CTO Tax France 2026: Flat Tax 31.4%, Dividends & Capital Gains
The compte-titres ordinaire (CTO) is France's standard brokerage account — no contribution cap, no restrictions on which assets you can hold. But it comes with a tax bill every time you sell or receive dividends. Here's everything you need to know about French CTO taxation in 2026.
CTO vs PEA: the key tax difference
The fundamental difference between a CTO and a PEA is that the CTO has no tax wrapper. Every capital gain realised and every dividend received triggers taxation in that same year. There is no deferral, no exemption after a certain number of years.
| Account | Capital gains | Dividends | Contribution cap |
|---|---|---|---|
| CTO | 31.4% flat tax or progressive income tax | 31.4% flat tax or progressive IT + 40% allowance | Unlimited |
| PEA (under 5 years) | 31.4% on withdrawal | Reinvested tax-free | €150,000 |
| PEA (over 5 years) | 18.6% on withdrawal | Reinvested tax-free | €150,000 |
The PEA wins on long-term compounding thanks to tax-free growth inside the wrapper and the reduced 18.6% rate after 5 years. But the CTO remains essential in several specific situations — more on that below.
Capital gains tax on a French CTO
Since January 2026, the PFU (Prélèvement Forfaitaire Unique, or flat tax) rate is 31.4%, split into:
- 12.8% income tax (IR)
- 18.6% social charges (PS: CSG, CRDS, etc.)
This rate applies to your net capital gain — the sale price minus the purchase price (including fees). The flat tax is the default regime: if you do nothing special on your tax return, this is what applies.
If you realise a loss during the year, it offsets gains of the same type. If the net balance is still negative, the loss can be carried forward for 10 years.
Dividend tax on a French CTO
Dividends received in a CTO are taxed in the year they are paid. Two options are available.
Option 1 — PFU flat tax 31.4% (default)
Simple and automatic: 31.4% on the gross dividend amount. No special action required when filing your tax return.
Option 2 — Progressive income tax scale (option 2OP)
You can opt for the progressive income tax scale. In this case:
- A 40% allowance applies to eligible dividends
- The remaining 60% is added to your taxable income and taxed at your marginal income tax rate (TMI)
- Social charges of 18.6% apply to 100% of the gross dividend (not on the post-allowance amount)
2026 update: The 2OP option is now revocable until 31 December 2029 for 2026 income. In practice, you can choose this option on your 2027 tax return (for 2026 income) and revert to the flat tax if it turns out not to be advantageous.
When to choose the progressive tax scale instead of flat tax?
The progressive option is advantageous if your marginal tax rate (TMI) is 11% or below (including 0%). Example with €1,000 gross eligible dividends:
| Regime | Income tax base | Income tax (TMI 11%) | Social charges (18.6% on gross) | Total tax | Net received |
|---|---|---|---|---|---|
| Flat tax 31.4% | €1,000 | €128 (12.8%) | €186 | €314 | €686 |
| Progressive IT 11% | €600 (after 40% allowance) | €66 | €186 | €252 | €748 |
At an 11% marginal rate, the progressive option saves €62 per €1,000 of dividends. At 30% TMI, it is the reverse: the flat tax is more favourable (12.8% income tax vs 30% × 60% = 18% effective income tax on gross).
Worked example: €10,000 capital gain
You bought shares for €10,000, they are now worth €20,000. You sell and realise a €10,000 capital gain. Here is what you owe depending on the regime:
| Regime | Income tax | Social charges | Total tax | Net in pocket |
|---|---|---|---|---|
| Flat tax (default) | €10,000 × 12.8% = €1,280 | €10,000 × 18.6% = €1,860 | €3,140 | €6,860 |
| Progressive IT (TMI 11%) | €10,000 × 11% = €1,100 | €10,000 × 18.6% = €1,860 | €2,960 | €7,040 |
Note: the 40% allowance does not apply to capital gains — it is reserved for dividends. At an 11% marginal rate, switching to progressive taxation saves €180 on a €10,000 capital gain.
The 2OP option (progressive income tax) applies to all your capital income for the year — both dividends AND capital gains. You cannot choose progressive taxation for dividends and the flat tax for capital gains. Calculate the overall impact before opting in.
How to file CTO income on your French tax return
Your broker sends you an IFU (Imprimé Fiscal Unique) each year in February-March. It summarises all taxable amounts. You simply copy the figures onto your tax return:
- Box 3VG (form 2042-C): net capital gains taxable at flat tax
- Box 2DC: gross dividends subject to flat tax
- Box 2OP: tick this box to opt for progressive income tax (applies to the entire year)
- Box 3VM: net capital losses for the year (if applicable)
If you made no sales and received no dividends during the year, there is nothing to declare.
When a CTO beats a PEA
The PEA is not always the right answer. Here are the concrete situations where a CTO is the better choice:
1. Your PEA contribution cap is reached
The PEA is capped at €150,000 in contributions. Once this limit is reached, you cannot deposit another euro. The CTO becomes the only option for continuing to invest in equities or ETFs.
2. The ETFs you want are not PEA-eligible
Many popular ETFs cannot be held in a PEA. Examples:
- iShares Core MSCI World UCITS ETF (IWDA) — TER: 0.20% — ISIN: IE00B4L5Y983 — not PEA-eligible
- iShares Core S&P 500 UCITS ETF (CSPX) — TER: 0.07% — ISIN: IE00B5BMR087 — not PEA-eligible
If you specifically want these ETFs for their ultra-competitive TER or Irish domicile, a CTO is your only option.
3. You are not a French tax resident
The PEA is reserved for French tax residents. If you leave France, you can no longer fund your PEA. A CTO remains accessible from abroad (subject to your broker's rules).
4. You need immediate flexibility
A CTO allows withdrawals at any time without structural consequences. Before the PEA's 5-year mark, any withdrawal triggers its closure. If you have a short-term horizon or a project in 2-3 years, a CTO avoids jeopardising your PEA tax advantage.
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Join Treestep →Frequently asked questions
Do I need to declare my CTO every year even without selling?
If you received dividends during the year, yes — they are taxable even without any sale. However, if you received no dividends and made no capital gains (no sales), there is nothing to declare. Your broker will send you an IFU (tax summary document) in February-March detailing exactly what is taxable.
What is the 3VG tax box?
Box 3VG on the French tax return (form 2042-C) is where you report the net amount of your taxable capital gains subject to the PFU flat tax. Your broker calculates this amount for you and indicates it on the IFU. You simply copy the figure.
Does the 40% dividend allowance apply to ETFs?
Not always. The 40% allowance applies only to dividends paid by eligible French or European companies. Most ETF distributions are classified as "fund distributions", which do not systematically benefit from the 40% allowance. Check your broker's IFU document for the exact classification of income received.
Foreign CTO accounts: same French tax rules?
If you are a French tax resident, investment income from foreign accounts (dividends, capital gains) is taxable in France. The 31.4% PFU flat tax applies by default. Bilateral tax treaties may reduce foreign withholding tax, recoverable as a tax credit. A CTO held abroad must also be declared on form 3916.