France’s Finance Act for 2026 introduces a new 20% tax on certain luxury assets and non-business real estate owned via corporate structures.

The measure, set out in new Article 235 ter C of the French General Code of Tax Law (Code général des impôts français or CGI), imposes an annual levy of 20% of the value of qualifying assets owned by certain holding companies, where those assets are not used for a genuine business purpose. 

 Companies affected 

The tax applies to companies that meet all four of the following conditions: 

• They are subject to French corporate income tax (impôt sur les sociétés);  

• Their assets are worth at least 5 million euros;  

• More than 50% of their income consists of passive revenue, (dividends, interest, rental income, investment returns, etc.);  

• They are directly or indirectly controlled by an individual.  

 Assets taxed 

• Luxury assets: passenger vehicles, yachts, aircraft, jewellery and precious metals, wines and spirits, racehorses and competition horses, and assets associated with hunting or fishing activities, provided they are not used for a genuine business purpose. Any debt incurred in acquiring or financing these assets is not tax-deductible.  

• Private-use residential property: main homes or second homes reserved for the use of a company’s controlling shareholder, director, or members of their family (whether gratis, at below-market rent, or under artificial letting arrangements). The tax does not apply to properties let on arm’s-length market terms. Cash holdings and financial investments are not affected. Assets subject to the new tax will, however, be exempt from French real estate wealth tax (IFI). 

 Liability and payment 

• French-resident companies must pay the tax directly.  

• If the company is registered outside France, liability falls on the French shareholders or partners who control it. Tax is charged in proportion to their ownership interest, with relief mechanisms designed to prevent international double taxation.  

 Effective date 

• The new regime applies to accounting periods ending on or after 31 December 2026. Taxpayers who may be liable for the new levy therefore have until the end of 2026 to reorganise their assets if needed. 

• The tax is not deductible for French corporate income tax purposes.  

12 June 2026

By Pascal Julien Saint-Amand and Jihane Yuksek, Althémis Paris (France)