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Capital gains tax calculation for legal entities

The capital gains is the difference between the selling price and the purchase price (art.150 V french tax code).

The purchase price is reduced by 2% per year as of the date of the purchase (details below).

Nevertheless, since March the 1st, 2010, and only for sales by resident legal entities Member State of European Union or other State party at the European economic Area having concluded with France a fiscal convention which contains an administrative "clause d'assistance" against fraud and fiscal evasion (Iceland, Norway and Liechtenstein) and not cooperative (in sense of the article 238-O A French Tax cod), capital gains tax is calculated in the same conditions as those applicable to french resident legal entities ("impôt sur les sociétés") (Art. 244 bis A french tax code)


Selling price

This is the price stated in the selling act.

Capital charges as well as any compensation paid to the seller (art. 150 VA-II french tax code) (such as compensation for eviction paid by the buyer on behalf of the seller), are added to the price.
 
The following costs, based on written proof, are deducted (art.150 VA-III ) :

  • the VAT paid by the seller at the time of the sale
  • the value of furniture sold with the property (cf § "furniture »)
  • the costs paid by the seller (restrictive list) :
    • Fees paid to an intermediary (estate agent),
    • Fees paid to an accredited representative,
    • Fees related to mandatory certifications (asbestos, parasites...),
    • Eviction compensation,
    • Fees paid to an architect to obtain a building permit,
    • Fees paid to obtain release of mortgage.

These expenses must have been incurred by the seller and justified by showing invoices.


Acquisition price

This is the price stated in the purchase act, or the value stated in the act of donation or in
the French deed of inheritance.
 
All capital charges as well as any compensation paid to the seller are added to the price.
 
Acquisition expenses can be added to the price (lump sum of 7,5 % is excluded) :

  • Free acquisition (death, donation)
    Declaration and deed costs (donation, inheritance, death certificate,…), Notary and other legal fees.
     
  • Paid acquisition
    Expenses relating to the purchase of the property are deductible at their actual cost (Lump sums of 7,5 % is excluded) : Notary's fees, agency's fees paid by the purchaser, legal fees, VAT paid by the purchaser…
    These expenses must have been paid by the seller and justified by showing invoices.
     
  • The costs of the work done on the property can be added to the purchase price :
    Expenses relating to construction, reconstruction or extension works are deductible, with production of invoices and their proof of paiement (bank statements).
    Warning : Expenses relating to improvment, maintenance, repair, renovation work are not deductible. Cost of paid labour and expenses of materials are excluded.


Capital gain calculation

The capital gain is the difference between the selling price and the purchase price (art.150 V french tax code).

The purchase price is reduced by 2% per year since the date of the acquisition.

This reduction of 2% is applied on the purchase price (except the value of the land and the shares), the purchase fees and the expenses relating to the work.

Lump sums of 7,5 % and 15% on the purchase price are excluded.

The rate of the taxable capital gain is 33,1/3 %.

Warning : The accredited representative guarantees the payment of the annual tax of 3% (art. 990 F french tax code) for the year of the sale(cf § "3% tax").