Today, a technical article on the tax treatment of latent interest from various financial investments available to French tax residents.

In the preamble, we wish to clarify that this article focuses on taxation due under social and income taxes. We do not deal in any way with the Free Transfer Rights (DMTG), more commonly known as inheritance rights. Unrealized interest is defined as capital gains that have never been recorded on envelopes, on funds with daily updated net asset values.

• Income Tax (IR) processing:

Specifically, at the time of the death of the subscriber, no envelope has its potential latent interest subject to the IR. Most investment envelopes have a tax purge. However, one envelope is an exception to the rule.

The specific case of the Plan d'Epargne Entreprise: In the event of the death of the investor, the beneficiaries must request the liquidation of the rights of the deceased within a period of 6 months following the death (if the death took place in metropolitan France) or within a period of one year (if death occurred outside the home). After this period, capital gains are taxed (Article 150 O A, III, 4 of the CGI).

• The treatment of social security contributions (PS):

Since 1 January 2010, interest or income acquired or recorded on the contract at the date of death of the insured person is subject to social security levies, where these have not yet been imposed during the life of the insured person. The rightholders will therefore recover their capital after social taxation is currently equal to 17.2%. These social contributions are also present for the Share Savings Plan (PEA) and the Corporate Savings Plan (PEE).

Nevertheless, some envelopes are exempt from this tax for latent interests. This is indeed the case for the Retirement Savings Plan (PER), the Popular Retirement Savings Plan (PERP) and the Securities Account (CT).

NB: are also excluded from the scope of social security contributions and income tax, the amounts received by beneficiaries on the death of the insured person contracts indemnifying in the form of death capital.

Summary table of the taxation of deferred interest according to investment envelopes:

The team of Finankap Group is at your disposal to minimize the tax impact on your latent interests and more generally, implement investment strategies allowing you to optimize your taxation on your income and your future estate.

Do not let the tax system decide for you and enjoy now a tailor-made accompaniment!

Finankap Group, always by your side to give life to your desires.