Tax policy directorate – Bureau a

Capital gains on the disposal of securities and shares: 
Article 10 of the 2013 Budget Act
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and Article 17 of the 2014 Budget Act
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overhauled the 
arrangements for the taxation of net gains on the disposal of securities and shares realised by persons 
domiciled in France for tax purposes.
Capital gains on the disposal of securities and shares made as from 1 January 2013 have therefore, 
without exception, been taxed at the progressive rate of income tax instead of at a proportional rate.
Capital gains on sales are subject to the progressive income tax scale after applying an ordinary law 
allowance which increases on the basis of the length of ownership of the securities or shares sold: 50% 
from two years up to eight years and then 65% thereafter 
Investments in startups, small and medium-sized enterprises (SMEs less than ten years old when the 
sold shares were subscribed for or acquired) and transfers of undertakings are fostered by the 
introduction of an increased allowance at the progressive rate depending on the length of ownership of 
the securities or shares sold: 50% from one to four years, 65% from four to eight years and 85% as 
from eight years.
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Act no. 2012-1509 of 29 December 2012. 
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Act no. 2013-1278 of 29 December 2013.

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Capital gains realised by SME owner-managers taking their retirement are subject to a special fixed 
allowance of €500,000. Any potential surplus capital gains above this amount are then subject to the 
aforementioned proportional allowances.
At the same time, a number of derogations, which have been revised in this increased allowance 
regime, have been repealed (inter-family transfers, sale of innovative startups, assignments by SME 
owner-managers exercising their pension entitlements). 
Provided all the conditions are met, the aforementioned allowances for length of ownership apply only 
to the portion of the capital gains remaining after setting off capital losses of the same kind (capital 
losses for the current year or carried over from the ten previous years). When applicable, the gross 
amount of capital losses is offset against the gross amount of capital gains.
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In addition, transactions for the contribution of shares to companies controlled by the contributor are 
compulsorily subject to the tax deferral provided for in Article 150-0 B ter CGI. 
 
Adjustment mechanisms for capital gains with tax deferral expiring on or after 1 January 2013 
Article 34 of the 2016 Supplementary Budget Act no. 2016-1918 amended the tax regime under the 
progressive tax scale for capital gains with deferred taxation when the event terminating this deferral 
occurs on or after 1 January 2013. 
Thus, for capital gains not eligible for the holding period allowance, the amount of capital gains placed 
under deferred taxation at the taxpayer's discretion before 1 January 2013 is reduced by applying a 
monetary erosion coefficient to the acquisition price of the securities subject to the transaction that 
triggered the tax deferral. This coefficient is based on the most recent consumer price index excluding 
tobacco published by INSEE at the date of the aforementioned transaction. This index is calculated 
between the date the securities were acquired and the date they were contributed. 
With regard to capital gains subject to compulsory tax deferral under Article 150-0 B ter CGI, income 
tax and, where applicable, the levy on top earners are calculated by applying the tax rate determined at 
the date the securities were contributed, under the conditions specified in Article 200 A 2 ter CGI. This 
tax rate is applied only to the deferred capital gains. 
Social security contributions for capital gains subject to compulsory tax deferral under Article 150-0 B