Flat tax (PFU)
The single flat-rate levy (PFU), commonly known as the flat tax, is an all-in 30% tax rate that applies by default to investment income and capital gains on securities. The rate breaks down into 12.8% income tax and 17.2% social levies. Taxpayers may elect the progressive income-tax scale if it yields a lower overall bill.
Key points
- 30% rate applicable by default since January 1, 2018.
- Covers: dividends, interest, capital gains on securities, life-insurance income beyond 8 years under certain conditions.
- Global election of the progressive scale: applies to all eligible income, not selectively per item.
- 40% dividend allowance retained only when the progressive scale is elected.
- Does not directly apply to rental income or real-estate capital gains.
Frequently asked questions
Does the PFU apply to income from an IS-taxed SCI?
Yes, when an IS-taxed SCI distributes dividends to individual shareholders, those dividends are subject to the 30% PFU (or the progressive scale on election). However, rents and capital gains are taxed at the corporate level, and only the upstreaming of cash as dividends triggers the flat tax.
When is it better to elect the progressive scale rather than the flat tax?
Electing the progressive scale is advantageous when the taxpayer's marginal rate plus social levies is below 30%. This is typically the case for low-income households. It also unlocks the 40% dividend allowance, which can be decisive for shareholders receiving substantial dividends.
How does the flat tax interact with real-estate life-insurance investments?
For life-insurance policies invested in real-estate supports (SCPI, OPCI), gains on redemptions after 8 years benefit from an annual allowance (€4,600 for a single person, €9,200 for a couple) before the PFU applies. Beyond the allowance, the rate is 7.5% (income tax) + 17.2% (social levies) for premiums paid before September 2017, and 12.8% + 17.2% for later premiums exceeding €150,000.
In practice
Anne receives €5,000 in dividends from her IS-taxed SCI. Under the PFU, she would pay €1,500 (30%). Since her marginal income-tax rate is 11%, she models the progressive-scale option: 11% × 60% (after the 40% allowance) × €5,000 = €330 income tax + 17.2% social levies = €330 + €860 = €1,190. She therefore elects the progressive scale.
Official sources
- Taxation of securities (flat tax / PFU) · impots.gouv.fr
- Housing and financing information · ANIL
- Mortgage credit (official guide) · Service-Public.gouv.fr