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Tax conditions for investment securities

are less complicated than you think!

Each year, you must declare your income to the tax authorities, including investment income and any capital gains or losses on the disposal of your shares. Let’s take a look at the applicable tax treatment.

The elements of taxation in this document apply to French residents for tax purposes. More information for residents outside France here.

What is investment income?

Investment income refers to all income from financial investments. As an Air Liquide shareholder, this corresponds to your dividend payments, any capital gains on sales of your shares and the payment of fractional rights during free share attributions.

Where to find the amount of 2019 investment income relating to your Air Liquide shares to be declared in 2020? 

Your tax reporting form includes all the information necessary to complete your tax return. Simply copy the stated amounts of dividends and fractional rights in the relevant boxes of your tax return. Any fractional rights received following the October 2019 free share attribution are to be reported as a capital gain on a sale without taking into account the deduction (in box 3VG).

Good to know: if you are a direct registered shareholder, you can access your account document in your personal online Account

Note: you must calculate the total amount of your net capital gains or losses based on the gross disposal amounts yourself. For further information on how to do this, please refer to our factsheet.

Choosing the best taxation method 

Since the enactment of the 2018 Finance Act in France, each year you may choose between the 30% flat tax and the income tax, on a progressive scale, which corresponds to the historic mechanism.  

To help you choose between the taxation methods available to you and make an informed choice, we recommend using the tax authorities' simulator (in French only).

Note: the option chosen applies to the entire household’s investment income. 

I have chosen the flat tax, what must I do?

The tax return form, as well as the tax authorities’ simulator, applies the flat tax by default. You therefore do not need to change anything if you choose the flat tax. 

You must, however:

  • verify the amount of your dividend which is pre-completed by the tax authorities in box 2CG and any advance withholding for tax deducted when the dividend was paid in box 2CK.
  • in the event of a capital gain on a sale, you must complete the amount of your capital gain in box 3VG without taking into account the deduction for seniority.

Note: any fractional rights received from a free share attribution must be declared as a capital gain on disposal, without applying the deduction (in box 3VG).

I have chosen the progressive scale, what must I do?

You must tick box 2OP on your tax return.

You must also: 

  • verify the amount of your dividend which is pre-completed by the tax authorities in box 2BH and any advance withholding for tax deducted when the dividend was paid in box 2CK.
  • in the event of capital gains on a sale, you must complete the amount of your capital gains in box 3VG without taking into account the deduction and enter any deductions for seniority in box 3SG (Common law seniority deduction) from the document 2042C.

Note: any fractional rights received from a free share attribution must also be declared as a capital gain on disposal, without applying the deduction (in box 3VG).

 

Find out more:
Read the Taxation factsheet

 

To make things clearer, let’s take an example!

The elements of taxation apply to French residents for tax purposes.

Paul, single, with no children, received in 2019:

  • A salary of €35,000
  • €500 in dividends

He also made €1,500 in capital gains on disposals (before the seniority deduction).

In other words, total revenue of €37,000, of which €35,000 in recurring revenue and €2,000 in non-recurring revenue. His marginal tax rate is therefore 30%.

If Paul chooses: the flat tax the progressive scale
Paul will pay: 30% of his investment income (income tax of 12.80% and social contributions of 17.20%). 30% of his non-recurring revenue (due to his marginal tax rate), taking into account the 40% deduction on dividends1, and social contributions of 17.20%
In this specific case: 30% x (€1,500 + €500) = €600
  Dividend Capital gains on sale
Social contributions 17.2% x €500 = €86 17.2% x €1500 = €258
Income tax 30% x (60%1 x €500) = €90 30% x €1500 = €450
Total €176 €708
  A total of €600 included in his income tax. A total of €884 included in his income tax.

 

Paul’s best option would be to apply the flat tax.

1 60% of the amount of the gross dividend is taxed, due to the application of the 40% deduction.

[updated on April 27, 2020]

Article published on April 06, 2020