As I explain in my presentation (ABOUT ME), for many reasons, stocks investment is not popular in France. The most important reason is, in my opinion, taxes and its associated complexity. Below, with an example, I try to explain why the complexity of the system does not encourage the French to invest on the stock market.
99 dividends CBL & Associates Properties inc.
$0.265 / share = $ 26.24 = 24.66€ income brut
- US local tax (15%) = $3.94 = 3.70€
- Social Cotisation (15.5%) = (24.66€-3.7€)*15.5% = 3.25€
- Income pré-tax (21%) = (24.66€-3.7€)*21% = 4.40€
Total brut amount for my dividend is 13.31€ (Direct debit = 46%!!)
But this is just the beginning of my adventure, because each year we must pay, during the spring, our annual income tax. Above, we have seen that I already pay a direct debit tax. French politicians have an incredible capacity to make complicated laws.
Depending of my income, in my case, I can reduce from this taxable base by 40% and also deduct social cotisation, I already paid:
Taxable base = 13.31€ – 5.32€ (which represent 40% of total brut amount) – 3.25€ (social cotisation) = 4.74€
This taxable amount is then taxed on your Marginal Tax Rate to which you deduct the tax credit related to the US deduction (3.70€). My rate is 30%, so:
(4.74€ – 30%) – 3.70€ = – 2.28€
This negative result indicates that it is now the French State that owes me money!
Then I add Total brut amount + Taxable amount following Marginal Tax
13.31€+(-2.28€) = 11.03€
Finally, from my brut income rest 24.66€ – 11.03€ = 13.63€ net after all taxes