Roche & Cie

Riding and Race-Horses Taxation

Taxation of race horses;
Investment in a racing horse can be particularly interesting. However, among the 8,000 French owners of racing horses, only a handful of them will actually make a fortune. The others, at best, will reimburse the expenses incurred.

Overview of this type of alternative investment.

The 4 major products availaible on the “horsing market”

White horse

White horse

The foal from the moment of his birthday until the end of the year of birth, can be negotiated from 4.000 € to 12.000 €. However, prices vary according to origin and ancestors’ origin, place of birth, etc. Sometimes a foal can negotiate on a higher basis, although it is particularly risky to invest heavily in a racehorse of which one knows almost nothing of its intrinsic qualities.

The Yearling is the horse born on January 1st or after January 1st until January 1st of the following year. Its value is determined by its pedigree, its athletic qualities, its precocity and the evaluation of its potential. The price range remains large, but on average Yearling is negotiated between 30,000 € and 100,000 €.

The pre-trained 2-year can also be sold on a wide range of prices, even larger than the yearling, knowing that prices can rise with certain thoroughbreds having already proved themselves. However, the investor has a better view on the qualities of his racing horse, his potential is precise, and the gains to come also.

The racehorse can be purchased during training, with the owner. For this type of mount, the minimum purchase price is already almost inaccessible for most investors.

Sources of earnings from holding a racehorse

  • The prizes awarded in a favorable ranking in competitions,
  • The sale of breeding,
  • The surplus value to the resale.
  • Race gains are often minimal and are best used to reimburse the costs of maintaining the horse.

The protrusion can also bring back enough to ensure a part of the maintenance of the racehorse. The breeding is negotiated from 300 € but can also reach exorbitant prices as soon as one considers horses having obtained good results in competition, a horse in good health can carry between 5 and 10 protrusions per month.

Taxation:

In order to determine the taxation on race winnings, it is necessary to define the degree of intervention of the owner

In order to be a non-intervening owner and to benefit from the exemption from race winnings, the owner entrusts the exploitation of his horse’s racing career to a professional, if this is not the case the owner is intervening and is taxed at BNC scheme, non-professional or professional with the possibility of deducting deficits. The capital gains are in turn after various allowances integrated into the income of the owner.

Non-Intervening Owners

Race gains realized by the owner of a racehorse without ground or non-breeder who confers his horse to a coach without exercising any diligence in order to create a source of income do not constitute taxable products And are therefore exempt from income tax. Only profits or gains from the sale of horses are taxable, in this case, after tax reductions to the IRPP.

Owners

Race gains and gains realized by owners who do not fulfill the aforementioned exemption condition and the profits or gains realized by groundless breeders from the sale of their horses are taxable in the category of non-commercial profits .

Professionals: When the activity deployed by the owner is of a professional nature, the deficit is deducted from the profits of the same nature made during the tax year by the members of the tax household. In the absence of such profits, the deficit is chargeable to the total income under the conditions of ordinary law.
Non-professional: When the activity is not professional, the deficit is not deductible either from a professional profit or from the overall income. It can only be applied against profits from similar activities in the same or the following five years.


Cabinet Roche & Cie, Chartered Accountant in Lyon, France.