In France, classic cars are subject to special taxation, whether in the event of purchase abroad or even resale. The argus takes stock of what you need to know before importing or selling an old car.
Buying a classic car abroad or selling it is an opportunity to pay taxes. If the taxation in the event of importation has become rather favorable in recent years, the situation is different for the sale in case of capital gain. Therefore, it is better to be interested in the question before buying or even selling in order to avoid unpleasant surprises.
The tax definition of “collector’s car”
Since 1er January 2014, to benefit from the status of collection vehicle for tax purposes, a car must meet three cumulative criteria:
- be at least 30 years old;
- be in its original condition, without substantial modification to the chassis, bodywork, steering or braking system, transmission or suspension, or engine;
- correspond to a model or type whose production has ceased.
Two other categories of vehicles can also claim collector car status, regardless of their year of manufacture:
- competition motor vehicles designed, built and used exclusively for competition and possessing a significant sporting track record acquired during prestigious national or international events;
- motor vehicles that have taken part in a historic event.
This collector’s vehicle status has tax consequences in the event of sale or import into France.
TO READ. Gray card collection. A status that is not irreversible!
The sale of a collector’s car taxed in the event of a capital gain
In principle, selling a car for more than the price at which it was purchased does not give rise to any taxation. It is different for classic cars, the sale of which in France or abroad (export) entails the payment of a tax in the event of a capital gain, except in three cases:
- the sale price of the vehicle is less than €5,000;
- the seller has owned the vehicle for more than 22 years;
- the sale is made for the benefit of a museum.
Apart from these three situations, if the seller of a collector’s vehicle earns a profit in relation to its purchase price, he will have to declare it to the tax authorities and pay a tax. In this case, he will then have the choice between two taxes:
- either a flat tax of 6.5% of the sale price;
- or the common law tax on the capital gain of 34.5% of the actual capital gain, calculated taking into account the costs of restoration and repair.
Note that the amount of capital gains tax is subject to a 5% reduction per year of possession of the vehicle beyond the second year, which is why there will be no tax if the seller has owned the vehicle for over 22 years. It is therefore imperative to know this type of taxation in order to take it into account when setting the sale price and to opt for the most advantageous tax at the end of it.
Reduced taxes for importing a vintage car
Importing a used car into France only gives rise to the payment of taxes when it comes from a country outside the European Union. In this case, a VAT of 20% must be provided, to which are added 10% customs duties.
For collector vehicles, taxation is different. Since 2014, models imported from a country outside the European Union benefit from an exemption from customs duties and VAT at a reduced rate of 5.5%. If the classic car is acquired within the European Union, no tax is due. A good point for those who wish to buy the vehicle of their dreams from abroad. It should nevertheless be kept in mind that other costs may considerably increase the bill. This is particularly the case for conversion and bank transfer costs, transport (especially if it is by sea), or even local insurance in the countries crossed.
Nevertheless collector’s vehicles are an interesting investment, particularly for the wealthiest, since they are not subject to the ISI (tax on real estate wealth), which replaced the ISF (wealth tax). They are, however, subject to inheritance tax on the basis of a value which cannot be less than that indicated on the insurance contract which covers them. Be that as it may, classic cars above all make it possible to satisfy a passion that will often outweigh these tax considerations. The million vintage cars listed last year on our roads by the French Federation of Vintage Vehicles (FFVE) is the best proof of this!