This lesson describes French law
The rules, rates and forms below are those of the French tax system and apply to French residents. Every country has its own framework. Refer to the rules that apply to you, and to a qualified professional.
Tax is the only “return” you can improve without taking the slightest additional risk. A point of tax saved is worth exactly a point of performance gained — but unlike performance, it is certain.
The French framework in brief
In a CTO, capital gains and dividends fall by default under the flat tax of 30%, which combines 12.8% of income tax and 17.2% of social levies. In a PEA held for more than five years, income tax disappears: only the 17.2% of social levies remain — a considerable gap, compounded over decades.
Tax-loss harvesting
The principle: deliberately realising unrealised losses in order to offset them against your gains for the year, and so reduce your taxable base. In France, losses can be offset against gains of the same nature and carried forward for ten years.
An illustration
You have realised €5,000 of gains in a CTO. You also hold a position sitting on an unrealised loss of €2,000. By selling it before the end of the year, your taxable base falls to €3,000 — roughly €600 of tax saved, without changing your exposure if you reposition into a similar (but not identical) asset.
Never let tax drive the investment
Selling a good company purely for a tax advantage is a classic mistake. Tax optimisation should be the consequence of your investment decisions, never their cause.
Form 2074 and tracking your average cost
Form 2074 is used to declare the detail of your gains and losses. Its difficulty lies in computing the weighted average unit cost, particularly after successive purchases (DCA) — hence the importance of rigorous tracking from the very first purchase.
Earnnest computes no tax base
This lesson is theoretical. Earnnest produces neither a tax summary nor a 2074 export: those functions were withdrawn on 20 August 2026. Your portfolio's Income tab estimates your dividends, and position tracking computes a realised result on a FIFO basis — that is a reading of performance, not a taxable base. The French rule is the weighted average price (art. 150-0 D, 3 of the CGI), which FIFO does not reproduce. For your return, rely on your broker's statements and on a professional.
Disclaimer
This lesson is informative and general. Tax rules change and depend on your personal situation. For any binding decision, consult a tax adviser: Earnnest is neither an investment adviser nor a tax adviser.
À retenir
- ✓A PEA after five years removes income tax: the gap with a CTO is major over the long run.
- ✓Tax-loss harvesting reduces the taxable base; losses can be carried forward for ten years.
- ✓Tax optimises an investment decision: it must never dictate one.