By Martin Leduc
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It is also called the single flat-rate levy (PFU). The flat tax applies to capital income since 2018.
What is it, and above all, how does it work? Details.
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Objective: to simplify the taxation of savings
As its name suggests, it is a flat rate tax, that is to say that it does not take into account your tax bracket or your reference tax income. In other words, your income is not included in the calculation of this tax.
Only financial products are taxed. Here are which ones:
- Movable income: dividends (shares and shares paying a variable return) and fixed income investments (bonds, debt securities, deposit accounts and term accounts, etc.)
- Capital gains from the sale of securities subject to income tax
- life insurance
- The Housing Savings Plan (PEL)
- The housing savings account (CEL)
Please note that some savings income is not subject to the PFU. Here are which ones:
• Booklet A
• The LEP People’s Savings Account
• The Youth Booklet
• The LDDS Sustainable and Solidarity Development Booklet
And suddenly, how does it work, this PFU?
As the website of the Ministry of the Economy explains, for movable income “Taxation takes place in two stages. Investment income is subject to a 12.8% deduction in the year of its payment, as an income tax installment”.
Then, at the time of the declaration of income, the final taxation takes place.
It should be noted that “any capital losses are deductible from the capital gains for the year and chargeable against the capital gains for the following 10 years”.
Regarding interest from life insurance payments, it is also a two-step system. A levy (12.8% on contracts less than 8 years old and 7.5% on those over 8 years old) is made when the proceeds are paid, “then the final tax is made when the declaration is made. income”.
For a contract of less than 8 years, the rate is 12.8%. When it is more, it is 7.5% for payments up to 150,000 euros, and 12.8% when these products exceed 150,000 euros.
If you prefer not to pay the “flat tax” directly, it is possible to choose another option: the progressive scale of income tax.
For the investment income, the 40% allowance is applied to eligible income. In addition, the deductible expenses that you paid during the year and the deficits of the previous years are allowed in the deduction. Finally, a small part of the general social contribution (CSG) is also deductible.
Regarding capital gainsthe allowance may apply for securities acquired before 2018. And as for income from movable capital, part of the CSG may be deducted from the overall income for the year of its payment.
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