Tax Deductions on Investments: Everything You Need to Know

Introduction

Investing is an essential process to grow one’s wealth, but it is often accompanied by a significant tax burden. To encourage certain types of investments and support the economy, the French government offers various tax abatements that reduce the taxation on realized gains. This article provides a comprehensive overview of the tax abatements related to investments, explaining how they work, their eligibility conditions, and the opportunities they represent to optimize your taxation.

What is a tax abatement on investments?

A tax abatement is a flat-rate reduction applied to the taxable base of income or capital gains. In the context of investments, it is often a percentage deducted from the amount of capital gains realized upon the sale of an asset (stocks, real estate, social shares, etc.). This reduction helps decrease the amount of tax owed, or even fully exempt part of the gains, under certain conditions.

For example, on real estate capital gains, abatements apply depending on the holding period of the property, gradually reducing the taxation until a total exemption after 22 years of holding for income tax.

Abatements on capital gains from movable assets: how does it work?

Capital gains realized from the sale of financial securities (stocks, bonds, fund shares) are subject to income tax and social contributions. However, abatements for holding period may apply, notably under the classic “capital gains on movable assets” regime.

• Abatement for holding period: Depending on the holding period of the securities, a progressive abatement is granted, which can go up to 65% for a holding between 2 and 8 years, and up to 8