Capital losses on securities: how to allocate and carry them forward for 10 years

A capital loss on the sale of securities does not reduce your taxable income. It is offset against capital gains of the same type in the same year. Any loss that could not be offset is carried forward to capital gains in the following ten years. The tax authorities state that "no offsetting of capital losses incurred against total income is possible.".

This page deals with capital losses on securities and equity interests held in private assets. It does not cover the rules specific to non-residents, unlisted securities, or derivatives. It does not detail the treatment of losses on securities of companies in liquidation or cancelled: the BOFiP (Official Bulletin of Public Finances) covers this separately.

Shares and fund units carry a risk of capital loss.

The principle: same type, same year, then ten years

Capital losses incurred during a given year are offset "exclusively against taxable capital gains of the same nature" (BOFiP). The mechanism involves three steps:

1. You add up the capital losses of the year and offset them against the capital gains of the year.
2. If an excess of capital losses remains, it is carried forward.
3. This surplus is offset against capital gains of the same nature in the following ten years, "up to and including the tenth year".

The carry-forward is valid for year N: it can be used from N+1 to N+10. A capital loss in 2026 can therefore be offset against capital gains realized up to 2036.

Which operations are "of the same nature"?«

The BOFiP (French Official Tax Bulletin) classifies capital gains and losses realized within the framework of managing your private assets in the same category. This includes, in particular, the sale of securities and equity interests, redemptions of units in SICAVs (open-ended investment companies) or FCPs (mutual funds), share buybacks by the issuing company, and the early closure of a PEA (equity savings plan).

Capital gains and losses of the same nature realized in the same year offset each other.

What the loss in value cannot do

• Reduce your other income. Salaries, rents, profits: no deduction from total income.
• To be offset against any winnings. The BOFiP (French Official Tax Bulletin) excludes capital gains included in business profits, gains from exercising stock options granted since June 20, 2007, and gains from acquiring free shares. One exception exists: capital losses on securities resulting from the exercise of options or the granting of free shares can be offset against gains realized on those same securities.
• To arise from a transaction that is not taxable. The BOFiP (French Official Tax Bulletin) states that capital losses are only taken into account if they "result from taxable transactions." A transaction subject to deferred taxation or that is exempt does not create a capital loss.

In what order are capital losses allocated?

The order is set:

1. capital losses of the year, as a priority; ;
2. then the carried-forward losses, the oldest ones first.

You choose which capital gains to offset, in this order. The offset is limited to the amount of taxable capital gains. You do not choose the year of the offset.

One point is important when holding period allowances exist. The BOFiP (French Official Tax Bulletin) specifies that the allocation is made "gross amount to gross amount," before the allowance. The allowance then only applies to the remaining balance. It is only valid if the tax scale is chosen and for securities acquired before January 1, 2018: without this option, the flat rate of 12.8% applies.

The example of the BOFiP

The BOFiP gives a simple case (example 1, § 500):

The capital loss of €20,000 is initially offset by the capital gain of €5,000. The remaining €15,000 is used the following year.

Special cases

The PEA

• Closure before five years. Gains or losses recorded "may give rise to compensation with capital gains or losses of the same nature" (BOFiP, § 300).
• Closure after five years. The loss can be offset against capital gains, distributions, and profits of the same nature in the same year, with any remaining amount carried forward for ten years. Three conditions apply: the plan is closed, the overall capital loss is calculated in relation to the contributions, and the securities are sold in full.

The rules for the PEA (equity savings plan) have their own page.

The climate-focused future savings plan (PEAC)

The BOFiP (French Official Tax Bulletin) states that a loss incurred on a PEAC (French Equity Savings Plan) "cannot be offset against gains of the same nature." The BOFiP version of April 10, 2025, was updated following the creation of the PEAC.

The surviving spouse

The BOFiP (French Official Tax Bulletin) states that "the surviving spouse may deduct carryforward losses incurred on the sale of securities owned solely by them." For securities that were part of the marital community property, paragraph 410 limits the deduction to half of the corresponding carryforward losses. The complete rules are set out in paragraph 410 of the BOFiP. These rules must be verified before any deduction following a death.

Crypto assets

Their treatment is separate. According to impots.gouv.fr, capital losses on digital assets can only be offset against capital gains of the same type in the same year. They cannot be offset against capital gains from the sale of other assets and "cannot be carried forward to subsequent years." The ten-year rule does not apply.

Where to declare it

For 2025 income, the practical guide to 2026 income tax provides the following guidelines:

• the amount of capital gains realized is declared on line 3VG of the 2042 C declaration; ;
• The capital loss for the year, after offsetting against the capital gains of the year, is declared on line 3VH; it is carried forward to the capital gains of the following ten years; ;
• The brochure asks for details of capital losses incurred from 2015 to 2024 and their allocation to capital gains in 2025, to be entered on the 2074 declaration if you subscribe to one, or on the 2074-CMV form; ;
• Depending on the circumstances, the financial institution has not calculated your gain: you then fill in form 2074; ;
• For a sale in 2026, the line numbers of the 2026 income tax return may differ: they can be checked on the year's information sheet.

Keep your statements for each year: the brochure asks for details of capital losses incurred in previous years.

Numerical example (fictitious profile)

Situation. Hélène holds a standard securities account. Her securities were acquired on or after January 1, 2018: no holding period allowance applies. She does not opt for the progressive tax scale: the flat-rate levy applies, amounting to 12.8% of income tax and 18.6% of social security contributions. Assuming social security contributions: 18.6% of the rate indicated by service-public.gouv.fr for 2026 income, assumed to remain unchanged in 2027. This rate should be verified with the tax authorities before any personal calculations. She has two capital losses carried forward: €8,000 from 2019 and €12,000 from 2022. In 2026, she sells securities A with a capital loss of €3,000 and securities B with a capital gain of €15,000.

Issue. In what order should these capital losses be allocated, and what remains to be carried forward?

Strategy. It applies the prescribed order: first the capital loss of the year, then the carried-forward capital losses, the oldest first.

Result.

The taxable capital gain for 2026 is zero. Without the carried-forward capital losses, the base would be €12,000: the flat-rate tax would be €3,768 (€1,536 income tax and €2,232 social security contributions).

There remains €8,000 of the 2022 capital loss, which can be offset against capital gains no later than 2032. The 2019 capital loss has been fully used. It would have expired after 2029.

In 2027, Hélène realizes a capital gain of €10,000. She deducts the remaining €8,000. The taxable base is €2,000, of which €628 is subject to the flat-rate levy (€256 income tax and €372 social security contributions), compared to €3,140 without the deferral.

This profile is fictitious. The amounts and years are hypothetical and have no basis in any actual case. The calculation does not take into account the deductible portion of CSG (General Social Contribution) if you opt for the progressive tax scale, nor any other elements of your tax return. It illustrates the mechanism and does not predict your specific situation.

What changes depending on your situation

• The nature of your earnings. Private equity securities, free shares, stock options, crypto-assets: capital losses do not offset each other between these categories.
• The envelope. Ordinary securities account, PEA or PEAC: the rules for closing and allocating funds differ.
• The date of acquisition of the securities. She decides on any potential tax allowances and the method of taxation to be compared.
• Your loss history. Each year of deferral has its own deadline.
• Your family situation. A death changes the rules for allocating carryforward losses.

The rule depends on your situation. No results are guaranteed.