Becoming a horse owner is the dream of many horse racing enthusiasts. This article will focus on the legal and fiscal constraints encountered by non-professional and non-intervening co-owners in France, that is those for whom this investment is intended for patrimonial purposes.
Racehorse Career Associations
The acquisition of a trotter or a gallop may represent a significant investment, which is why the purchase of individual horses is reserved for only a minority of enthusiasts. On the other hand, joint ownerships are very common in the sector and allow everyone to invest in the career of a racehorse. These associations, governed by the parent companies of the races (France Galop and the Société du Cheval Français), aim to pool the financial resources necessary for holding, training and participating in races. Each co-owner then participates in the cost of the horse’s career in proportion to his initial investment, sharing the gains generally follows the same logic. The maximum number of co-owners is six for a gallop horse, and ten for a trotter.
In terms of taxation of income
The joint ownership thus declared is fiscally transparent, since it does not dispose of any personal means of its own, so the tax regime applicable depends on the personal situation of each co-owner. We will focus here on the situation of non-professional co-owners and non-stakeholders.
Imposition of race wins
For simple investor owners, earnings and race bonuses are exempt from income tax. The products from horse racing are in fact assimilated to gains from games of chance.
The products of the projections belong to the Non Commercial Benefits (BIC). Thanks to the micro-scheme, whose owners are eligible if their individual revenues do not exceed 33.200 €, the reporting obligations are not very marked. Taxable profit will be determined after a tax allowance of 34% (with a minimum deduction of € 305).
Capital gains on disposal
For the non-intervening owners, the capital gains realized on the sale of the horse or on the sale of the shares of the co-ownership, falls within the regime of capital gains on movable property realized by individuals. The gross capital gain is thus calculated according to the traditional conditions (selling price – purchase price) and then reduced by deductions for holding period: 5% per year, starting from the second year of holding. The tax rate is 19% + 15.5% of CSG CRDS.
Gains received by owners whose activity is not considered to be carried on professionally are considered to be outside the scope of VAT.
About Wealth Tax:
Race horses are assimilated to movable property and taxed on their market value on January 1 of the tax year.