Tax policy directorate – Bureau a

Substitution income 
For substitution income, the rate is set at: 
7.5% for early retirement benefits received by employees who have taken early retirement 
since 11 October 2007, 5.1% of which is deductible from the income tax base; 
6.6% for pensions and disability benefits, 4.2% of which is deductible from the income tax 
base. This may be reduced to 3.8% (fully deductible from the income tax base) when the income is 
received by recipients whose taxable income does not exceed a certain threshold;
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this is also the 
exemption limit for the welfare contribution for elderly people living alone levied on retirement pensions. 
Pensions and disability benefits are exempt from the CSG when the recipient’s taxable income is below 
the exemption limit;
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exemption from the CSG also means exemption from the CRDS; 
- 6.2% for other substitution income (unemployment benefits, etc.), 3.8% of which is deductible 
from the income tax base. Recipients of unemployment benefit can benefit from this lower rate or be 
fully exempt from the CSG under the same conditions applicable to pensions and disability benefits. 
Daily social security allowances for sickness, maternity, work-related accidents and occupational 
illness are still subject to a rate of 6.2% regardless of how much the recipient earns. 
The CSG on substitution income is generally levied at source by the organisation responsible for 
making these income payments. 
CSG ON INCOME FROM PERSONAL ASSETS: 
The CSG is levied on income from personal assets at 8.2%. The following are liable to the CSG: 
- 
income from property; 
- 
purchased life annuities; 
- 
investment income other than income on which the CSG has been deducted at source (see 
"CSG on investment income" below); 
- 
capital gains and profits liable to income tax, including long-term business capital gains and 
capital gains on transferable securities and shares; 
- 
profits liable to income tax from industrial and commercial activities, agricultural activities and 
non-commercial profits not liable to pay CSG on earned and substitution income; 
- 
income of indeterminate origin subject to estimated assessment and other amounts subject to 
estimated assessment for non-production or late production of the tax return; 
- 
any other sources of income taxable in France on the basis of an international treaty which 
have not been subject to CSG on earned and substitution income. 
The CSG is levied on the net amount used to determine the income tax liability. 
Nevertheless, CSG is levied on the gross amount of investment income, i.e. prior to the deduction of 
expenses incurred for acquiring or keeping the income and the 40% allowance. Income from 
capitalisation bonds or life insurance policies of eight years or more are taxed before application of the 
lump-sum allowance of €4,600 or €9,200. 
Similarly, capital gains on transferable securities and shares are taxed before any length-of-ownership 
deduction. 
Generally speaking, the CSG is assessed, verified and collected in the same way as income tax. 
50
Social Security Code, Article L. 136-8, Section III, paragraph 2. 
51
Social Security Code, Article L. 136-8, Section III, paragraph 1. 

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5.1% of the CSG on income from personal assets, except for capital gains liable to income tax at a 
proportional rate, is deductible from taxable income in the year it is paid. 
An upper limit is placed on the CSG deductible in relation to net gains on disposals of transferable 
securities and shares that benefit from a lump-sum allowance in favour of retiring managing directors in 
keeping with the taxable amount of each gain. 
CSG ON INVESTMENT INCOME: 
Income from fixed-income investments, together with dividends and similar income (with the exception 
of those received within the framework of a PEA equity savings plan) are liable to the CSG on 
investment income at 8.2%: 
- 
where they are liable to income tax at progressive rates and the payer of the income or 
revenue is established in France; 
- 
where they are exempt from income tax (with the exception of certain regulated tax-free 
savings products, namely Livret A, Livret d’Épargne Populaire, Livret de Développement 
Durable, Livret Jeune and Livret d’Épargne Entreprise savings accounts, reimbursement 
bonuses and premiums); 
- 
where they are liable to withholding tax in full discharge of tax liability as per the 2013 Budget 
Act (see Chapter 2, Section 1). 
The CSG on investment income is also payable on capital gains on real property and on certain 
movables liable to income tax at a proportional rate upon disposal. 
The CSG is deducted at source, generally, in the case of fixed-interest investment income and 
distributed income, by the payer. In the case of tax-exempt products, the deduction is made in principle 
on payment of the income to the debtor or to the intermediary who pays the income in question and is 
then responsible for paying the amounts to the State.
The CSG on capital gains on property and certain movables is collected at the same time as the 
withholding tax in discharge of income tax on the capital gain.
The social security contributions base for capital gains on disposals of property other than building plots 
and related construction rights, liable to CSG and other social levies
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, is determined through the 
application of a different length-of-ownership deduction to that applied to determine the tax base. 1.65% 
is deducted for each year of ownership after the fifth year up to the 21st; it falls to 1.60% for the 22nd 
year and is then raised to 9% for each year after the 22nd. In total, the exemption from social levies is 
acquired over a 30-year period (rather than 22 for income tax).
For capital gains on disposals of building plots, the social security contributions base is equal to the tax 
base. After 30 years, the applicable length-of-ownership deduction renders these gains exempt from 
both income tax and social security contributions. 
5.1% of the CSG paid on income from fixed-income investments and distributed income liable to income 
tax at progressive rates can be deducted from taxable income in the year in which it is paid.
The rate of CSG deductible from investment income gains is therefore in line with the rate of CSG 
deductible from earned income to bring the taxation of investment income into line with that of earned 
income
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. 
The CSG yielded €95.06 billion in 2015.
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The social security debt repayment contribution (CRDS) at a rate of 0.5%; the social levy at a rate of 4.5%, 
the surcharge at a rate of 0.3% and the solidarity levy at a rate of 2%.
53
Since 2013 Budget Act No. 2012-1509 of 29 December 2012. 

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