusively for individuals acting in the management of their private assets. It applies to capital losses resulting from the non-repayment of:
- participatory loans (remunerated or not) granted from 1 January 2016;
- minibonds subscribed from 1 January 2017.
Temporal scope
The offset is applied for the year in which the debt becomes definitively irrecoverable (as defined in Article 272 of the French General Tax Code - CGI) or for the following five years. For minibonds, this regime remains applicable to subscriptions made until 10 November 2023, despite the abolition of the minibond regime.
Offset rules
The offset is carried out in the comprehensive income tax return filed the year following the receipt of the relevant interest. It is exclusively applicable:
- for participatory loans granted in 2016: against interest generated by other participatory loans, with no annual cap and excluding minibonds;
- for participatory loans granted from 1 January 2017 and minibonds subscribed from that date: against interest generated by participatory loans or minibonds, subject to a global annual cap of €8,000.
The offsettable loss is not taken into account for determining the tax base of the mandatory withholding tax (Article 125 A of the CGI). Furthermore, the tax base for social contributions (collected at source or via tax assessment) is determined without considering the deductible loss retained for income tax purposes.
Income excluded from the offset
Capital losses cannot be offset against:
- distributed income referred to in Articles 108 and 109 of the CGI;
- capital gains referred to in 1 of I of Article 150-0 A of the CGI;
- global income.
Declarative obligations
In case of offset, the taxpayer must attach to their income tax return a note detailing, by year, the losses carried forward (Article 41 duodecies N of Annex III to the CGI).