A general investment account in France is often known as a compte-titres, or a compte-titres ordinaire (CTO). They are mainly used to invest into collective investment funds and publicly traded shares and bonds.
What is the taxation of income and the capital gains?
The capital gains are taxed at a flat rate of 30% (17.2% social charges and 12.8% income tax), this flat-tax is known as the prélèvement forfaitaire unique (PFU).
However, it is possible to opt for your marginal tax rate if you prefer (normally, if it is lower). This may be particularly interesting if you acquired the investments before 2018 as you can obtain large tax reliefs depending upon the number of years that you hold the investment.
The income from the investments (interest or dividends), is taxed at the 30% PFU by default. However, there are some significant tax reliefs for dividend income, as explained below.
Low to medium income households can be exempted from the 12.8% income tax part of the 30% flat tax. This tax relief is limited to individuals who earn up to 50,000 euros per year, or couples who earn up to 75,000 euros per year. If you wish to benefit from this exemption, then you must request it before the 30th of November in the previous year. The tax year for individuals in France is from the 1st of January to the 31st of December.
During your tax return, which are generally submitted from April to June for all income received in the previous calendar year, you can also select an option for all of your investment income to be subjected to your marginal income tax rate, minus a 40% tax relief. You can also save 6.8% of the 17.2% social charges.
I have heard that France introduced a financial transactions tax, is this correct and does it apply to investments held within a compte-titres?
In France, a financial transactions tax was introduced on the 1st of August 2012. On the 1st of January 2017, it was increased from 0.2% to 0.3%. This is known as la taxe sur les transactions financières (TTF).
It is applied to the purchase of shares in companies who have their head office in France and who have a market capitalisation of more than one billion euros on the 1st of January of the year of the purchase. A list of the shares of companies that it applies to is published each year and for 2023 the list can be viewed here: https://bofip.impots.gouv.fr/bofip/9789-PGP.html/identifiant=BOI-ANNX-000467-20221221
There are, however, some investments which are explicitly exempt from the financial transactions tax, there are the following:
- The purchase of shares within an employee share savings plan
- The purchase of shares in the case of an increase in capital of the company
- Government bonds and corporate bonds, including convertible bonds
- Collective investment funds / mutual funds
- Trackers funds such as ETFs
- Derivatives such as options, futures, warrants and swaps (except for some credit default swaps).
What happens on death?
The investments within the account can be transferred to the beneficiaries or sold. The capital gains on transfer or sale due to a death are not subject to income tax and social charges but are added to the value of the estate for French inheritance tax purposes (droits de succession).
What kinds of investments are available?
The main kinds available in a French compte-titres are listed below:
- Shares
- Bonds
- Collective investment funds / mutual funds, known as organismes de placement collectif en valeurs mobilières (OPCVM) in France, of which there are two main types:
- Fonds commun de placement (FCP),
- Société d’investissement à capital variable (Sicav)
- Warrants,
- ETFs
What is the difference between an FCP and a SICAV?
There are very few differences between a Fonds common de placement (FCP) and a Société d’investissement à capital variable (Sicav). A Sicav has a corporate structure and the investors become shareholders within the open-ended investment fund. The shareholders are granted a right to vote during the general assemblies.
An investor of an FCP is known as an associate (associé) and does not receive a right to vote on the management of the fund. An FCP, like a Sicav, is an open-ended investment fund, which means that the value of the shares or units (parts) are based on the net asset value of the fund (NAV) divided by the number of shares or units, rather than the supply and demand for the individual shares, as is the case with a close-ended investment fund.
Useful links:
- https://www.amf-france.org/fr/espace-epargnants/comprendre-les-produits-financiers/supports-dinvestissement/compte-titres
- https://www.lafinancepourtous.com/decryptages/finance-perso/epargne-et-placement/deces-du-titulaire-de-valeurs-mobilieres/
- https://www.lafinancepourtous.com/decryptages/marches-financiers/fonctionnement-du-marche/taxe-sur-les-transactions-financieres/
- https://www.moneyvox.fr/bourse/compte-titres.php
The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. Additionally, the author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, this article is dated and is based on legislation as of the date. It should be noted that legislation changes, but articles are rarely updated. Sometimes a new article is written; so, please check for later articles. Additionally, check for changes in legislation on official government websites. Finally, this article should not be relied on in isolation.
