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Capital gains tax in France applies to profits from the sale of assets: shares, bonds, property, collectibles. The tax rate and calculation differ sharply depending on the asset type and how long you have owned it.
Key Principle: When CGT Applies
CGT is charged in the year you realise the gain-that is, when you sell the asset. Unrealised gains on assets you own but have not sold are not taxed annually in France (unlike some countries with wealth taxes or annual asset valuations).
However, France does have a wealth tax called the IFI (Impôt sur la Fortune Immobilière) on net taxable real estate exceeding €1.3 million. This is separate from CGT and applies regardless of whether you sell anything.
Two Types of Assets, Two Completely Different Rates
Securities (Shares, Bonds, Funds) - Flat tax (PFU) of 31.4% - Or optional progressive tax, if your income is modest and this results in lower overall tax - Calculated on net gains (gains minus losses in the same year)
Property (Real Estate) - 19% income tax plus 18.6% social charges = 37.6% base rate (from 1 January 2026) - Reduced by taper relief (6% per year after the 6th year of ownership) - Further reduced after 22 years of ownership (income tax portion exempted entirely) - Principal residence: 100% exempt from CGT
Gains vs Losses: Netting and Offset Rules
Securities losses can be offset against securities gains in the same year. Real estate losses, however, generally cannot be offset against securities gains--the two CGT regimes are separate. Real estate losses may be carried forward against future real estate gains within the same household over a 10-year period, subject to specific conditions set by the French tax administration. For example:
Securities offset (permitted): - Sell shares with a €5,000 gain - Sell other shares with a €2,000 loss - Net gain: €3,000 - Tax: 31.4% × €3,000 = €942
Real estate offset (separate regime): - Realise €20,000 real estate loss in year 1 - Realise €15,000 real estate gain in year 2 - Can carry forward €5,000 loss to future real estate sales
If losses exceed gains in a year, the unused loss may be carried forward to future years within the same regime, subject to specific time limits. Real estate losses can typically be carried forward for up to 10 years against future real estate gains within the same household. Securities losses can be carried forward for up to 10 years against future securities gains. Specialist French tax advice should be sought before relying on any loss-relief planning.
A 'security' in French tax law 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 (PFU), or flat-rate withholding tax.
The Default: 31.4% Flat Tax Composition (as of 1 January 2026)
The PFU of 31.4% is composed of (as of 1 January 2026): - 12.8%: Prélèvement forfaitaire (income tax component) - 18.6%: Contributions sociales (CSG 10.6%, CRDS 0.5%, prélèvement de solidarité 7.5%) (social charges: CSG 9.2%, CRDS 0.5%, plus solidarity contributions 7.5%)
This is the default treatment for all residents selling securities in France. When you sell shares with a gain, 31.4% is typically withheld and remitted to the tax authority.
Real Example: Selling UK Shares
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 in euros: €5,850 - CGT at 31.4%: €1,839 - Net proceeds to you: €15,711
Note: The exchange rate at the date of purchase and sale affects the calculation. Gains are measured in euros in France, so currency movements on GBP-denominated assets create additional gains or losses.
Optional: Progressive Tax Instead of 31.4%
You can elect to pay progressive income tax instead of the 31.4% flat tax, if it results in a lower overall tax bill. 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 18.6% social charges (always applied, updated 1 January 2026).
So, if your total income (including the capital gain) falls within the 11% bracket, total tax is 11% + 18.6% = 29.6%-better than the flat 31.4%. You must elect this on your annual tax return; it does not apply automatically.
When the Progressive Option Helps
The progressive option is beneficial only for expats with modest income. If you: - Have total income (from all sources) below €44,738 per year - Realise a capital gain - Total income (including the gain) remains below €44,738
Then 29.6% (progressive tax plus social charges) is better than 31.4% (flat tax plus social charges).
Real Example: Retired Expat with Modest Income
A retired British expat in France has: - UK pension: €15,000 per year - French investment fund gain (realised in the same tax year): €10,000 - Total income: €25,000
Option 1 (Default 30% Flat Tax) - Tax on gain: 31.4% × €10,000 = €3,140 - Total net income: €21,860
Option 2 (Progressive Tax) - Income tax on €25,000 (all taxable at 11% bracket): 11% × €25,000 = €2,750 - Social charges on gain: 18.6% × €10,000 = €1,860 - Total tax: €4,610 - Total net income: €20,390
Option 1 is better: €3,140 < €4,610. The flat tax is usually preferable unless you have very modest total income and small gains.
No Holding Period 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 critical difference from UK CGT, which has annual exemptions and rates based on income level.
Netting Gains and Losses
You can offset gains against losses in the same tax year. If you: - Sell shares with a €5,000 gain - Sell other shares with a €2,000 loss - Net gain: €3,000 - Tax: 31.4% × €3,000 = €942
If losses exceed gains in a year, the unused loss may be carried forward, subject to time limits typically up to 10 years within the same regime.
Property capital gains tax in France is significantly higher than securities but has a major advantage: taper relief that reduces tax dramatically with holding period.
The Base Rate: 37.6% (as of 1 January 2026)
When you sell a property (other than your principal residence) at a profit, the gain is subject to (rates current as of 1 January 2026): - 19%: Impôt sur le revenu (income tax) - 18.6%: Contributions sociales (social charges: CSG, CRDS, solidarity contributions, updated 1 January 2026) - Total base rate: 37.6%
Real Example: Property Sale Without Taper
You purchase a villa in the Dordogne for €200,000 in 2021 and sell it in 2025 (4 years later) for €250,000. - Acquisition cost: €200,000 - Sale price: €250,000 - Gross gain: €50,000 - CGT at 37.6% (no taper relief at 4 years): €18,800 - Net proceeds: €231,200
Taper Relief: The Game-Changer for Holding Period
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)
The 19% income tax base rate is not directly reduced. Instead, French tax law applies an allowance (abattement) that reduces the TAXABLE GAIN amount itself. The allowance accrues at 6% of the gain per full year of ownership from year 6 to year 21, plus 4% in year 22, giving 100% exemption from income tax after 22 complete years. The effective income tax rate is the base 19% multiplied by the un-relieved share of the gain.
Social Charges Taper (18.6% base, updated 1 January 2026)
Social charges reduce by 1.65% per year after the 6th year until year 21, then by 1.6% in year 22, then by 9% per year from year 22 to 30:
Combined Effect: Total CGT Rate by Holding Period
Here is the practical impact on your tax rate at current rates (1 January 2026 onwards):
The Power of Taper Relief: A Real Scenario
A British expat purchases a property in Provence for €300,000 and sells it in 2026 (15 complete years later) for €450,000. With 10 years of taper (years 6 through 15), the calculation is:
Gain: €150,000 Holding period: 15 years (taper relief applies from year 7 onward)
Income tax allowance: 60% (10 years × 6%). Effective income tax rate: 19% × (1 - 0.60) = 7.6%. Income tax on gain: 7.6% × €150,000 = €11,400.
- Social charges allowance: 16.5% (10 years × 1.65%). Effective social charges rate: 18.6% × (1 - 0.165) = 15.53%. Social charges on gain: 15.53% × €150,000 = €23,295.
- Combined effective CGT rate: approximately 23.1%. Total tax due: approximately €34,695.
- Net proceeds: approximately €415,305 (before notaire fees and estate agent fees, plus any exceptional surtax on gains over €50,000).
Comparison: if the same property were sold at year 5 (no taper relief at all):
At year 22 (income tax fully exempt; social charges 28% allowance):
This is why timing property sales is critical tax planning for expats. Holding an extra 10 years can save more in tax than you might earn in investment returns.
Principal Residence Exemption: 100% Tax-Free
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 of ownership, 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
Real Example: Principal Residence
A retired British expat purchases a flat in Lyon for €250,000, lives there as their main home for 3 years, and sells for €320,000. - Gain: €70,000 - Principal residence exemption: 100% - CGT due: €0 - Net proceeds: €320,000 (before notaire and agent fees; principal residence exempt from CGT regardless of holding period)
This is a massive advantage. Many expats underestimate the importance of correctly designating their principal residence.
Secondary Homes and Holiday Property: No Exemption
If you own a second property-holiday villa, investment flat, investment property-no exemption applies. Full CGT (37.6% base, reduced by taper relief) is due on any gain.
Strategic Designation: Which Property Should Be Principal Residence?
For couples or expats with multiple properties, the choice of which property qualifies as 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. This exemption saves 37.6% × €100,000 = €37,600 in tax. The Provence property will incur CGT, but on a lower base value.
Alternatively, if you plan to sell the Provence property soon and hold the Paris property long-term, consider timing the principal residence designation to maximise taper relief on the property you're keeping.
Inherited Property: Step-Up in Base Cost
When you inherit a property, your acquisition cost is automatically reset to 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) has specific technical rules for calculating the gain and what costs are deductible.
How Gain Is Calculated
Gain - Sale price minus net acquisition cost minus deductible sale costs.
Non-Deductible Costs
Deductible Sale Costs
Real Example: Calculating Net Gain
Sale price: €400,000
Less: Estate agent fee (5%): €20,000 Less: Notaire fee at sale (2.5%): €10,000
Net sale proceeds: €370,000
Original purchase price: €250,000 Less: Notaire fee at purchase (7%): €17,500 Plus: Capital improvements (roof, electrics): €30,000
Net acquisition cost basis: €262,500
Net taxable gain: €370,000 minus €262,500 = €107,500
CGT (assuming 5 years or less holding; no taper relief): €107,500 × 37.6% = €40,420
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 at the time of purchase. These are not CGT but are a separate cost of property acquisition. They reduce the net amount the seller receives and increase the buyer's acquisition cost basis.
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. France taxes all French-source income for residents and non-residents alike. However, if you are a UK tax resident, you may also be subject to UK CGT. The UK-France DTA prevents double taxation (discussed below).
When you sell an asset (property or securities) and are subject to both UK and French tax, the UK-France Double Taxation Treaty (signed 2008, in force 2009) prevents you from paying full tax in both countries.
How the Treaty Allocates Taxing Rights
The treaty gives different countries primary taxing rights depending on the asset type:
Article 14: Real Estate Gains
France has the primary right to tax gains on French property. If you sell French property: - France taxes the gain (no matter where you live) - UK may also tax the gain if you are a UK resident - UK allows a foreign tax credit for French tax paid - You pay the higher of the two rates, not both in full
Worldwide Capital Gains
For securities and other non-real-estate assets: - Both countries can tax the gain (as worldwide income) - Treaty reliefs apply (foreign tax credit) - You avoid paying both countries' full tax
Real Example: Selling French Property
A British expat is: - French tax resident (subject to French tax on worldwide income) - UK citizen (potentially subject to UK CGT if treated as UK resident for tax purposes)
They sell a villa in France for €400,000 (gain €100,000). Here is the tax exposure:
French Tax: €37,600 (37.6% on €100,000 gain) UK Tax: £20,000 (20% UK CGT on gain, if UK resident)
With treaty relief: - France taxes the gain at the French rate (€36,200) - UK provides a foreign tax credit equal to the UK tax (£20,000) - The expat pays only the French tax (the higher rate) - Total tax: €36,200 (not €56,200)
Real 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 - The expat pays whichever is higher - Total tax: paid at the higher jurisdiction's rate, not both in full
Filing Requirements and Treaty Relief
You must declare the gain in both countries: - UK: Include in your Self-Assessment return or notify HMRC - France: Include in your annual tax return (déclaration de revenus) - Claim treaty relief on the French return (via foreign tax credit form)
Your French tax adviser should handle treaty relief calculations. UK tax advisers should ensure the sale is correctly reported to HMRC.
UK Residence Status: Does UK CGT Apply?
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 and depend on: - Your residence status - Asset type (UK property vs securities vs other assets) - Previous UK residency history - When the asset was acquired
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.
Property Exit Planning: Identifying Taper Milestones
Property held at different periods incurs very different tax rates:
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.
Real Example: Large Property Gain
A property purchased for €300,000 with anticipated €200,000 gain:
For retirees, delaying the sale by several years (if feasible) is often a material tax saving.
Principal Residence Strategy
Ensure your main home is designated as your principal residence (résidence principale). This exemption saves 37.6% of the gain, regardless of holding period.
If you own multiple properties and plan to sell one: - Which property should be principal residence? - When would you want to change the designation (e.g., if you move house)? - Maintain documentation proving principal residence status (utility bills, voter registration, family presence evidence)
Documentation is critical. Tax disputes over principal residence designation can result in loss of exemption and significant tax bills.
Timing for Couples and 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 accumulated investment losses, they might be the better owner of a property with anticipated gains (to utilise the loss carryforward).
Securities Exit Planning: Electing Progressive Tax
Review whether the progressive income tax scale (0-45%) plus 18.6% social charges is more efficient than the 31.4% flat-rate PFU for your particular income level.
If your income is modest (below €44,738), the progressive option might save 1.8% (28.2% vs 30%). The election must be made on your annual tax return.
Currency Hedging on UK Shares
For UK expats selling UK shares (denominated in pounds), currency exchange rates at the time of sale affect the gain measured in euros. Currency movements can create significant gains or losses independent of investment performance.
Consider whether to hedge currency exposure before selling large amounts of GBP-denominated investments.
Multi-Year Disposal Planning
If you have a large portfolio to liquidate (e.g., investment portfolio being converted to living expenses in retirement): - Spread sales over multiple years (if market risk is acceptable) to manage the tax burden - Harvest losses in years with gains - Time sales to avoid pushing into higher progressive tax brackets (if electing progressive option)
Consult a tax adviser before embarking on large disposals.
Mistake 1: Not Budgeting for 30% Flat Tax on Securities
Many British expats assume their investment portfolio grows tax-free while held (like in an ISA in the UK). In France, when you sell securities at a gain, 31.4% is immediately due as of 1 January 2026. Expats who have not budgeted for this are shocked when they liquidate investments for retirement.
Fix: Understand that 30% CGT is due upon sale, not upon receipt of income. When planning retirement withdrawals, retain 31.4% of proceeds for tax.
Mistake 2: Selling Property Without Understanding Taper Relief
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 tens of thousands 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.
Mistake 3: Not Documenting Principal Residence Status
Some expats with multiple properties do not clearly designate one as their principal residence, leading to disputes with the tax authority and loss of exemption.
Fix: Maintain clear documentation proving which property is your main home: - Utility bills - Voter registration - Lease agreement (if renting) - Family presence evidence
Update the designation if you move house.
Mistake 4: Failing to Claim Foreign Tax Credit
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 handles this.
Mistake 5: Underestimating Acquisition Costs
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 all deductible fees and improvements).
Mistake 6: Not Planning Multi-Property Exits
If selling multiple properties, some expats do not coordinate the timing and principal residence 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.
Mistake 7: Not Comparing Holding 15 Years vs 22 Years
An expat with a property held 15 years and €100,000 gain sells without realising that holding 7 more years (to year 22) would remove the income tax element entirely and reduce CGT from approximately €23,100 to approximately €13,400 (social charges only).
Fix: For property with significant gains, always calculate the tax at the 22-year mark and consider whether delaying the sale is worthwhile.
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For British expats, professional planning around capital gains tax is most valuable when it:
Provides Sequencing, Not Just Solutions
Capital gains planning is rarely about a single transaction. It is about the sequence of decisions over time: which property to sell first, when to realise securities gains, how to time inheritance distributions, when to change principal residence designations. A professional adviser helps you understand the tax cost of different sequences and identifies the order that minimises cumulative tax.
Challenges Comfort-Based Assumptions
Many expats believe they should sell property when they feel ready to move or retire. But the tax math often suggests a different timeline. An adviser challenges the comfort-based decision and shows the cost of the comfortable choice.
Protects Timing and Optionality
Once you sell an asset, the tax is locked in. A professional review before the sale (not after) protects your ability to change course. After-the-fact tax planning is always more expensive than before-the-fact planning.
Integrates Behaviour, Not Just Maths
Some expats will delay a sale by 5 years to save €30,000 in tax. Others won't. An adviser understands both the math and your situation, and frames the decision in a way that makes sense to you.
Acts as a Stabiliser During Change
Selling property, moving countries, or transitioning to retirement are all stressful. An adviser provides clarity on the tax implications, removing one layer of uncertainty.
The goal isn't to 'manage money'. It's to manage decisions across life stages. Most serious expats seek a conversation, not a product.
If you're reading this and thinking:
Then the next step is usually a structured conversation focused on clarity, not implementation. Not because something is urgent. But because the years just before and after a major asset sale are the rare window where calm planning is possible. Once you've sold, the tax is locked in.
A focused session with our cross-border tax planning specialists can help you model different scenarios, understand the exact tax cost of your options, and identify whether waiting, timing, or acting now makes the most sense for your situation.
Capital gains tax in France is not about:
Most British expats only realise they didn't have this clarity after they've sold something. Those who build it early rarely regret it. And the cost of that clarity-a focused conversation with a specialist-is usually recouped many times over in tax savings on the first significant asset sale.
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 for information purposes only and does not constitute financial advice. Capital gains tax rules depend on asset type, holding period, residency status, and personal circumstances. Rates, reliefs, and DTA interpretation are subject to change. Professional tax advice from a French accountant or UK-qualified adviser familiar with cross-border issues must be obtained before making any asset sales or tax planning decisions.
A focused conversation can help you understand the exact tax cost of different sale scenarios and identify whether waiting is worth the opportunity cost.
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Our advisers work with British expats to structure exits around taper relief milestones, principal residence designations, and UK-France treaty mechanics.
