Capital gains of individuals imposed at progressive rates for specific assignments of values may benefit ratio system. For the assessment of the condition relating to the outstanding amount of income, deducting allowances to win maintenance period.

From January 1, 2013, capital gains of individuals related to the sale of securities or rights are no longer taxed at proportional rates, but are subject to a progressive rate of income tax. As such, they are not excluded by the principle quotient system reserved by Article 163-0 A, III of CGI for the only outstanding or deferred income taxed at progressive rates. The administrative doctrine in force until then, before the imposition of such profits progressive scale, however, that the gains made by an individual under the management of a portfolio of securities are not exceptional income (Luart Rep. Senator p 27-6 1323 -1991 No. 14463, included in the Bofip base under BOI-IR-LIQ-20-30-20 No. 120). When asked about the possibility of applying the system ratio of capital gains from the sale of non-negotiable social values, including SARL actions, the administration has provided the following details.

The mechanism of the “ratio” under Article 163-0 A of the CGI, can tailor the progressivity of the tax rate to the exceptional nature of income, benefits for taxpayers who have made exceptional income (not likely which is renewed every year) and quantity (ie, higher than the average net income according to which the taxpayer was subject to income taxes for prior to perception or realization of that income) three years.

Disposal gains values and social rights of the people who are governed by the provisions of Articles 150-0 and following of the CGI and in particular, profits from transfer of shares held in the SARL are liable to be taxed according to the ratio of the mechanism when subjected to the progressive scale of income tax and comply with the conditions set out in Article 163-0 to above.

However, a gain resulting from the sale of shares held for a year can not be regarded as an exceptional income once the taxpayer has made over the years before and after the operations of the same nature (CE 15-6 -2005 No. 250218).

However, when the gain comes from an exceptional operation, the system ratio is likely to apply to taxable profit.

Moreover, the fact act or not under the management of a portfolio of securities has no impact on system revenue ratio, much less the exceptional nature or the revenue generated by the sale.

After the doctrine of Luart response described above is therefore null and void.

In this regard, it is clarified that the condition relating to the outstanding amount of capital gain is assessed taking into account the amount of profit after deduction, where appropriate, allocations for the period set for the holding in Articles D 150-0 and 150-0 D ter CGI.

Note: regarding the condition relating to the outstanding amount of the capital gain, the position of the administration may be similar to the Administrative Court of Appeal of Douai which judged that the exceptional income compared with the average net income past three years is the one that was selected in the taxable year for which the taxpayer has benefited from this exceptional income (CAA Douai 07/06/2000 No. 96-875).