- Definition of the flat tax
- What products are the flat tax for?
- Flat tax and life insurance
- The flat tax, an obligation?
The capital income will be taxed on a flat tax. But what is the flat tax? How will it apply and on which products? Is it mandatory? Small summary of this tax.
Loi Finance 2018: the flat tax, what is it?
Definition of the flat tax
With the flat tax, all taxpayers are taxed at the same rate regardless of their income. The flat tax is a flat tax or a single rate tax that will apply to income from capital stock as of January 2018.
This 30% tax named Single Lump Sum or PFU, will consist of 17.2% social security contributions (15.5% + 1.7 points from the CSG) and 12.8% income tax.
To note: Until December 31, 2017, income from movable property is subject to 15.5% social security contributions and a progressive scale ranging from 0 to 45% for income tax, ie a range from 15.5% to 60.5%. % for the largest incomes.
What products are the flat tax for?
Property income, the capital gain of a real estate sale, tax-free regulated books are exempt at the PFU. The flat tax will touch income from movable capital: interest, dividends, tax savings products, capital gains on the sale of businesses or shares.
Thus an ELP opened in 2018 will have its interests that will be submitted to the PFU in the first year and not after 12 years. This measure is not retroactive, that is, ELPs opened prior to December 31, 2017 will still be exempt from taxation until the 12th year. After this period, the interest will be taxed at the PFU.
Flat tax and life insurance
Life insurance is also targeted by the flat tax but only for contracts over € 150,000 and for payments from the date of the reform on September 27, 2017. This minimum sum of 150,000 euros or 300,000 euros for a couple means all contracts combined. The flat tax of 30% will be beyond this sum and regardless of the duration of the life insurance contract. Below this threshold, the tax rate will be 24.7%.
Small consolation, the annual deduction on earnings withdrawn after 8 years remains in place, ie 4,600 euros for a single person or double for a couple.
The flat tax, an obligation?
All new contracts subscribed from January 2018 and affected by the flat tax will have the PFU as the default mode of taxation. However a taxpayer can apply for a tax on the income tax schedule if his household is not taxable on income. It will then benefit a tax at 17.2% which corresponds to social security contributions 2018 instead of 30%.
Households located between the third and the last tax bracket (between 30 and 45%) any interest in moving to the PFU at 30% since they will be taxed less than at present.