Taxation of Investments Driven by Passion: Increased Transparency and Oversight

"Hobby" investments—which include, among other things, jewelry, works of art, collectibles, precious metals, and rare wines—have long been subject to special tax rules that are often unknown or misunderstood by investors.

 The 2025 Tax Act introduced significant clarifications intended to define the applicable framework while increasing the tax authorities’ scrutiny of these transactions, which are often perceived as opaque or prone to abuse.

Thus, the new law maintains a full tax exemption for sales totaling less than €5,000. Above this threshold, the seller must choose between two distinct tax regimes. The first is a flat-rate tax, which is simple to apply, with rates that vary depending on the type of item sold: 6% for jewelry, works of art, collectibles, and antiques, and 11% for precious metals. A 0.5% contribution toward the repayment of social debt (CRDS) is added to these rates. This flat-rate system has the advantage of simplicity but may prove fiscally disadvantageous in cases of low capital gains.

The second tax regime proposed by the 2025 Tax Act applies to personal property and taxes only the capital gain realized, at an overall rate of 36.2%, including social security contributions (17.2%). This option is particularly suitable for investors who can accurately document the purchase price and date of acquisition of the property being sold, and it includes a progressive deduction of 5% per year of ownership beyond the second year, resulting in a total exemption after 22 years of ownership.

A recent decision by the Paris Court of Appeals clarifies the scope of these provisions by explicitly including watches not made of precious metals or gemstones among the items subject to this specific tax. This case law thus specifies that the value of a “collector’s item” is not solely linked to the precious material but also to the quality of craftsmanship and its rarity, thereby extending tax scrutiny to a broader range of goods.

Furthermore, the tax authorities have made it clear that they intend to step up oversight of these transactions, which carry a high risk of speculation. They are now using advanced technologies—including artificial intelligence and the analysis of public data from social media—to detect undeclared or underreported activities. Particular attention is being paid to the frequent and speculative resale of rare and prestigious wines. 

In a recent case, the tax authorities reclassified the repeated sale of 60 bottles of Petrus en primeur by a private collector as a commercial activity. This ruling underscores the authorities’ growing ability to identify and tax commercial activities disguised as asset management or a simple hobby.

These regulatory and case law developments call for greater vigilance on the part of owners of “hobby” investments, both regarding reporting requirements and the tax choices made during transactions. The stakes are clear: to avoid any risk of a tax reassessment and to make the most of existing provisions while ensuring full compliance with an increasingly vigilant tax authority equipped with powerful monitoring and control tools.