Investment income - Tax rate increase - Larger tax base
An instruction dated January 28, 1996 (5.I.1.97) explains the consequences of the reform of the CSG regime (contribution social generalisee, a special social tax applicable to revenues earned by individuals) arising from the Social Security Finance law of December 27, 1996.
1. The rate of CSG contributions is increased from 2.4% to 3.4%.
2. Investment income subject to withholding tax provided for by Article 125 A (relating to the taxation of interest on bonds) of the French Tax Code is liable to CSG contributions, except for income paid to beneficiaries domiciled outside France. CSG contributions are levied under the same conditions as the withholding tax applicable to investment income.
3. Many forms of income previously exempt from personal income tax are now liable to CSG contributions, such as interest on CEL (compte d'epargne logement - home savings accounts) and PEL (plan d'epargne logement - home saving plans), income from capitalization bonds or policies (such as life insurance policies) taxed under Article 125 OA of the French Tax Code, income from PEP (plan d'epargne populaire - individual savings plan), PEA (plan d'epargne en actions - personal equity plan), etc.
The following types of income remain exempt: interest from the first livret de caisse d'epargne (passbook savings accounts) and the livret jeune (special savings accounts for young people), income from LEP (livret d'epargne populaire - national savings accounts) and CODEVI (compte pour le developpement industriel - industrial development savings accounts), as well as interest on amounts invested in an LEE (livret d'epargne entreprise - company savings accounts).
This reform has led to the harmonization of the base for CSG contributions with that of the CRDS contributions (contribution au remboursement de la dette sociale, a temporary social tax which is allocated to repaying the deficit incurred by the French social security system), except for certain forms of substitute income.
The content of this article is intended to provide a French guide to the subject matter. Specialist advice should be sought for your specific circumstances.
For additional information contact Claire Acard on +33 (1) 184.108.40.206 or enter text search: "ARCHIBALD ANDERSEN Profile". The members of ARCHIBALD ANDERSEN Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
A trustee in bankruptcy's rights to obtain a possession order and order for sale against a bankrupt's property will not be suspended indefinitely even where there are exceptional circumstances.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).