Nouvelle taxe sur les actifs non professionnels des holdings patrimoniales

The 2026 Finance Act introduces, in the new Article 235 ter C of the French Tax Code (FTC), an annual 20% tax on the market value of certain non-business assets held by “family holding companies”.

This measure, which applies to financial years ended on or after 31 December 2026, targets companies whose income is mainly passive and in which an “individual” holds at least 50% of the rights or exercises decision-making power.

An equivalent tax has already been introduced in other countries: Ireland (20% on undistributed income), Luxembourg (0.25%) and the United States with the “Personal Holding Companies income” regime (20% on undistributed passive income in an offshore holding company).

Scope of the tax

Which companies are concerned?

This new tax applies to:

• French companies, i.e. companies with their registered office in France and subject to CIT (automatically or by election). The tax is payable by the company itself. The condition of ownership by an individual is assessed regardless of where that individual is domiciled for tax purposes (tax residence in France or abroad); or,
• foreign companies, i.e. companies whose registered office is outside France, provided they are subject to a tax equivalent to CIT or are companies with share capital (LLC). The application of this tax is subject to at least one individual shareholder being domiciled in France for tax purposes. The tax is then payable by the individuals. In addition, a safeguard clause provides that the tax is not due if the taxpayer shows that the choice of a foreign registered office and the holding of the shares do not have as their main purpose the circumvention of French tax legislation. The burden of proof, including showing that the main purpose is other than tax-related, lies with the taxpayer.

Three cumulative conditions

Three conditions must all be met for the company to be subject to this new tax, assessed at the closing date of the financial year concerned:

• The market value of all the assets held by the company must be equal to or greater than €5m;
• An "individual" (understood as the family circle, including under certain agreements between shareholders) holds at least 50% of the voting or financial rights, directly or indirectly, or exercises decision-making power in it. Indirect ownership is assessed by multiplying the successive ownership percentages. Any person holding more than 50% of the rights in another company is regarded as holding all of those rights. The ownership condition is presumed to be met where rights are held by a trust (FTC, Art. 792-0 bis) or by an entity located in an NCST (FTC, Art. 238-0 A), with no minimum ownership threshold. The taxpayer retains the possibility of showing that the company is not 50% controlled by an individual; and,
• Passive income represents more than 50% of the aggregate amount of operating and financial income (excluding reversals of provisions and depreciation). The following are defined as passive income: dividends, interest, income from bonds, receivables, deposits and guarantees, royalties from the sale or licensing of operating licences, patents and trademarks, processes or formulas, copyright, rents, and proceeds from the sale of assets generating passive income (where they constitute operating or financial income).

Tax base

Where the holding company is French

The tax base is the market value of certain non-business assets exhaustively listed in Article 235 ter C, II-A of the FTC, assessed at the closing date of the financial year, i.e.

• assets used for hunting and fishing;
• vehicles not used for a business activity, passenger vehicles, yachts, sailing or motor pleasure boats and aircraft;
• jewellery and precious metals (unless assigned to a museum or historic monument or exhibited in a place accessible to the public or to the company's employees), racehorses or competition horses, wines and spirits;
• housing that the individual reserves for his or her own use (market value less the debts attached to these assets, under certain conditions).

These assets are excluded from the tax base in proportion to their use for an eligible business activity (industrial, commercial, craft, agricultural or professional), whether carried on by the holding company, a related company or the controlling individual.

Where the holding company is foreign and held by an individual domiciled in France

The tax base corresponds to the fraction of the market value of the shares that represents the value of the non-operating assets.

In the event of a split of ownership, shares held in usufruct are in principle taken into account at their full ownership value, subject to specific provisions of the French Civil Code relating to the rights of spouses.

Rate, calculation and interaction with other taxes

Rate

The tax is calculated at the rate of 20%.

Two corrective mechanisms are provided for individuals who are liable for the tax and are shareholders of companies with their registered office abroad:

• Wealth taxes paid outside France on the non-operating assets can be credited, in proportion to the shareholding. Only the principal tax is concerned. Any excess is neither refundable nor carried forward. The credit is applied in the twofold proportion of the non-operating assets and the shareholding.
• The tax is reduced by the difference between 75% of the previous year's net worldwide income and the total of the tax and the taxes due. This mechanism includes an anti-abuse clause adding back income distributed by a controlled company where the distribution is intended to avoid the tax.

Interaction with other taxes

The tax is not deductible from income subject to CIT (FTC, Art. 39, 1-4°).

As regards real estate wealth tax (IFI), shares in companies, up to their value representing real estate assets, are exempt from IFI where they have been subject to this tax for the financial year ended in the year preceding 1 January.

Filing and collection

• For French companies, this new tax is declared under the rules applicable to CIT, together with a schedule setting out the calculation of the tax base. Collection and audit are governed by the same rules, penalties and safeguards as those applicable to CIT.
• For foreign companies, this new tax is declared on the annual income tax return of the individual taxpayer. It is collected by tax assessment notice (payable within 30 days). The scheme does not provide for withholding at source.

Entry into force

The tax is due for financial years ended on or after 31 December 2026, i.e. individuals will have no tax to declare in respect of 2026, only from 2027.

The related IFI exemption will come into force for the IFI whose chargeable event occurs on 1 January 2027.