France's holding company tax is an annual 20% charge on homes, yachts, cars and other listed assets held by family-controlled companies with €5 million or more in assets. It first applies to financial years ending on 31 December 2026.
Known in French as the taxe sur les actifs non affectés à une activité opérationnelle des sociétés holdings patrimoniales, it is often described in English as a tax on luxury assets in France. It concerns any family holding company, and any French property held through a company, that meets the conditions below - including an SCI subject to corporate tax.
Key points
- Since the 2026 Finance Act, France charges an annual 20% tax on a closed list of assets held by companies that meet three conditions: at least €5 million of total assets, control by one individual or family group, and mainly passive income.
- The listed assets are homes used by the controlling family, yachts, aircraft, cars, jewellery, precious metals, wine, racehorses, and hunting and fishing assets.
- The tax applies to financial years ending on or after 31 December 2026. For a calendar-year company, the first assessment date is this 31 December.
- A French company pays the tax itself, wherever its owners live. For a foreign company, the French-resident individuals who control it pay.
- The rules are in article 235 ter C of the French Tax Code (CGI). No dedicated official commentary (BOFiP) on this tax was identified as at 25 October 2026, so several points still need clarification.
1. What does article 235 ter C CGI target?
Holding a home, a boat or a car through a company separates the legal owner of the asset from the person who enjoys it. Article 7 of the 2026 Finance Act (law no. 2026-103 of 19 February 2026) introduced a targeted annual tax on specified assets held within companies that meet financial, control and passive-income conditions.
The government's original proposal was a 2% tax on a much broader base, including cash and securities. Parliament narrowed the base to a closed list of assets and set the rate at 20%.
2. Is your company in scope?
First, the type of company:
- French companies subject to corporate tax (IS), by law or by option: SAS, SARL, SA, and an SCI that opted for IS. Where the owners live does not matter.
- Foreign companies subject to a tax equivalent to IS, or which are capital companies, provided at least one controlling individual is French tax-resident. The "capital company" limb is designed to catch entities that pay no corporate tax at home.
Then the company must meet all three of the following conditions.
| Condition | The rule | What it means in practice |
|---|---|---|
| 1. Size | The market value of all its assets is €5 million or more at year-end | Everything counts - shares, cash, property - not only the taxable assets. The threshold is tested company by company; holdings of several companies are not added together |
| 2. Control | One individual holds 50% or more of the voting rights or of the financial rights, directly or indirectly, or controls the company in fact | Exactly 50% is enough, so two unrelated 50/50 shareholders can both meet the test |
| 3. Passive income | Passive income exceeds 50% of the combined operating and financial income recognised over the financial year, excluding reversals of provisions and depreciation | Passive income covers dividends, interest, specified royalties, copyright income, rents and certain disposal proceeds classified as operating or financial income. A specific exclusion applies to certain income under qualifying group cash-pooling arrangements |
Timing
Company size, control and the assets held are measured at the year-end date. The passive income test, and the share of business use of each asset, are measured over the whole financial year.
Who counts as "one individual"
For the control test, an individual is treated together with their spouse, PACS partner or cohabiting partner, their ascendants and descendants, and their brothers and sisters. Aggregation also applies to shareholders bound by an agreement requiring unified voting on distribution policy, even where they are not family members.
Indirect holdings are traced through
Percentages are multiplied along a chain of companies, and any holding of 50% or more is treated as 100% for this purpose. This rule serves the control test; it does not inflate the value on which tax is computed.
Trust ownership
Trust ownership creates a rebuttable presumption for the control test. If any part of the shares is held, directly or indirectly, by a trust (as defined by article 792-0 bis CGI) or by an entity in a non-cooperative jurisdiction, the 50% holding condition is presumed to be met. The law sets no minimum: a single share held by a trust can trigger the presumption. It can be rebutted, but showing that the trust is irrevocable or discretionary is not enough on its own.
3. What is taxed - and what is not
The 20% applies to the market value, at year-end, of these assets only:
- Homes that the controlling person reserves for their own use - occupied free of charge or at a below-market rent, as a main or secondary residence, or let under a sham lease. Use by any member of the family group counts.
- Yachts and pleasure boats (sail or motor) and aircraft
- Vehicles not used for a business activity, and passenger vehicles
- Jewellery and precious metals, unless used to run a museum or historic monument, or displayed in a place open to the public or to employees (staff offices do not count)
- Racehorses and show horses
- Wines and spirits
- Hunting and fishing assets
The statutory list is broader than assets formally designated for personal use. For listed assets other than homes, the key question is whether, and to what extent, the business-use exclusion applies. There is no minimum value per item.
What is not on the list
Securities, cash, and property let to third parties at a market rent are not taxed at 20%, although they count towards the €5 million threshold, and rents count as passive income. Works of art, antiques and collectors' items are not listed as separate taxable categories. An item may nevertheless fall within another listed category, such as jewellery, precious metals or vehicles. By contrast, the same Finance Act expressly lists objets d'art, de collection ou d'antiquité among the luxury assets excluded from the Dutreil business-transfer relief (article 787 B CGI).
Collector vehicles should not be assumed to be exempt
Although collectors' items are not a separate category, the statute expressly includes vehicles not used for business. A parliamentary question has asked the government to clarify the point.
Business use reduces the base
A listed asset is excluded in proportion to its use, during the year, in an industrial, commercial, craft, agricultural or professional activity - or where it is the very object of that activity. The activity may be carried on by the company or a related company. The exclusion also covers qualifying professional use by the controlling individual, or by a company in which that individual works, subject to the conditions and limits incorporated from article 975 CGI. Business use must be proven, and the method for measuring the proportion still awaits official guidance.
Acquisition debt may reduce the value of a taxable home, subject to statutory rules. Only loans taken out by the company to buy the home count; loans for works do not. No debt reduces the value of the other listed assets.
| Type of loan | Amount taken into account |
|---|---|
| Repayable in constant instalments | Capital outstanding at year-end |
| Other repayment profiles, including bullet (in fine) loans | Initial amount, reduced on a straight-line basis over the loan term |
| No fixed repayment date | Initial amount, reduced by one-twentieth for each year elapsed |
| Loans from the controlling person, the family group or related companies | Disregarded. For French-seated companies, the law allows an exception where the company demonstrates that the borrowing was not entered into mainly for tax purposes |
4. A worked example
A Paris-based founder owns 100% of a French SAS. On 31 December 2026 the company holds:
| Asset | Market value |
|---|---|
| Listed and private equity portfolio | €9,000,000 |
| Paris apartment where the founder lives rent-free | €2,500,000 |
| Wine collection | €200,000 |
| Car with no business use | €300,000 |
Assumptions: the apartment was bought with a loan from a third-party bank, repayable in constant instalments, with €500,000 of capital outstanding at year-end - the debt taken into account under the rules above. The wine and the car have no business use. Dividends and interest make up 90% of the company's operating and financial income for the year.
The company meets all three conditions: total assets of €12 million, 100% control, and passive income above 50%.
| Taxable asset | Base |
|---|---|
| Apartment, less the qualifying debt | €2,000,000 |
| Wine | €200,000 |
| Car | €300,000 |
| Total base | €2,500,000 |
| Tax at 20% | €500,000 |
The portfolio is not taxed. The tax is not deductible in calculating the company's corporate income tax base, and it is due again for every year in which the conditions are met.
5. Who pays the tax, and when?
| Situation | Who is liable | Filing and payment |
|---|---|---|
| Company with its seat in France | The company | Filed under the corporate income tax rules, with a calculation annex. Payment is due by the statutory corporate tax balance deadline (article 1668, 2 CGI) - nominally 15 May 2027 for a 31 December 2026 year-end; check the exact 2027 date against the tax calendar |
| Company with its seat outside France | French-resident individuals identified by the statutory control and aggregation rules | Declared on their personal income tax return filed in the year after the company's year-end (first in 2027). The tax is then assessed and payable within 30 days of the notice |
For foreign companies, the tax base is the portion of the market value of the individual's shareholding attributable to the listed assets. Special rules apply to split ownership (usufruct and bare ownership) through article 968 CGI. Three further rules apply:
- Escape clause. The tax is not due if the individual shows that neither the choice of the company's seat nor the holding of the shares has the main purpose of circumventing French tax law. Leading commentators consider this test new and demanding, and a seat moved after the tax was announced is likely to weigh against the taxpayer.
- Foreign tax credit. A credit is available for qualifying foreign taxes imposed on the value of the listed assets and having characteristics similar to this tax.
- Income cap. An income-based cap is available to individuals taxed in respect of foreign companies. Its calculation uses a statutory definition of worldwide income and relevant taxes, with a 75% ratio and specific anti-abuse adjustments.
In practice, the individual must declare the value of the company's listed assets and its total assets. If the foreign company does not provide that information, the law offers no specific protection.
Link with the property wealth tax (IFI)
Article 975, VII CGI provides an IFI exemption linked to the new tax: shares, for the part of their value representing real estate, are exempt when they have been subject to the tax for the company's financial year ending in the preceding calendar year. For a 31 December 2026 year-end, the first relevant IFI is 2027. Its precise application to a given shareholding and property requires careful analysis. It is an exemption mechanism, not a euro-for-euro tax credit.
6. Does the tax apply if I live outside France?
French company, non-resident owners
On the statutory wording, a French-seated company can fall within the tax even where its controlling owners are non-resident. Leading French commentaries read the text the same way. A French SCI that opted for corporate tax and holds both investments and a family home in Paris or on the Riviera is the typical case to check.
Foreign company, French-resident owner
A UK, US, Luxembourg, UAE or other company controlled by a French resident can make that individual personally liable.
Dual residents
Leading commentary considers that where a tax treaty makes the individual non-resident in France, the tax should not be due in respect of a foreign company. This awaits official confirmation.
Where is the "seat"?
The law does not define it. Commentators expect the administration to look at both the registered office and the place of effective management, which matters for a foreign company actually run from France.
Separate questions may arise under an applicable tax treaty or where the company has no operating or financial income at all.
7. What to review before your year-end
| Check | Why it matters |
|---|---|
| Map every company, trust and foreign entity in the structure | Control is traced through chains, family and shareholder agreements are aggregated, and trusts carry a presumption |
| Value every asset at market value at year-end | Both the €5 million threshold and the 20% base use market value |
| Compute the passive income ratio over the full financial year | It often decides whether the company is in or out |
| Review how each home is used by the family | A genuine, documented market-rent lease is treated differently from free use or a sham lease |
| Document business use of vehicles, boats and aircraft over the year | Only proven qualifying use reduces the base |
| Review how each home was financed | Only qualifying acquisition debt counts; related-party loans are disregarded by default |
| For foreign companies, gather the information you will need to declare | The individual must report asset values the company holds |
| Model the full cost of any restructuring before acting | Moving assets out of a company can itself trigger corporate tax, tax on distributions or transfer duties |
Before restructuring, assess both the immediate tax cost and the potential application of specific anti-abuse rules and the French abuse-of-law procedures. Any transaction should be legally effective, accurately documented and consistent with its stated purpose.
8. What is still uncertain
- Official guidance. No dedicated published BOFiP commentary on this new tax was identified in the sources reviewed as at 25 October 2026. This article distinguishes the statutory wording from points requiring further clarification.
- Collector vehicles. A written question from Senator Henno (no. 07938, 5 March 2026) asks the government to confirm whether they are outside the base. It is awaiting an answer.
- Companies with no operating or financial income. The law contains no specific rule for this situation.
- Business-use measurement. How to measure partial or mixed use, and exactly which conditions of article 975 CGI apply, remain to be clarified.
- Constitutionality. Article 7 was referred to the Constitutional Council without specific constitutional objections being advanced. The Council did not rule on the substantive constitutionality of the tax (decision no. 2026-901 DC), leaving open the possibility of a later priority question of constitutionality (QPC). Some practitioners also raise questions under EU freedom of establishment; this remains a matter of debate, not an established incompatibility.
- The 2027 budget. The government's original 2027 Finance Bill does not amend article 235 ter C. Separate proposals concerning investment assets held by family holding companies have been discussed during the parliamentary process, including a proposed 2% annual tax adopted in committee on 8 October 2026. These proposals must not be confused with the enacted 20% tax. This article will be updated once the 2027 Finance Act is adopted.
No court decision has yet been issued on article 235 ter C. The first disputes cannot arise before the tax is first assessed in 2027.
Frequently asked questions
What is the French holding company tax?
An annual 20% tax, created by the 2026 Finance Act (article 235 ter C CGI), on a closed list of assets - such as family-used homes, yachts, aircraft, cars, jewellery and wine - held by companies with at least €5 million of assets, controlled by one individual or family group, and earning mainly passive income.
When does it start?
It applies to financial years ending on or after 31 December 2026. For a French calendar-year company, payment is due by the corporate tax balance deadline, nominally 15 May 2027.
Are shares, cash and art taxed?
Securities, cash and property let at a market rent are not in the taxable base, although they count towards the €5 million threshold. Works of art and collectors' items are not separate taxable categories, but an item may still fall within another listed category, such as jewellery, precious metals or vehicles.
I live outside France. Can my French company be caught?
Yes. On the statutory wording, a French company can be in scope even if all its owners are non-resident.
Does it apply to foreign companies?
Yes, where a French-resident individual controls the company. That individual then reports the tax on their income tax return, unless they show the structure is not mainly aimed at circumventing French tax law.
Does it apply if a trust holds the shares?
Trust ownership creates a rebuttable presumption that the control test is met. It cannot be rebutted merely by pointing to the trust being irrevocable or discretionary.
Will I pay both this tax and IFI on the same property?
The law provides an IFI exemption linked to this tax, but its application should be checked for the particular shareholding and property concerned.
Related reading
- The French impatriate regime (article 155 B CGI) - for executives moving to France
- Cross-border tax and property and succession
If your structure may be in scope, a review before 31 December lets you decide with the numbers in hand. Book a consultation.
This article is general information under French law as at 25 October 2026. It is not legal or tax advice for your situation.