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Capital gains tax (CGT) in France applies to profits from the sale of assets: shares, bonds, property, collectibles. The tax rate and calculation differ depending on the asset type and holding period.
CGT is charged in the year you realise the gain (sell the asset). Unrealised gains (assets you own but have not sold) are not taxed annually in France (unlike some countries with wealth taxes).
However, France does have a wealth tax (IFI) on net taxable assets exceeding €1.3 million (covered in Article #52), which is separate from CGT.
[Securities (Shares, Bonds, Funds) - Flat tax (PFU) of 30% - Or progressive tax, if beneficial - Calculated on net gains (gains minus losses)](http://Assurance-Vie vs Offshore Bond in France: Which Investment Wrapper Saves British Expats More?)
Property (Real Estate) - 19% income tax + 17.2% social charges = 36.2% base rate - Reduced by taper relief (6% per year after 6th year of ownership) - Further reduced after 22 years (income tax exemption) - Principal residence: 100% exempt
If you sell multiple assets in the same year, you can net gains against losses for both securities and property (with some limitations). For example: - Sell shares with €5,000 gain - Sell shares with €2,000 loss - Net gain: €3,000 - Tax: 30% × €3,000 = €900
If losses exceed gains in a year, you can carry forward the loss to the next year (indefinitely, until used).
A 'security' in France includes shares, bonds, mutual funds, and investment funds. When you sell a security at a profit, the gain is subject to the Prélèvement Forfaitaire Unique (Flat-Rate Withholding Tax).
The PFU of 30% is composed of: - 12.8%: Income tax (prélèvement forfaitaire) - 17.2%: Social charges (contributions sociales)
This is the default treatment. When you sell shares with a gain, 30% is typically withheld and remitted to the tax authority.
You purchase £10,000 of UK shares in 2020 and sell them in 2025 for £15,000. - Acquisition cost: £10,000 (€11,700 at 2020 exchange rates) - Sale proceeds: £15,000 (€17,550 at 2025 exchange rates) - Gross gain: €5,850 - CGT at 30%: €1,755 - Net proceeds: €15,795
Note: The exchange rate at the date of purchase and sale affects the calculation (gains are measured in euros in France).
You can opt out of the 30% flat tax and instead pay progressive income tax on the gain, if it results in lower overall tax.
French progressive income tax on capital gains is: - 11% (€0-€44,738 taxable income) - 30% (€44,739-€153,270) - 41% (€153,271-€276,816) - 45% (over €276,816)
Plus social charges of 17.2%.
So, if your total income (including the gain) falls within the 11% bracket, total tax is 11% + 17.2% = 28.2%-better than 30%.
If you: - Have modest income (below €44,738) - Realise a capital gain - Total income (including gain) remains below €44,738
Then 28.2% (progressive + social charges) is better than 30% (flat tax + social charges).
You must elect to use the progressive option on your tax return; it does not apply automatically.
A retired expat has: - UK pension: €15,000 - French investment fund gain: €10,000 - Total income: €25,000
Option 1: Default 30% Flat Tax - Tax on gain: 30% × €10,000 = €3,000 - Total net income: €22,000
Option 2: Progressive Tax - Income tax on €25,000 total: 11% × €25,000 (all in 11% bracket) = €2,750 - Social charges on gain: 17.2% × €10,000 = €1,720 - Total tax: €4,470 - Total net income: €20,530
Option 1 is better: €3,000 < €4,470.
So the flat tax option is usually preferable unless you have very modest income and small gains.
Netting Gains and Losses
You can offset gains against losses in the same tax year. If you: - Sell shares with €5,000 gain - Sell shares with €2,000 loss - Net gain: €3,000 - Tax: 30% × €3,000 = €900
If losses exceed gains, the loss carries forward to future years (indefinitely).
Holding Period: No Advantage for Securities
Unlike property, there is no taper relief or holding period advantage for securities. Whether you hold shares for 1 year or 30 years, the CGT is the same 30% (or progressive rate, if elected).
This is a key difference from UK CGT (which has annual exemptions and rates based on income level).
For British expats, a peculiarity arises: gains on UK shares held while in France are measured in euros. When you sell UK shares purchased in pounds, the gain reflects both the investment performance and the currency movement between pounds and euros.
Example: - Buy 1,000 GBP shares at £10 each = £10,000 (€11,700 at purchase, GBP/EUR 1.17) - Sell at £11 each = £11,000 (€12,320 at sale, GBP/EUR 1.12) - Investment gain: £1,000 (10%) - Currency loss: €100 (EUR appreciated, GBP weakened) - Net gain in euros: €620 - French CGT: 30% × €620 = €186
Currency losses can offset currency gains on securities held during the same year.
Property capital gains tax in France is significantly higher than securities but benefits from substantial taper relief for holding periods.
When you sell a property (other than your principal residence) at a profit, the gain is subject to: - 19%: Income tax (impôt sur le revenu) - 17.2%: Social charges (contributions sociales) - Total: 36.2%
You purchase a villa in the Dordogne for €200,000 in 2021 and sell it in 2025 for €250,000. - Acquisition cost: €200,000 - Sale price: €250,000 - Gross gain: €50,000 - CGT at 36.2%: €18,100 - Net proceeds: €231,900
This is before any estate agent fees or conveyancing costs (notaire fees, which are paid from the sale price).
The critical feature of French property CGT is taper relief based on the number of years you have owned the property.
Income Tax Taper (19% base)
| Years Owned | Income Tax Rate | Remaining Rate After Relief | 0-5 years | 19% | 19% | 6 years | 19% | 19% (6% relief starts year 7) | 7 years | 19% - 6% = 13% | 8 years | 19% - 12% = 7% | 9-22 years | 19% - 18% = 1% | 22+ years | 0% (fully exempt) |
The 17.2% social charges also reduce after 6 years of ownership (with a different taper), but the key relief is the income tax reduction.
Social charges reduce by 5.8% per year after 6 years:
| Years Owned | Social Charges Rate | |---|---| | 0-5 years | 17.2% | | 6-29 years | Reduces by 5.8% per year | | 30+ years | 0% (fully exempt) |
| Years Owned | Income Tax | Social Charges | Total CGT | 0-5 years | 19% | 17.2% | 36.2% | 6 years | 19% | 17.2% | 36.2% | 7 years | 13% | 16.2% | 29.2% | 8 years | 7% | 10.4% | 17.4% | 9-21 years | 1% | 0.6% | 1.6% | 22+ years | 0% | 0.6% | 0.6% |
A British expat purchases a property in Provence for €300,000 and sells it 15 years later for €450,000.
Tax Calculation - Years 0-5 (first 5 years): no relief - Years 6-14 (years 6-14): 6% relief per year = 54% relief by year 14 - Year 15: approximately 60% relief
Approximate effective CGT rate at 15 years: ~15% (compared to 36.2% at 5 years) - Tax due: 15% × €150,000 = €22,500 - Net proceeds: €427,500 (before notaire fees, estate agent fees)
Comparison: If Sold at Year 5 - Tax due: 36.2% × €150,000 = €54,300 - Net proceeds: €395,700 - Difference: €32,000 more if held for 15 years
This is why timing property sales is critical tax planning for expats.
Your principal residence (résidence principale-your main home where you live) is completely exempt from property CGT. There is no time requirement; even if you sell after 1 year, CGT does not apply.
For this exemption to apply: - The property must be your principal residence at the time of sale - You must live there as your main home - Only one property per household can qualify
A retired expat purchases a flat in Lyon for €250,000, lives there as their main home for 3 years, and sells for €320,000.
This is a massive advantage. Many expats underestimate the importance of this exemption.
Secondary Homes and Holiday Property: No Exemption
If you own a second property (holiday villa, investment property), no exemption applies. Full CGT (36.2% base, reduced by taper relief) is due.
Strategic Designation: Which Property Should Be Principal Residence?
For couples or expats with multiple properties, the choice of which property is the principal residence is important. If you own: - Primary home in Paris (estimated gain on sale: €100,000) - Holiday property in Provence (estimated gain on sale: €50,000)
Designate the Paris property as your principal residence (exemption saves 36.2% × €100,000 = €36,200). The Provence property will incur CGT, but at a lower holding value.
Alternatively, if you plan to sell the Provence property soon and hold the Paris property long-term, it might make sense to designate Provence as principal residence temporarily, then switch back (though switching carries its own complications).
When you inherit a property, your base cost is the market value at the date of death, not the deceased's original purchase price. This 'step-up' eliminates any gain that accrued during the previous owner's lifetime.
Example: - Deceased purchased property for €100,000 in 1990 - Market value at death in 2025: €500,000 - You inherit it - Your base cost: €500,000 (not €100,000) - If you sell immediately: no gain, no CGT - If you sell later for €550,000: only €50,000 gain, subject to CGT
This is a material tax benefit of inheritance and explains why inherited property is often immediately sold without tax consequences.
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French property CGT (called 'plus-values immobilières' or property gains) has specific technical rules.
Gain = Sale price minus acquisition cost minus deductible expenses.
Deductible Acquisition Costs - Original purchase price - Notaire fees paid at purchase - Professional fees (surveyor, lawyer) - Capital improvement costs (major renovations, structural repairs)
Non-Deductible Costs - General maintenance and repairs - Furnishings and decorations - Mortgage interest (deductible for rental property income, not CGT)
Deductible Sale Costs - Estate agent fees - Notaire fees at sale - Legal fees - Cleaning and repairs to facilitate sale
Example: Calculating Net Gain
Allocation of Fees
In practice, 'gain' is often calculated as sale price minus original purchase price, and then fees are deducted separately. The result is the same.
Transfer Taxes (Droits de Mutation)
French property sales include droits de mutation (transfer taxes, also called 'stamp duty'). These are typically 7-8% of the purchase price and are collected by the notaire.
These are not CGT but are a separate cost of property transfer. For the buyer, these increase the acquisition cost basis; for the seller, they reduce net proceeds.
Non-Resident Selling French Property
If you sell French property but are no longer a French tax resident, you are still subject to French CGT on the gain. Non-residents are taxed by France on French-source income (including property gains).
However, if you are a UK tax resident, you may also be subject to UK CGT. The UK-France DTA prevents double taxation (covered below).
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When you sell an asset (property or securities) and are subject to both UK and French tax, the UK-France Double Taxation Convention (DTA) prevents you from paying full tax in both countries.
The treaty allocates taxing rights between the two countries: - Property: France has the primary right to tax gains on French property - Securities: Generally, both countries can tax, but treaty reliefs apply
Example: Selling French Property
A British expat sells a villa in France for €400,000 (gain €100,000). They are: - French tax resident (subject to French tax on worldwide income) - UK citizen (potentially subject to UK CGT if treated as UK resident)
French Tax: €36,200 (36.2% on €100,000 gain) UK Tax: Potentially €20,000 (20% UK CGT on €100,000 gain, if UK resident)
With treaty relief: - France taxes the gain (primary right to French property) - UK allows a foreign tax credit: tax credit = UK tax on the gain = €20,000 - If French tax (€36,200) exceeds the credit (€20,000), the expat pays the difference (€16,200) - Total tax: €36,200 (French rate governs)
The treaty ensures the expat pays the higher rate (French 36.2%) but does not pay both countries' full tax.
Example: Selling UK Property
A British expat resident in France sells a UK flat for £300,000 (gain £50,000). They are subject to both UK and French tax.
UK Tax: £10,000 (20% CGT on £50,000 gain) French Tax: On worldwide income (France taxes the converted-to-euro gain)
With treaty relief: - UK taxes the gain (UK property is UK-source income) - France allows a foreign tax credit for UK tax paid - If French tax is lower, the expat pays the difference; if higher, they pay the difference
The treaty prevents paying both in full.
Filing Requirements
You must declare the gain in both countries: - UK: Include in your Self-Assessment return or notify HMRC of the gain - France: Include in your annual tax return (déclaration de revenus) - Claim treaty relief on the French return (via foreign tax credit)
Your French tax adviser should handle this; UK expat solicitors or accountants should ensure treaty relief is claimed correctly.
If you are a UK non-resident (having moved to France), you may not be subject to UK CGT on gains realised while non-resident. However, the rules are complex (depending on residence status, asset type, previous UK residency history).
Consult a UK tax adviser before selling significant assets to confirm whether UK CGT applies.
For British expats with substantial investments or property, strategic timing of asset sales can materially reduce CGT exposure.
1. Identify Taper Milestones
Property held: - 0-5 years: 36.2% CGT (full rate) - 6-7 years: 30%+ CGT (modest relief) - 8-9 years: 20%+ CGT (moderate relief) - 15+ years: 2-5% CGT (substantial relief) - 22+ years: <1% CGT (social charges only)
If you hold a property with a significant anticipated gain, timing the sale to hit the 15-year or 22-year mark can save 30-35% of the gain in tax.
Example: Property with anticipated €200,000 gain - Sell at year 6: CGT €72,400 - Sell at year 15: CGT €3,000-€5,000 - Saving: €67,000+
For retirees, delaying the sale by several years (if feasible) can be a material tax saving.
2. Principal Residence Strategy
Ensure your main home is designated as your principal residence (résidence principale). This exemption saves 36.2% of the gain, regardless of holding period.
If you own multiple properties and plan to sell one, consider: - Which property should be principal residence? - When would you want to change the designation (e.g., if you move house)? - Documentation: ensure proof of principal residence status (utility bills, voter registration, family presence)
3. Timing for Spouses
For couples, consider who should hold the property (if separate ownership) or whether to sell as joint owners.
Each spouse has their own CGT liability. If one spouse has already used significant investment losses to offset other gains, they might be the better owner of a property with anticipated gains (to utilize the loss carryforward).
1. Bunching Losses
If you have accumulated investment losses, you can realise gains in a year with losses to net them off (tax-free).
Example: - Losses carried forward: €50,000 - Planned gain from sale: €40,000 - Net: losses exceed gains, no tax due
2. Progressive vs Flat Tax Election
Review whether the progressive tax rate (11-45% + 17.2% social charges) or the 30% flat tax is better for your situation. If your income is modest, the progressive option might be better.
3. Currency Hedging
For UK expats selling UK shares (denominated in pounds), currency exchange rates at the time of sale affect the gain measured in euros. Consider whether to hedge currency exposure before selling large amounts of GBP-denominated investments.
4. Timing Around Income
CGT is subject to progressive rates if you elect the progressive option. Consider whether realising a gain in a year of low other income reduces your overall tax rate.
If you have a large portfolio to liquidate (e.g., investment portfolio being converted to living expenses in retirement), consider: - Spreading sales over multiple years (if market risk is acceptable) to manage the tax burden - Harvesting losses in years with gains - Timing sales to avoid pushing into higher tax brackets
Consult a tax adviser before embarking on large disposals.
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Many British expats assume their investment portfolio grows tax-free while held (like in an ISA). In France, when you sell securities at a gain, 30% is immediately due. Expats who have not budgeted for this are shocked when they sell investments for retirement.
Fix: Understand that 30% CGT is due upon sale, not upon receipt of income. Budget for this by retaining 30% of proceeds.
Some expats sell a property after 5-10 years, paying full or near-full CGT, not realising that holding another 5-10 years would save massive amounts in tax.
Fix: Before selling property, calculate the CGT at different holding periods (5, 7, 10, 15, 22 years). If the gain is large, the saving from taper relief may justify delaying the sale.
Some expats with multiple properties do not clearly designate one as their principal residence, leading to dispute with the tax authority and loss of exemption.
Fix: Maintain documentation (utility bills, voter registration, lease agreement, family presence evidence) proving which property is your main home. Update the designation if you move house.
Some expats pay UK CGT on asset sales but do not claim the foreign tax credit in France, resulting in double taxation.
Fix: On your French tax return, declare the UK tax paid and claim the foreign tax credit. Ensure your French tax adviser does this.
Some expats calculate gain as simply sale price minus original purchase price, not including notaire fees and improvement costs. This overstates the gain and the CGT.
Fix: Retain all documentation of acquisition costs (purchase deed, notaire invoice, renovation invoices). Calculate the gain correctly as sale price minus net acquisition cost (including fees).
If selling multiple properties, some expats do not coordinate the timing and designations, resulting in excess CGT and wasted exemptions.
Fix: Plan which property will be principal residence, when each will be sold, and what the combined CGT liability will be. Use taper relief timing strategically.
An expat with a property held 15 years and €100,000 gain sells without realising that holding 7 more years (to year 22) would reduce CGT from ~€2,000 to <€600.
Fix: For property with significant gains, always calculate the tax at the 22-year mark and consider whether delaying the sale is worthwhile.
Capital gains tax in France is material-30% on securities, 36.2% on property (before taper relief). For expats with investments or property, strategic planning around timing, asset location, and principal residence designation can save tens of thousands of euros.
Securities: The 30% flat tax is nearly impossible to avoid unless you have very modest income (in which case the progressive option might be slightly better). Focus on tax-efficient investing (buy-and-hold, minimise trading) to reduce the frequency of realised gains.
Property: Taper relief is a game-changer. Property held 15+ years incurs minimal CGT. For expats planning retirement property sales, understanding and timing to hit taper milestones is critical planning.
Principal Residence: 100% exemption on your main home saves 36.2% of gains. Ensure proper designation and documentation.
Double Taxation: The UK-France DTA prevents paying both countries' full tax. Ensure foreign tax credit is claimed on French returns.
Consult a French accountant or tax adviser familiar with British expat issues before making large asset sales. The cost of professional advice is minimal compared to the tax saving from proper planning.
Carla Smart is a Chartered Financial Planner with over 15 years’ experience helping internationally mobile clients secure their financial futures. Her career spans three continents and multiple international markets, giving her a practical understanding of how complex financial systems intersect across borders.
This article is educational only and not tax advice. CGT rules depend on asset type, holding period, residency status, and personal circumstances. Rates and reliefs change regularly. Obtain professional tax advice from a French accountant before making asset sales or retirement planning decisions. UK-France DTA interpretation requires specialist advice.
French property CGT drops dramatically with holding period. A property gain of €100,000 costs €36,200 if sold after 5 years, but only €21,800 if sold after 15 years (43% saving). After 22 years, only social charges apply (18.6%), saving another 50%. For long-term investors, timing the sale to hit taper milestones (6, 15, 22 years) is material tax planning.
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Capital gains tax can consume 30-36% of investment returns. Our advisers review your asset location, holding periods, and exit timing to minimise the tax burden when you sell.
