Taxation · PFU · France

The Flat Tax (PFU) — Shares & Dividends

Q: What is the flat tax (PFU) rate in 2025 / 2026?

The flat tax (PFU) rises from 30 % to 31,4 %: 12,8 % income tax (IR, unchanged) + 18,6 % social charges (prélèvements sociaux) (instead of 17,2 %), following the CSG (contribution sociale généralisée) increase enacted in LOI n° 2025-1403 du 30 décembre 2025 (LFSS 2026). The increase applies to capital gains on securities realised from 2025 onwards (filed in 2026) and to investment income (dividends, interest) from 1 January 2026.

Q: Flat tax (PFU) or progressive scale (barème progressif): which to choose?

By default, you are subject to the flat tax (PFU). You can opt for the progressive scale (barème progressif) by ticking box 2OP on form 2042 — this option is global and applies to all your investment income for the year. As a rough guide (to be calculated case by case): the flat tax (PFU) is generally more advantageous from TMI ≥ 30 %, the progressive scale mainly at TMI of 0 % / 11 %. For dividends, the 40 % allowance (abattement de 40 %) can make the progressive scale competitive up to a TMI of 30 %.

Q: Is the CSG (contribution sociale généralisée) deductible?

The deductible CSG fraction (CSG déductible) remains fixed at 6,8 %, but only when opting for the progressive scale — never under the flat tax (PFU). The 1,4-point increase (contribution financière pour l'autonomie) is not deductible. The deductible CSG reduces the following year's taxable income, not the tax directly.

Q: What is the holding-period allowance (abattement pour durée de détention)?

It applies only if (a) you opt for the progressive scale (barème progressif) and (b) the securities were acquired before 1 January 2018. Standard regime: 50 % (between 2 and 8 years), 65 % (beyond 8 years). Enhanced SME regime (régime renforcé PME): 50 % (1 to 4 years), 65 % (4 to 8 years), 85 % (beyond 8 years). Note: the allowance only reduces the income-tax (IR) base — social charges (prélèvements sociaux) remain due on the full capital gain.

Q: How are dividends taxed?

Under the flat tax (PFU), the 12,8 % income tax (IR) rate applies to the gross dividend (plus 18,6 % social charges). The 40 % allowance (abattement de 40 %) only exists under the progressive scale. A non-liberatory withholding (prélèvement forfaitaire non libératoire, PFNL) of 12,8 % is withheld at source and then credited against the final tax; an exemption is available subject to income conditions (revenu fiscal de référence, RFR).

Q: And what about the PEA (plan d'épargne en actions)?

The equity savings plan (plan d'épargne en actions, PEA) is a tax wrapper: capital gains and dividends accumulated inside the plan are exempt from income tax after 5 years of holding (social charges remain due on withdrawal). For eligible European shares, it is often the most efficient option, alongside a standard brokerage account under the flat tax (PFU) for non-eligible securities.

The flat tax (prélèvement forfaitaire unique, PFU) applies by default to your investment gains in France. Rate, option for the progressive scale (barème progressif, case 2OP), holding-period allowances and dividends — clearly explained, with worked examples and updated for the 2026 reform.

📅 Updated: 06/2026 · Reference: LOI n° 2025-1403 du 30 décembre 2025 (LFSS 2026)

⚠ PFU 2026 reform: the flat tax (prélèvement forfaitaire unique) rises from 30 % to 31,4 % (12,8 % IR + 18,6 % social charges), following the CSG increase in LOI n° 2025-1403 du 30 décembre 2025 (LFSS 2026). Effective date: capital gains on securities from 2025 income onwards, investment income (dividends, interest) from 1 January 2026. Remain at 17,2 %: life insurance (assurance-vie), PEL/CEL/PEP, rental income, real estate capital gains.

1The two regimes: flat tax (PFU) by default, progressive scale (barème) on option

📋 How your investment income is taxed in France:

In France, investment income (revenus de capitaux mobiliers) (dividends, interest) and capital gains on the disposal of securities (shares, ETFs, funds) are subject by default to the flat tax (prélèvement forfaitaire unique, PFU).

You may waive the flat tax (PFU) and opt for the progressive income tax scale (barème progressif) by ticking box 2OP on form 2042. This option is global: it applies to all your investment income for the year — it is not possible to mix the flat tax and the progressive scale line by line.

💡 Key point: doing nothing = flat tax (PFU). Ticking box 2OP = progressive scale for the whole year and all investment income. The right choice depends on your marginal tax rate (TMI) and the type of income — to be assessed case by case (see section 3).

2The flat tax (PFU) rate: 30 % → 31,4 %

The flat tax (PFU) combines a fixed income tax rate and social charges (prélèvements sociaux). The 2026 reform raises the social-charges component from 17,2 % to 18,6 %, leaving the income-tax component unchanged.

Component	Pre-reform	Post-reform (LFSS 2026)
Income tax (PFU)	12,8 %	12,8 % (unchanged)
Social charges (prélèvements sociaux)	17,2 %	18,6 %
Total flat tax (PFU)	30 %	31,4 %

The increase stems from a new financial contribution for long-term care (contribution financière pour l'autonomie, CFA) of +1,4 points added to the social charges (often described as "CSG rising from 9,2 % to 10,6 %"). It does not take effect at the same time for all types of income:

Type of income	Effective date of 18,6 % rate
Capital gains on securities (revenus du patrimoine)	2025 income — filed in 2026
Dividends, interest (produits de placement)	From 1 January 2026
Life insurance (assurance-vie), PEL / CEL / PEP, rental income, real estate capital gains	Remain at 17,2 %

⚠ Asymmetry to be aware of: for share capital gains realised in 2025, the applicable rate is already 31,4 % in the 2026 return — whereas dividends do not move to 18,6 % social charges until 1 January 2026. Do not apply "30 %" uniformly.

3Flat tax (PFU) or progressive scale (barème): which to choose?

The flat tax (PFU) is a fixed rate; the progressive scale depends on your marginal tax rate (TMI) but unlocks two benefits reserved for the scale: the 40 % dividend allowance (abattement de 40 %) and the deductible CSG (CSG déductible) of 6,8 %.

💡 Rule of thumb (to be calculated case by case — not a hard boundary): the flat tax (PFU) is generally more advantageous from TMI ≥ 30 %; the progressive scale mainly at TMI of 0 % / 11 %. For dividends, the 40 % allowance (abattement de 40 %) can make the progressive scale competitive up to a TMI of 30 %.

Example — 1 000 € gross dividends, TMI at 30 %

Flat tax (PFU) — income tax12,8 % × 1 000 €128 €

Flat tax (PFU) — social charges18,6 % × 1 000 €186 €

Flat tax (PFU) — total31,4 % of gross314 €

Progressive scale — IR after 40 % allowance(1 000 € × 60 %) × 30 % TMI180 €

Progressive scale — social charges18,6 % on the full amount (1 000 €)186 €

Progressive scale — total (excl. deductible CSG effect)180 € + 186 €≈ 366 €

→ At TMI of 30 %, the flat tax (PFU) (314 €) is more advantageous than the progressive scale (≈ 366 €). The deductible CSG (6,8 % × 1 000 € = 68 € that will reduce the following year's taxable income) narrows the gap, without reversing it at this TMI.

Same example — TMI at 11 %

Flat tax (PFU) — total31,4 % of 1 000 €314 €

Progressive scale — IR after 40 % allowance(1 000 € × 60 %) × 11 % TMI66 €

Progressive scale — social charges18,6 % on the full amount186 €

Progressive scale — total66 € + 186 €≈ 252 €

→ At TMI of 11 %, the progressive scale (≈ 252 €) is more advantageous than the flat tax (PFU) (314 €).

✅ Deductible CSG (CSG déductible) — a benefit of the progressive scale only: when opting for the progressive scale, a 6,8 % fraction remains deductible from the following year's taxable income. This fraction does not change despite the rise in social charges: the 1,4-point increase (CFA) is not deductible. Under the flat tax (PFU), no CSG is deductible.

⚠ The 2OP option is global and irrevocable for the year: by ticking box 2OP, you subject all your investment income (dividends, interest and capital gains) to the progressive scale. Do the full calculation before ticking.

4Holding-period allowance (abattement pour durée de détention) — progressive scale only

The holding-period allowance (abattement pour durée de détention) reduces the taxable base of share capital gains — but subject to two cumulative strict conditions.

⚠ Two cumulative conditions: the allowance only applies if (a) you opt for the progressive scale (barème progressif) and (b) the securities were acquired before 1 January 2018. Securities acquired since that date never qualify, regardless of the regime.

Holding period	Standard regime	Enhanced regime (SMEs, PME)
1 to 4 years	—	50 %
2 to 8 years	50 %	65 % (4 to 8 years)
Beyond 8 years	65 %	85 %

⚠ The allowance applies to income tax only: the 18,6 % social charges (prélèvements sociaux) remain due on the full capital gain, without any allowance. The benefit therefore only relates to the income-tax (IR) component.

5Dividends: flat tax (PFU) on the gross amount, 40 % allowance (abattement de 40 %) under the progressive scale

Regime	Income tax (IR) base	40 % allowance	Deductible CSG
Flat tax (PFU, default)	Gross dividend × 12,8 %	No	No
Progressive scale (option 2OP)	Gross × 60 % × TMI	Yes (40 %)	Yes (6,8 %)

💡 Non-liberatory withholding (prélèvement forfaitaire non libératoire, PFNL): on payment, a 12,8 % advance is withheld at source by your paying institution, then credited against the final tax due (and refunded in case of over-payment). An exemption from this advance is available subject to income conditions (revenu fiscal de référence, RFR), on request to the paying institution.

6The PEA (plan d'épargne en actions): an alternative to standard brokerage accounts

✅ The equity savings plan (plan d'épargne en actions, PEA) is a tax wrapper: capital gains and dividends accumulated inside the plan are exempt from income tax after 5 years of holding (social charges remain due on withdrawal). For eligible European shares, this is often the most efficient option, alongside a standard brokerage account under the flat tax (PFU) for non-eligible securities (US shares, derivatives, etc.).

7Which forms do you need to file?

Form	What it is for
2042	Main return; reporting of investment income. Box 2OP to opt for the progressive scale.
2074	Detailed calculation of gains and losses when you do the calculation yourself or use a foreign broker.
2074-CMV	Tracking of carried-forward losses from one year to the next.

⚠ Foreign broker: with a broker outside France (IBKR, etc.), the institution does not pre-fill the French IFU — you will generally need to file a 2074 and convert transactions into euros. Remember also to declare your foreign accounts (form 3916).

Frequently asked questions

What is the flat tax (PFU) rate in 2025 / 2026?

The flat tax (PFU) rises from 30 % to 31,4 %: 12,8 % income tax (IR, unchanged) + 18,6 % social charges (prélèvements sociaux) (instead of 17,2 %), following the CSG (contribution sociale généralisée) increase enacted in LOI n° 2025-1403 du 30 décembre 2025 (LFSS 2026). The increase applies to capital gains on securities realised from 2025 onwards (filed in 2026) and to investment income (dividends, interest) from 1 January 2026.

Flat tax (PFU) or progressive scale (barème progressif): which to choose?

By default, you are subject to the flat tax (PFU). You can opt for the progressive scale (barème progressif) by ticking box 2OP on form 2042 — this option is global and applies to all your investment income for the year. As a rough guide (to be calculated case by case): the flat tax (PFU) is generally more advantageous from TMI ≥ 30 %, the progressive scale mainly at TMI of 0 % / 11 %. For dividends, the 40 % allowance (abattement de 40 %) can make the progressive scale competitive up to a TMI of 30 %.

Is the CSG (contribution sociale généralisée) deductible?

The deductible CSG fraction (CSG déductible) remains fixed at 6,8 %, but only when opting for the progressive scale — never under the flat tax (PFU). The 1,4-point increase (contribution financière pour l'autonomie) is not deductible. The deductible CSG reduces the following year's taxable income, not the tax directly.

What is the holding-period allowance (abattement pour durée de détention)?

It applies only if (a) you opt for the progressive scale (barème progressif) and (b) the securities were acquired before 1 January 2018. Standard regime: 50 % (between 2 and 8 years), 65 % (beyond 8 years). Enhanced SME regime (régime renforcé PME): 50 % (1 to 4 years), 65 % (4 to 8 years), 85 % (beyond 8 years). Note: the allowance only reduces the income-tax (IR) base — social charges (prélèvements sociaux) remain due on the full capital gain.

How are dividends taxed?

Under the flat tax (PFU), the 12,8 % income tax (IR) rate applies to the gross dividend (plus 18,6 % social charges). The 40 % allowance (abattement de 40 %) only exists under the progressive scale. A non-liberatory withholding (prélèvement forfaitaire non libératoire, PFNL) of 12,8 % is withheld at source and then credited against the final tax; an exemption is available subject to income conditions (revenu fiscal de référence, RFR).

And what about the PEA (plan d'épargne en actions)?

The equity savings plan (plan d'épargne en actions, PEA) is a tax wrapper: capital gains and dividends accumulated inside the plan are exempt from income tax after 5 years of holding (social charges remain due on withdrawal). For eligible European shares, it is often the most efficient option, alongside a standard brokerage account under the flat tax (PFU) for non-eligible securities.

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Trades shares, options and derivatives daily via international brokers, with first-hand experience of the trade-offs between flat tax (PFU) and the progressive scale (barème progressif).

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Education, Not Tax Advice

This content is general education — not tax or legal advice. For binding guidance, consult a qualified tax advisor. As of: 06/2026