Wine tax rules
TAXATION ON RESALE OF WINE (IR/IS)
Situation. You have acquired a bottle (or batch of bottles) of wine that you wish to resell to a third party in order to capitalize on the increase in its value. The gain is potentially taxable. Here is a summary of the applicable tax rules.
I. YOU ARE A FRENCH RESIDENT
The following are considered French residents (CGI, art. 4 B):
◈ Individuals:
o who have their home or main place of residence in France;
o or who carry out their main professional activity in France;
o have their center of economic interests in France.
◈ Companies or groups whose head office is located in France
1. YOU ARE AN INDIVIDUAL
| 1.1 Individuals | The following are considered private individuals ◈ Natural persons ◈ Companies or groupings covered by articles 8 et seq. of the French General Tax Code (e.g. non-trading company not subject to corporation tax) which are not engaged in a professional activity (see below). |
CGI, art. 8, 8 bis, 8 ter, 8 quater and 8 quinquies |
| 1.2 Exemption (sale price < €5,000) | A sale with a transfer price of €5,000 or less is tax-exempt. The exemption threshold is assessed on a sale-by-sale basis. In the case of multiple sales of bottles from the same lot to a single buyer, the exemption threshold is assessed globally if the sales are close in time. |
CGI, art. 150 UA BOI-RPPM-PVBMC-10 |
| 1.3 Gross gain | The capital gain is equal to : Sale price - (Acquisition price + Acquisition costs) Maintenance costs (e.g. conservation costs) are not included in acquisition costs. |
CGI, art. 150 V |
| 1.4. taxable gain (after deduction for holding period) | After two years' ownership, a 5% allowance is applied to the gain realized. The sale is therefore tax-free after 22 years. | CGI, art. 150 VC |
| 1.5. tax | The capital gain after deduction is subject to ◈ Income tax at 19%; ◈ social security contributions at a rate of 17.2%. For a total tax rate of 36.2%. |
CGI, art. 200 B |
| 1.6. Capital losses | Capital losses are not taken into account. | CGI, art. 150 VD |
| 1.7. declaration | ◈ Declaration of capital gains o Form n°2048-M filed in duplicate with the tax department o Within one month of the sale ◈ Carried forward to the income tax return o Box 3VZ of form n°2042 C o Filed the year following the year of sale |
CGI, art. 150 VG to 150 VH |
Example of application.
A case of 12 Petrus 1998 acquired on April 1, 2005 for a unit price of €1,200 including tax, i.e. a total amount of €14,400 including tax. The case is resold to a single seller on April 1, 2022 for a unit price of €3,000 including tax, i.e. €36,000 including tax
◈ Gross capital gain = 36,000 - 14,400 = €21,600
◈ Taxable capital gain = 21,600 - (21,600 x (17 - 2) x 5%) = €5,400
◈ Tax due = 5,400 x 36.2% = €1955
2. YOU ARE IN BUSINESS
| 2.1. Commercial activity | The following are considered to be professionals subject to the regime described below o Companies subject to corporate income tax; o Persons who habitually purchase wine for resale on their own account are deemed to be engaged in a commercial activity taxable as industrial and commercial profits (BIC). Factors to be taken into account include the conditions under which the wine is acquired, the time between purchase and resale, the frequency and amount of transactions, and the share of the gain in total taxable income. |
CAA Douai, 02/04/2020 : 1702225 |
| 2.2. tax category (IR) | If your company is subject to income tax, you are likely to be taxed on the resale of bottles in the Industrial and Commercial Profits (BIC) category, which implies ◈ Micro BIC: flat-rate allowance for expenses of 50% (or 71%) on profit, subject to a sales threshold of €72,600 (or €176,200) ◈ The professional BIC deficit can be offset against the household's overall income |
CGI, art. 50-0 |
| 2.3 Qualification of professional activity | The activity may consist of trading or investment (different accounting and taxation) ◈ The volume of purchases and sales, the physical possession of wines and their management are indications that the business is a trading activity; ◈ The trading activity may be accessory to the main activity; |
Bulletin CNCC, n° 167, September 2012, EC 2012-06, p. 619 |
| 2.4. Accounting in the case of trading | At the time of purchase, bottles are recorded in inventory at their acquisition price. When they are resold, you will recognize taxable income under ordinary law. |
CGI, art. 150 VC |
| 2.5. Accounting for investment | If you wish to resell the bottles within a short period of time ◈ When acquired, the bottles must be booked to a financial asset account (55) ◈ When they are resold, you will recognize taxable income under ordinary law If you do not wish to resell the bottles within a short time ◈ When acquired, the bottles should be booked to the "Other financial assets" account (270) ◈ When you resell them, you will recognize taxable income under ordinary law |
CGI, art. 200 B |
II. YOU ARE A NON-RESIDENT
1. YOU ARE AN INDIVIDUAL
The sale is tax-exempt in France (BOI-RPPM-PVBMC-10 n° 20). However, it may be taxable in your country of residence (OECD Model Tax Convention, art. 13).
2. YOU ARE A PROFESSIONAL
In principle, unless you have a permanent establishment in France, the sale is taxable in the seller's country of residence (OECD Model Tax Convention, Article 7).
VAT ON PURCHASE AND RESALE
Situations covered: You wish to purchase wine or spirits in France for consumption or resale and are wondering about your VAT rights and obligations:
- Do you have to pay VAT at the time of purchase?
- Do you have to charge VAT on resale?
Taking these factors into account is essential to optimize the profitability of your potential investment1. YOU BUY WINE IN FRANCE FOR CONSUMPTION
| 1.1 You are domiciled or established in France |
You are a private individual o Purchase subject to French VAT You are a professional subject to VATo Purchase subject to French VAT |
CGI, art. 256 and 256 A |
| 1.2 You are domiciled or established in another member state of the European Union |
You are a private individual ◈ You are in France at the time of purchase (or you carry out the transport yourself): o Purchase subject to French VAT ◈ You buy the wine remotely and it is delivered by the seller: o Purchase subject to VAT in the EU country of destination You are a professional subject to VAT ◈ Purchase exempt from French VAT under certain conditions: 1. Provide the seller with your intra-Community VAT number 2. Shipment of wine to another member state within a reasonable timeframe 3. If you arrange transport: you must provide the seller with proof of transport to another EU member state (transport document, carrier's invoice, etc.) ◈ And pay the VAT of the member state to which the wine is delivered (reverse charge). |
CGI, art. 258 A CGI, art. 256, II bis-1° of the CGI CGI, art. 262 ter, I VAT Directive, art. 200 |
| 1.3 You are domiciled or established in a country outside the European Union |
You are a private individual ◈ If the seller delivers the wine outside the EU: o No French VAT ◈ If you arrange transport from France (via a carrier): o Purchase exempt from French VAT under certain conditions: 1. Shipment of wine outside the EU within a reasonable time ; 2. You must provide the seller with a copy of the export declaration on which he is mentioned as the exporter ◈ If you buy the wine for personal use and transport it in your personal luggage: => No French VAT under certain conditions: o Sales note procedure (= tax-free or PABLO procedure) 1. Your purchase must be worth more than €100 including VAT 2. The wine must be transported outside the EU within three months of the sale 3. The seller must provide you with a sales slip, which must be stamped by the customs authorities when you leave the country Please note: the seller generally applies VAT to the sale and reimburses it to you after deduction of a percentage for administration costs o Simplified procedure for small quantities of wine: 1. Quantities of less than 90 liters of still wine or 60 liters of sparkling wine, in containers of less than 5 L and a value of less than €1,000 2. You must have the seller's invoice stamped by the customs department You are a VAT-registered professional ◈ If the seller delivers the wine outside the EU: o No French VAT ◈ If you handle transport from France, directly or via a carrier (Ex Works sale): o Purchase exempt from French VAT under certain conditions: 1. Shipment of wine outside the EU within a reasonable time 2. You must provide the seller with a copy of the export declaration on which he is mentioned as the exporter |
CGI, art. 262, I |
2. YOU BUY THE WINE IN FRANCE FOR RESALE (AND THE WINE IS STORED IN FRANCE UNTIL RESALE)
| 2.1 You plan to resell the wine in France (regardless of your country of residence or establishment) |
You are a private individual ◈ Buying : o Subject to French VAT o No possibility of deducting VAT on this purchase unless you are considered a VAT taxable person (see below) ◈ Resale : o Principle: no VAT on sales by private individuals o Exception: application of French VAT* if these sales fall within the scope of an economic activity (subject to VAT) = case of operations carried out for speculative purposes (short-term resale) and on a regular basis (repeated resale operations may be considered regular; this may also result from the quantities sold) in this case, the private individual must declare his activity and file VAT returns in France You are a professional subject to VAT◈ Purchase : o Subject to French VAT o Deductible VAT (in principle) ◈ Resale : o Application of French VAT* |
CGI, art. 256, 256 A and 258 CGI, art. 271 |
| 2.2 You plan to resell the wine outside France (whatever your country of residence or establishment) |
You are a private individual: ◈ Purchase : o Subject to French VAT o No possibility of deducting VAT on this purchase unless you are considered a VAT taxable person (see below) ◈ Resale : o Principle: no VAT on sales by private individuals o Exception: unless these sales fall within the scope of an economic activity (subject to VAT): case of operations carried out for speculative purposes (short-term resale) and on a regular basis (repeated resale operations may be considered regular; this may also result from the quantities sold) in this case the private individual must declare his activity and file VAT returns in France o Resale abroad = subject to French VAT or to the VAT of the Member State of destination (EU), or VAT exemption depending on the status of your customer, the sales figure achieved... (see 1.2 and 1.3) You are a VAT-registered professional and benefit from the duty-free purchase scheme: ◈ Purchase : Not subject to French VAT provided that the following are supplied to the seller prior to delivery: o A certificate of duty-free purchase (with figures, if applicable, and stamped by the tax authorities) o A copy of the visa exemption, if applicable ◈ Resale: o Exempt from French VAT if it is an export or an intra-Community delivery meeting the conditions (see 1.2 and 1.3) You are a VAT-registered professional and benefit from an export suspensive tax regime (RFSE): ◈ Purchase : o Payment of VAT on the purchase in France is suspended (definitively if resold for export or in the EU) ◈ Resale: o Exempt from French VAT if it is an export or an intra-Community delivery meeting the conditions (see 1.2 and 1.3) You are a VAT-registered professional and do not benefit from a special scheme: ◈ Purchase : o Subject to French VAT o Deductible VAT (in principle) ◈ Resale: o Exempt from VAT if it is an export or an intra-Community delivery meeting the conditions (see 1.2 and 1.3) |
CGI, art.258 CGI, art.271 CGI, art.256, 256 A and 258 CGI, art.256, II bis-1°, 262 ter, I and 262,I CGI, art.275 CGI, art.262 ter, I and 262, I CGI, art.277 CGI, art.262 ter, I et 262, I CGI, art.258 CGI, art.262 ter, I and 262, I |
