FCP, FCPR and FPCI: the tax regime for unit holders

A standard mutual fund is taxed according to the nature of its payouts: dividends, interest, or capital gains. Redemptions of your units are subject to the capital gains tax regime. Tax-advantaged venture capital funds (FCPR and FPCI) offer, under certain conditions, a preferential tax regime: distributed amounts are exempt from income tax if you hold the fund for five years and reinvest. Social security contributions remain payable. If any of these conditions are not met, the exemption is revoked.

This page deals with individual investors residing in France. It does not cover FIP and FCPI tax reductions, which are addressed on a dedicated page. It does not provide social security contribution rates: the sources consulted do not specify any for these products. It does not address the capitalization of FCP returns, the tax-deductible investment quota, or non-resident investors. The BOFiP (French Official Tax Bulletin) describes FCPRs (French Venture Capital Funds) as funds geared towards risky investments: the invested capital may be lost in whole or in part.

FCP, FCPR, FPCI: what are we talking about?

The BOFiP (BOI-RPPM-RCM-40-30, version of 25/05/2023) provides these guidelines:

• The FCP does not have legal personality: it is a co-ownership of financial instruments and deposits.
• FCPRs (venture capital funds), along with FCPIs and FIPs, form a category of funds "oriented towards risky investment" and open to non-professional investors.
• The FPCI According to the BOFiP (French Official Tax Bulletin), professional venture capital funds (FPCI) are "open only to professional investors." The conditions for an individual to access a FPCI are not addressed here. The BOFiP also mentions, in the section on preferential tax treatment, individuals subscribing to "tax-advantaged" FPCIs: this point is not addressed here and should be verified with the BOFiP.

The BOFiP also distinguishes between "legal" FCPR and FPCI funds and "tax-advantaged" FCPR and FPCI funds. A "tax-advantaged" fund is a "legal" fund whose assets also meet the conditions of paragraph II of Article 163 quinquies B of the French General Tax Code (CGI). Its investors benefit, under certain conditions, from a favorable tax regime.

The AMF (French Financial Markets Authority) presents private equity as the acquisition of stakes in unlisted companies. It states that it is impossible to redeem FCPR (French Venture Capital Fund) units during the fund's lifetime, which can last up to 10 years or more, and that one can "lose all or part of your capital." The BOFiP (French Official Tax Bulletin, § 170), however, states that FCPR units are "transferable": the difference between redemption by the fund and transfer is not detailed here and should be verified with the relevant sources. According to the AMF, FCPRs are invested to a minimum of 50% in securities of unlisted companies (AMF page dated February 23, 2023). This figure from the AMF is not presented as the quota for the tax regime.

The holder of a mutual fund: three cases

A distribution method: coupons

The sums distributed by a mutual fund "generally constitute investment income." Each sum allocated to a unit is broken down "according to its nature and origin": this is called couponing. Individual unit holders are subject to income tax under the standard rules.

The repurchase of your shares

The redemption of units in a mutual fund (FCP), or the dissolution of the fund, is taxed as a transfer of securities. According to the 2026 income tax guide (for 2025 income), the amount is declared on line 3VG. The flat rate is 12.8% (%), with the option to choose the progressive tax scale (see the "Transfers of Securities" page dated April 8, 2026). Allowances for holding periods apply only to securities acquired before 2018, if the progressive tax scale is chosen (see the guide).

Capitalization

The BOFiP refers the applicable tax regime for capitalized products to the BOI-RPPM-PVBMI, without detailing it in this instruction. This page does not address it.

The preferential tax treatment of FCPR and FPCI funds«

Article 163 quinquies B of the French General Tax Code (CGI) provides for an exemption from income tax. The BOFiP (Official Bulletin of Public Finances) sets out the conditions:

Shares of "carried interest" are excluded from benefiting from tax advantages.

What is exempt

The following are exempt from income tax: "sums or assets distributed by the fund to unit holders," provided they are "immediately reinvested in the fund." Tax credits attached to the fund's income are not available to unit holders.

The BOFiP (Official Bulletin of Public Finances) specifies that "the distributions and gains in question remain subject to social security contributions." The applicable rate for these products is not given by the sources consulted.

Where to declare it

The proceeds from FCPR units and capital gains on the sale of these units, exempt under Articles 150-0 A and 163 quinquies B, are declared on line 3VC. The brochure specifies: "The amount declared on line 3VC is used solely for determining the reference tax income." The BOFiP (Official Bulletin of Public Finances) also requires the investor to inform the fund's management company and stipulates that the amounts in question must be included on the single tax form no. 2561. It also requires the retention of documents relating to the fund's transactions.

When the exemption is revoked

The BOFiP (French Official Tax Bulletin) states: "It is therefore sufficient that one of the conditions listed in Article 163 quinquies B of the French General Tax Code (CGI) is no longer met." These conditions include the sale of shares, failure to reinvest, or the composition of the assets. The previously exempt amounts are then added to the income of the year in which the conditions cease to be met. The BOFiP provides an example: a shareholder who sells their shares in May of year N+4 will have the proceeds from years N to N+3 included in their income for year N+4.

The exemption is maintained in the event of a transfer during the commitment period when it is linked to disability (2nd or 3rd category), death, retirement or dismissal of the taxpayer or his spouse or partner bound by a PACS subject to joint taxation, with a direct causal link between the transfer and one of these events (BOFiP § 420).

FCP, FCPR and FPCI: numerical example (fictitious profile)

Situation. Marc holds units in a mutual fund (FCP), acquired after January 1, 2018: no holding period allowance applies. The fund pays him €1,000, broken down by the management company as follows: €700 in dividends eligible for the 40% allowance (%) and €300 in capital gains coupon payments. Assumptions: his marginal tax rate is 30% (%); the calculation is based on income tax only, without deductible social security contributions or CSG (General Social Contribution). Marc also subscribed on March 14, 2026, to units in a tax-advantaged venture capital fund (FCPR) and has committed to holding them.

Issue. How is this distribution taxed according to the method of taxation, and until when does its conservation commitment last?

Strategy. It applies the coupon allocation, then the allowance to only the "eligible dividends" portion.

Result.

The FCPR's conservation commitment, calculated from date to date, runs from 14/03/2026 to 14/03/2031.

This profile is fictitious. The amounts, breakdown, and marginal tax rate are hypothetical. The table does not compare the two tax regimes: it does not include social security contributions, deductible CSG (General Social Contribution), or your other income. It illustrates the mechanism and does not predict your specific situation.

FCP, FCPR and FPCI: what changes depending on your situation

• The type of funds. Ordinary FCP, "legal" or "tax" FCPR, FPCI: the rules are not the same.
• The composition of the cast. Eligible dividends, interest, coupon capital gains: each fraction has its own treatment.
• Your tax residence. The preferential scheme applies to resident individuals.
• The date and method of subscription. Direct subscription, with a waiting period calculated from each subscription.
• Your participation in the fund's companies. It is measured against your spouse, your ascendants and descendants.
• Life events. Disability, death, retirement, dismissal: the BOFiP draws specific exceptions from these.

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