The 2026 Finance Act introduces, under new article 235 ter C of the French Tax Code, an annual 20% tax on the fair market value of assets not allocated to an operating activity held by family wealth-holding companies: assets of EUR 5 million or more, more than 50% passive income, and a holding of at least 50% by an individual, directly or indirectly. The regime was upheld by the Constitutional Council (decision no. 2026-901 DC of 19 February 2026) and applies to financial years ending on or after 31 December 2026 (first taxation in spring 2027). For business owners and family offices, two paths open up: restructuring the holding company (reallocating assets, genuine operating activity) or relocating the structure and its principal to Switzerland (Geneva lump-sum tax regime, exit tax). The firm, registered with the Paris & Geneva Bars, weighs both.
Introduced by the 2026 Finance Act (Law no. 2026-103 of 19 February 2026, art. 7) and codified under new article 235 ter C of the French Tax Code, the tax on wealth-holding companies is an annual 20% levy on the fair market value of assets not allocated to an operating activity held by certain wealth-holding entities. It targets passive holding structures, not the professional business tool. The Constitutional Council held the regime not contrary to the Constitution (decision no. 2026-901 DC of 19 February 2026).
Three cumulative conditions define the wealth-holding company within scope: assets with a total fair market value of EUR 5 million or more at the end of the financial year; passive income representing more than 50% of total revenues (dividends, interest, rents, royalties, capital gains on those assets); and a holding of at least 50% of the voting or financial rights by an individual, directly or indirectly, together with their family group (or the exercise of decision-making power in fact). Listed companies and regulated funds in principle remain outside the scope.
The tax base is the fair market value, on the last day of the financial year, of the non-business assets listed by the statute: yachts and pleasure craft, private aircraft, passenger vehicles, precious metals, works of art and collectibles, and residences made available to shareholders. Debts are in principle not deductible, save for a partial deduction for real estate acquisition debt. The regime applies to financial years ending on or after 31 December 2026: the first taxation will take place in spring 2027.
The stakes are compounded by the interaction with the differential contribution on high incomes (CDHR), which establishes a minimum taxation of approximately 20% for very high incomes. For a business owner holding a wealth-holding company, the combination of the two regimes may justify a fundamental trade-off between restructuring and relocation.
Two strategies, two rationales. Restructuring acts on the tax base and the classification of the holding company; relocation acts on the residence of the principal and where the structure is anchored. The right choice depends on the assets, the time horizon and the life plans involved.
Reallocate assets to a genuine operating activity, bring the share of passive income below the 50% threshold, ring-fence luxury assets, and document economic substance. The objective: fall outside the scope of the tax without relocating the principal. See the holding company tax cornerstone page.
Transfer the principal's tax residence to Switzerland under the Geneva lump-sum tax regime (expenditure-based taxation), while managing the French exit tax on the shares. Relevant where the life plans and the composition of the assets lend themselves to it. See our alert on the 2026 Geneva lump-sum tax regime.
The minimum taxation of approximately 20% (CDHR) and the exit tax on unrealised capital gains (overall rate of 31.4% since the 2026 Social Security Financing Act: 12.8% income tax plus 18.6% social levies) must be modelled together: a poorly sequenced relocation can trigger immediate taxation where a deferral would have been available. Timing is decisive.
The choice engages two legal systems. The amended 1966 France-Switzerland tax treaty, the residence rules and the substance documentation must be handled in parallel. The firm's dual presence allows the trade-off to be managed seamlessly on both sides of the border.
Jonathan Bensaid, founding lawyer, advises business owners, families and family offices on auditing exposure to the holding company tax, restructuring the holding company (asset reallocation, operating substance), and weighing that path against a relocation to Geneva (lump-sum tax regime, exit tax), in a manner consistent with the CDHR. The firm is registered with the Paris & Geneva Bars.
Under article 235 ter C of the French Tax Code, the tax targets wealth-holding companies whose assets have a total fair market value of at least EUR 5 million, where more than 50% of revenues are passive income (dividends, interest, rents, royalties, capital gains on those assets), and which are held as to at least 50% by an individual, directly or indirectly, together with their family group. The 20% tax applies to the fair market value of the listed non-business assets not allocated to an operating activity (yachts, private aircraft, passenger vehicles, precious metals, works of art and collectibles, residences made available to shareholders). Listed companies and regulated funds in principle remain outside the scope.
The regime, introduced by the 2026 Finance Act (Law no. 2026-103 of 19 February 2026) and codified under article 235 ter C of the French Tax Code, applies to financial years ending on or after 31 December 2026. The first taxation will therefore take place in spring 2027. This leaves a window to audit exposure and, where appropriate, restructure the holding company or organise a relocation before the financial year closes.
The restructuring aims to strip the holding company of its wealth-holding classification: reallocating assets to a genuine, documented operating activity, bringing the share of passive income below the 50% threshold, ring-fencing or disposing of purely luxury assets, and building verifiable economic substance. Each lever must be documented and consistent with the reality of the business, failing which reclassification is a risk.
It can be, where the life plans and the composition of the assets lend themselves to it. Transferring the principal's tax residence to Switzerland under the Geneva lump-sum tax regime (expenditure-based taxation) changes the tax nexus. But the French exit tax on unrealised capital gains must be managed (an overall rate of 31.4% since the 2026 Social Security Financing Act, with a payment deferral available and relief after 2 or 5 years depending on the value of the shares), and the timing coordinated with the amended 1966 France-Switzerland tax treaty. A poorly sequenced relocation can trigger immediate taxation.
The firm, registered with the Paris & Geneva Bars, carries out an audit of exposure to the holding company tax, models both paths (restructuring vs relocation) taking into account the CDHR and the exit tax, and implements the chosen solution. The dual Geneva-Paris presence allows the French and Swiss aspects to be coordinated directly, without any disconnect between advisers on either side of the border.
Related resources on the holding company tax, tax residence and wealth structuring.
The full regime: scope, tax base, calculation and reporting obligations.
Voir la page Area of expertiseTransfer of tax residence, exit tax and bilateral tax treaties.
Voir la page Tax alertExpenditure-based taxation: thresholds, conditions and the France-Switzerland treaty.
Voir la page Lead counselWealth structures and France-Switzerland tax residence.
Voir la pageA first confidential discussion. Audit of exposure to the wealth-holding company tax, comparative modelling of restructuring versus relocation to Geneva (lump-sum tax regime, exit tax, CDHR), and coordinated implementation between Paris and Geneva.
© BENSAID Avocats. This article is educational and indicative. It does not constitute personalised legal advice. Sources: Law no. 2026-103 of 19 February 2026 (2026 Finance Act, art. 7, tax on wealth-holding companies, art. 235 ter C of the French Tax Code); Constitutional Council, decision no. 2026-901 DC of 19 February 2026; differential contribution on high incomes (CDHR); France-Switzerland tax treaty of 9 September 1966, as amended; French Tax Code (exit tax, art. 167 bis, overall rate of 31.4% since the 2026 Social Security Financing Act). Last updated: July 2026.
