Investing in a company allows you to claim part of its profits if it makes any. This income, called dividends, must be declared to the tax authorities. Manual.
Last year, companies gave their shareholders almost 1470 billion dollars in dividends. A record amount, up from 16.7% compared to 2020, according to asset manager Janus Henderson. For investors with hollow noses, these billions do not arrive as they are in their pockets. This taxable income must in fact be declared to the tax authorities.
To do this, the shareholders have the choice between the default tax system and taxation at the progressive scale of income tax. By default, capital income is subject to the single flat-rate deduction (PFU) of 30%, including 12.8% income tax and 17.2% social security contributions. The PFU is deducted at source when the dividends are paid. It is therefore considered as a tax installment which does not take into account the allowances to which you may be entitled, nor your possible preference for the progressive scale.
The method of holding the shares, whether the shares are held directly or via a specific envelope, and the very nature of the securities, whether they are assets of French or foreign companies, for example, influence the tax treatment of dividends. In this article, we will only talk about actions outside special plans such as the Plan d’epargne en actions (PEA). Dividends from securities held in this envelope are subject to possible taxation upon withdrawal and closure of the PEA.
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Dividends to be declared mainly in box 2DC
Whether you opt for the PFU or the scale, you must declare the stock dividend amount (but also of shares) in case 2DC of your main income tax return (the form 2042). This box is called income from stocks and shares. To be very specific, the dividends reported correspond to those distributed by companies paying corporation tax or similar, and having their registered office in France, in the European Union or in a country that has concluded an agreement with the France to avoid double taxation (South Africa, Algeria, Brazil, Canada, South Korea, United States…). In short, presumably, if you hold shares listed on Euronext, you must indicate your dividends on line 2DC.
The income to be declared is gross, ie excluding tax. In theory, the tax authorities have pre-filled the box based on the information provided by your bank. However, you must check the pre-registered amounts using the single tax form (IFU) that your bank should have sent you.
Don’t forget the tax credits
In the absence of a request for exemption from the deposit, income from shares and units declared on line 2DC was, in principle, subject to the non-liberating flat-rate withholding of 12.8% when paid. the amount of the lump sum payment already paidwhich constitutes a refundable tax credit in the event of overpayment, is indicated online 2CK. It is checked using the IFU and corrected if necessary.
Dividends paid by foreign companies, mentioned above, must also be reported on line 2DC. They are associated with a foreign value tax credit to avoid double taxation of foreign income. This tax credit, specified in your IFU, must be entered in box 2AB. Finally, the collection of income paid from abroad requires completing the form 2047 relating to income from foreign sources and income collected abroad.
A reduction of 40% possible with the progressive scale
Dividends declared on line 2DC entitle the holder to a 40% allowance. This means that you are not taxed on all of your winnings, but only on 60% of their value. Imagine that you were paid 1000 euros in dividends, the base on which the tax will be calculated will, in reality, be 600 euros.
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But to be eligible for this deductible, you must waive the PFU and opt for tax on the scale. This option is global and applies to all of your investment income. It therefore requires a general arbitration relating to all of your earnings for 2021. To opt for the progressive income tax scaleyou have to check the 2OP box. The allowance is taken into account directly by the tax authorities, without intervention on your part.
Imposing the bar also allows you to return part of the CSG deductible of your income. To do this, it is necessary to report in box 2BH the amount entered in box 2DC. By opting for the scale, this also makes it possible to deduct a certain number of costs necessary for the collection of dividends.
Deductible childcare costs
The costs of custody of the securities thus become deductible or even securities insurance premiums with the exception of insurance covering the risk of depreciation, specifies the tax authorities in its explanatory brochure. On the other hand, if you bought your shares on credit, the interest on the loan is not deductible. It is up to you to indicate to the tax officers the deductible costs and charges by entering their total amount in the box 2CA. It features income from securities and movable capital. These costs are then automatically deducted from your taxable earnings after applying the 40% allowance.
To find out if it is in your interest to opt for the scale, the easiest way is to do the life-size test. Privilege of those who declare online. To do this, you can complete the form for the first time without checking the 2OP box, then, before signing it digitally, you go back by checking this magic box. You can then compare the 2 estimates of your tax d.
What about dividends without deduction?
If you have securities in your portfolio of companies not subject to corporation tax, variable capital real estate investment companies (SPPICAVs) or listed real estate investment companies (SIICs), the dividends they pay do not entitle you to the 40% rebate. To enable the tax authorities to distinguish this income, you must report it in a specific box, the 2TS for other distributed and assimilated income. These dividends must also appear on your IFU.