French Finance Bill 2027: the tax measures under debate

The parliamentary timetable after the rejection in the Assemblée nationale

A finance bill follows a timetable set by article 47 of the Constitution. The Assemblée nationale must give its decision at first reading within forty days of the bill being tabled, and the Senate within twenty days of the referral. If the Assemblée nationale has not voted on the bill as a whole within that period, the Government refers to the Senate the text it presented, amended where appropriate by the amendments voted by the Assemblée nationale and accepted by the Government, and the Senate then has fifteen days (article 40 of the Organic Law on Finance Acts). The text then goes, in principle, to a joint committee and, failing agreement, to a new reading and, if the Government so requests, a final reading. If Parliament has not given its decision within seventy days, "the provisions of the bill may be brought into force by ordinance".

These rules matter for your decisions. As the Assemblée nationale rejected the first part, the bill is deemed rejected at first reading: none of the amendments voted by the deputies should appear in the text sent to the Senate, which would be the bill as tabled by the Government. That is what happened with the 2025 budget: rejected by the Assemblée nationale on 12 November 2024, the bill was sent to the Senate on 21 November 2024 in its initial version (Senate file). The positions taken by the deputies are not lost for all that: the Senate may take them up, the Government may build them into the text it defends, and the Assemblée nationale may reinstate them at a new reading. This page therefore gives, for each measure, the version as tabled, which is again the reference, and the version voted by the deputies before the rejection.

The coming stages, in order:

• Senate: transmission of the bill as tabled, examination in the finance committee then in plenary, within twenty days of the referral. The announced timetable provides for plenary sittings from 20 November to 8 December and a vote on the whole bill on 9 December, subject to confirmation in the legislative file.
• Joint committee (commission mixte paritaire) on the Senate's text, then, failing agreement, a new reading in each chamber and a final reading in the Assemblée nationale. It is at these stages that the deputies may reinstate the measures they had voted.
• Conseil constitutionnel, if a referral is made, then promulgation and publication in the Journal officiel, in principle before the end of December. This page will then present the Finance Act for 2027.
• Failing that: if Parliament has not given its decision within seventy days, the provisions of the bill may be brought into force by ordinance; if the budget cannot be promulgated in time, the Government may first seek a separate vote on the first part; failing that, it tables a special law authorising the collection of existing taxes until the budget is passed (article 45 of the Organic Law), the route taken in December 2024 and December 2025.

Contribution-and-sale: the bill as tabled returns to the Senate, after the deputies' rewrite

What the bill as tabled provides, and what the Senate will deliberate on. Article 5 ends the deferral of tax on the contribution gain (article 150-0 B ter of the French Tax Code) on any gratuitous transfer of the holding company's shares, whether by gift or on death, and repeals paragraph II of the article, which currently has the deferral taken over by a donee who controls the holding company. The income tax could be paid over five years, against security (future article 1681 G). That text, its effects and its timing are set out on our page Budget 2027: the Dutreil pact preserved, the end of the contribution-and-sale "purge".

What the deputies had adopted before the rejection (amendment No. 3089 and sub-amendment No. 3985). This version fell with the rejection of the first part; it is still described here because it may be taken up again in the Senate or at a new reading. The deputies had deleted the general replacement of the words "transfer for consideration" by the word "transfer" and kept paragraph II. Instead, a new 5° of paragraph I would have ended the deferral on a gift or manual gift of the shares received in exchange for the contribution, but only if the holding company has sold, or had redeemed, repaid or cancelled, the contributed shares within eight years of the contribution and one of the following two situations arises:

• the sale took place within three years of the contribution and the deferral was kept thanks to a reinvestment in private equity funds (d of 2° of paragraph I): the deferral would end in proportion to the share of the proceeds so reinvested;
• the sale took place more than three years after the contribution and the proceeds were not reinvested, within the period and in the proportion set by 2°, in an operating activity or in the capital of eligible companies (a, b and c of 2°): the deferral would end in proportion to the share not reinvested.

If the reinvestment period is still running on the date of the gift, the deferral would end, in the donor's name, when it expires. A fall in the value of the shares since the contribution, recorded at the time of the transfer, would be set against the deferred gain. A gift with reservation of usufruct would count only for the value of the bare ownership under the scale of article 669. Intermediate transactions (merger, demerger, exchange, contribution under a rollover or deferral regime, cancellation without any allocation to shareholders) are not treated as sales. The instalment plan for the income tax (future article 1681 G) would be extended from five to ten years, still against security.

What it would change. Under the bill as tabled, any transfer of the shares received in exchange for the contribution, by gift or on death, would make the deferred gain taxable. In the deputies' version, transfers on death were no longer covered, the deferred gain still being wiped out on death as it is today, and only gifts of a holding company whose sale proceeds had remained in cash, investments or funds would have triggered the tax. In both versions the application date is the same: transfers made since 1 October 2026.

Position at 6 November 2026: the deputies' wording fell with the rejection of the first part; the Senate will receive article 5 in its version as tabled. The narrower version may reappear in the Senate or at a new reading, though nothing guarantees it. If you have given holding company shares since 1 October 2026, or if a gift is planned, have the tax calculated under both versions and the history of the holding company's sales and reinvestments since the contribution drawn up.

Exit tax: the article 5 bis voted by the deputies fell with the rejection

Article 167 bis of the French Tax Code taxes the unrealised gains of taxpayers who move their tax residence out of France. Today, the deferral of payment is automatic on a move to a Member State of the European Union or to any other State bound to France by an administrative assistance agreement and a tax recovery assistance agreement, and the tax on unrealised gains is cancelled two years after departure, or five years where the shares exceed €2.57 million, if the shares are still held on that date.

An article 5 bis, added by the deputies (amendment No. 462 and identical amendments) and which fell with the rejection of the first part, would have changed this regime on two points. The automatic deferral would be reserved to Member States of the European Union and to other States party to the European Economic Area agreement meeting the same treaty conditions; a move to a State outside the Union and the European Economic Area would in all cases fall under the deferral on request, which requires the appointment of a representative in France and the provision of security. The relief period would be extended to fifteen years, whatever the value of the shares. The article also amends paragraph VIII of article 167 bis and repeals paragraph III of article 112 of the Finance Act for 2019; it does not itself set an application date.

Article 5 of the bill as tabled, the only text sent to the Senate, adjusts the exit tax to bring it into line with the contribution-and-sale rules: a gratuitous transfer of the holding company shares received in exchange for a contribution made after departure would end the deferral, where the shares contributed are those on which the unrealised gain was assessed on departure (new f bis of paragraph VII of article 167 bis), and the five-year instalment plan would be available for the tax so due.

Position at 6 November 2026: article 5 bis is not in the text sent to the Senate; the current regime of article 167 bis (automatic deferral on a move to treaty States, relief after two or five years) remains the reference, subject to a new amendment in the Senate or at a new reading. For a departure planned in 2027, particularly outside the European Union, have the exit tax calculated under both regimes before setting the date: see the French exit tax.

Gifts and business succession: what the deputies had added, and what remains

Cash gifts (article 4). The bill as tabled provided, for gifts made from 1 January to 30 June 2027 to an adult or emancipated descendant (or, failing that, a nephew or niece) under fifty, a single rate of 6% within a limit of €100,000 per donor and per donee, 5% where at least 1.1% of the sums received is paid to a charity helping people in need, and an increase of the article 790 G exemption from €31,865 to €50,000. The deputies had extended the period to the whole of 2027 and raised the article 790 G exemption to €100,000; that version fell with the rejection, and the Senate will deliberate on the version as tabled (first half of 2027, €50,000). These gifts would not be taken into account under the article 784 recall rule. The details of the bill as tabled are on our page Budget 2027: Dutreil and contribution-and-sale.

Dutreil pact (articles 10 septies and 10 octies, which fell with the rejection). The Government's bill does not amend article 787 B of the French Tax Code. The deputies had adopted two amendments. The first would have required at least one of the donees to be between eighteen and sixty on the day of the transfer, for company shares (787 B) as for a sole proprietorship (787 C). The second would have allowed, for an unlisted company, a full exemption instead of 75% if the collective undertaking lasts at least three years and each heir or donee undertakes to keep the shares for ten years instead of six; the same option would have been open to a sole proprietorship. These two additions, which follow opposite logics and had not been proposed by the Government, are not in the text sent to the Senate: at this stage, the Dutreil pact is unchanged.

Woodland, forests and rural property. The additional articles voted by the deputies also fell. Article 4 terdecies would have reduced the gift and inheritance tax exemption for woodland and forests and for shares in forestry groupings (article 793) from three quarters to one half, and limited it to €2,000,000 per transfer. Articles 10 nonies and 10 decies would have relaxed the retention undertaking of article 793 bis where rural property let on a long-term lease is given to descendants, who would have taken over the undertaking until its end.

Position at 6 November 2026: the Senate will receive article 4 alone, in its version as tabled; the deputies' additional articles may be tabled again in the Senate or at a new reading. A cash gift prepared for 2027 should be sized on the bill as tabled (first six months, €50,000 exemption), until the law is published. A Dutreil pact in preparation should be built on the regime in force, without counting on a full exemption.

Life insurance, including foreign policies: new conditions to keep the tax regime

Article 6 would reserve the tax advantages of life insurance to policies that meet the criteria of French law. In the Insurance Code, a new article L. 131-1-3 would prohibit dedicated unit-linked funds (dedicated funds, internal funds specific to one policy or to a closed circle of policyholders) from including assets issued, guaranteed or owed by the policyholder, the insured or a beneficiary, their spouse or civil partner, their ascendants, descendants, brothers and sisters, or by an entity they control, beyond a threshold set by decree for entities holding such assets indirectly.

For policies taken out with foreign insurers (6° of article 120 of the French Tax Code), article 122 would be supplemented: the annual allowance of €4,600 or €9,200 (reserved to insurers established in the European Union or in a European Economic Area State bound to France by an administrative assistance agreement) and the 7.5% rate on income from policies held for more than eight years (article 125-0 A) would require that premiums paid since 1 October 2026 were paid in cash, that the unit-linked assets have characteristics similar to those allowed under French law, and that dedicated unit-linked commitments are not backed by any asset issued, guaranteed or owed by the policyholder, their family circle or an entity they control. In addition, for a policy that did not meet these conditions on the date of death, the sums owed by the insurer would be subject to inheritance tax according to the relationship between the beneficiary and the insured (paragraph II bis of article 757 B, reinstated).

Planned timetable: the Insurance Code rules would apply to policies taken out since 1 October 2026, and from 1 July 2027 to earlier policies; the income tax rules to policies taken out since 1 October 2026 and to income from premiums paid since that date; the inheritance tax rule to deaths occurring from 1 July 2027.

Position at 6 November 2026: the deputies had adopted the article with drafting changes, with no change to the conditions or dates; the Senate will deliberate on the version as tabled, which has the same scope. If your policy, particularly a Luxembourg one, includes a dedicated fund or has received contributions in securities, have it reviewed before 1 July 2027: see life insurance in an international succession.

Business takeover and sale: what the "Papin" pact provides

Article 10 of the Finance Bill for 2027 is devoted to takeovers of very small businesses and SMEs. It is a bill. The deputies had amended it in several respects (text resulting from the deliberations of the Assemblée nationale at the end of the sitting of 30 October 2026); those amendments fell with the rejection of the first part on 4 November 2026, and the Senate will deliberate on the article in its version as tabled, described below.

For the departing owner-manager, the measure builds on the fixed allowance of article 150-0 D ter of the French Tax Code (CGI). The capital gain on the sale of shares in an SME is currently reduced by a fixed allowance of €500,000 if the seller sells all of their shares or more than 50% of the voting rights, has held an effective and normally remunerated management position for the previous five years, that remuneration accounting for more than half of their professional income, has held at least 25% of the rights over the same period, ceases all functions and claims their retirement pension within the two years before or after the sale, and, where the buyer is a company, holds no rights in it (a condition whose breach within three years withdraws the allowance). The company must be an SME within the EU meaning, subject to corporate income tax and carrying on an operating business; the shares must have been held for at least one year. The allowance applies only for income tax: social levies remain due on the gain before the allowance (BOI-RPPM-PVBMI-20-40, § 10). It applies to sales made until 31 December 2031 (Law No. 2017-1837 of 30 December 2017, art. 28, VI, C).

The bill does not double this allowance for every sale. Article 10, in its version as tabled, raises it to €1,000,000 for sales made from 1 January 2027 to 31 December 2029 to one or more employees of the company, or to a company all of whose members are employees of the company sold. The seller must still meet the conditions of paragraph II, retirement included. At least one employee buyer must be an employee of the company on the date of the sale, have held an employment contract with it for five years during the preceding ten years, and undertake to keep the shares and to manage the company for the following five years. If that undertaking is broken, the increased allowance is withdrawn for the year of the breach, and the text does not, in that case, provide for a return to the €500,000 allowance. Two additional articles voted by the deputies, which fell with the rejection, went further: article 10 sexies (amendment No. 4006) also raised the allowance to €1,000,000 for sales made from 2027 to 2029 to buyers who all qualify as new farmers (individuals, or a company each of whose members so qualifies) and undertake to keep the shares for five years; article 4 quater (amendment No. 239) opened the allowance, for sales made from 1 January 2027, to a seller who practises their profession within a professional practice company (société d'exercice libéral), provided that they cease practising it.

What the deputies had changed in article 10 before the rejection (changes that fell, and may be taken up again in the Senate or at a new reading):

• Buyout company: the bill as tabled requires all its members to be employees; amendment No. 3881 accepted a company in which one or more employees hold a majority of the capital and voting rights for five years, management being reserved to the employee buyers.
• Duration: the bill as tabled confines the measure to sales made from 1 January 2027 to 31 December 2029; amendment No. 784 had removed that limit.
• Jobs: the same amendment made the "deductions" conditional on an undertaking by the managing buyers regarding the maintenance of employment, the terms of which would have been set by decree.

On the buyer's side, article 10 creates an enhanced depreciation allowance (future article 39 decies J CGI) for businesses taken over between 1 January 2027 and 31 December 2029: 60% of the original value of all new assets acquired after the sale for a micro-enterprise, 30% for other SMEs on a list of assets (the deputies had capped that deduction, for those SMEs only, at 10% of turnover; the cap fell with the rejection). It requires the business to have at least five years of activity and to undertake to carry on the same activity for five years. In the bill as tabled, the seller must have ceased all functions in the business sold at the latest on the date of the sale; the deputies had relaxed that condition by allowing the seller to support the buyer for twelve months without any de jure or de facto management role (amendments Nos. 400 and 3878), a relaxation which also fell. Article 150-0 D ter, for its part, allows functions to cease within two years after the sale. An owner-manager who wants both their allowance and their buyer's enhanced depreciation must therefore step down from management on the day of the sale. Finally, the bill reduces to 0.1% the registration duties payable by an employee with five years of employment contract in the business during the ten years preceding the sale, or by a company in which employees hold a majority of the capital and voting rights for five years, at least one of them meeting that length-of-service condition. For a business, an agricultural business or a clientele operated by an SME (other than pure asset management), the rate applies above €23,000 and the buyer undertakes to operate and keep the business for five years; for partnership shares (parts sociales) in an SME, the buyer undertakes to keep them for five years and to entrust effective management, exclusively, to buyers meeting the length-of-service condition.

Two other articles concern businesses. Article 9 creates an "Industry 4.0" enhanced depreciation allowance (future article 39 decies H) for SMEs and mid-caps, on new assets from an exhaustive list (robotics, additive manufacturing, industrial software, sensors, data, wireless connection of critical industrial objects, numerically controlled machines, immersive technologies, cybersecurity) used in an industrial activity, firmly ordered from 1 October 2026 and acquired from 1 January 2027 to 31 December 2029 (or acquired from 2030 if ordered during that period with a down payment of at least 10% and acquired within thirty-six months): 40% for medium-sized enterprises and mid-caps, 80% for small enterprises; in regional aid areas, 80% for medium-sized enterprises and 120% for small ones. The same asset cannot benefit from both this scheme and that of article 10. Article 15 extends for one financial year the exceptional contribution on large companies' profits (turnover threshold of €1.5 billion, rates of 15.7% and 31.4%); the deputies had deleted it in plenary (amendment No. 69 and identical amendments), but it returns in the text sent to the Senate.

Before the courts, the conditions of article 150-0 D ter are strictly construed and personal to the seller. The Conseil d'État holds that they are assessed for each spouse separately, even under universal community of property (CE, 26 April 2024, No. 453014), and that the position of directeur général of an SAS, effectively held and normally remunerated, meets the functions condition without any power to represent the company towards third parties being required (CE, 21 October 2020, No. 437598). These decisions were given under an earlier wording of the article, whose conditions on functions and retirement are carried over into the current text.

If you are considering a sale in 2027, have the timing of your retirement and of the end of your functions checked now. If a takeover by your employees is possible, prepare the buyer's length of service, their management undertaking and the structure of the buyout company. Do not set your net price on the assumption that the one-million-euro allowance is secured before the law is published. For a sale combined with a move abroad, see also selling your business then moving to Switzerland.

Real estate: the furnished letting measure returns, the deputies' additions fell

Non-professional furnished letting (article 7). The bill as tabled capped the deduction of depreciation on homes let furnished outside a professional activity at 2.5% a year and €7,000 per household (1.5% and €5,000 for furnished tourist accommodation), and restricted depreciation carried forward. The deputies had deleted these provisions (amendments Nos. 96, 114 and 116); that deletion fell with the rejection, and the Senate will deliberate on article 7 in its version as tabled, cap included. See the taxation of furnished lettings.

The following articles had been added by the deputies; they are not in the text sent to the Senate and are still described here because they may be tabled again.

Former main residence (article 4 quinquies, fell). The gain on the sale of a home that was the seller's main residence for a cumulative period at least equal to the period giving full exemption for length of ownership would be exempt, even if it is no longer occupied, provided that the sale takes place within thirty-six months of the end of occupation and that the property has been neither let nor used for consideration in the meantime. For a taxpayer moving abroad, the measure would come on top of the exemption specific to non-residents who are nationals of the European Union or the European Economic Area (article 150 U, II, 2°), limited to €150,000 of gain.

Furnished home sold to become a main residence (article 4 sexies, fell). For sales from 1 January 2027, the gain on furnished premises used as a dwelling, other than a main residence, for at least one year would qualify, for income tax purposes (article 150 VC), for accelerated taper relief (8% a year beyond the fifth year, 12% for the seventeenth) if the buyer undertakes to use it as a main residence, occupied or let, until 1 January of the third year following the year of the deed, any lease having to take effect within six months of the deed; on a resale before that date, the new buyer would take over the undertaking. A fine of 5% of the price would penalise any breach.

Rental income (article 7 nonies, fell). The threshold for the simplified micro-foncier regime would rise from €15,000 to €30,000 and the flat-rate allowance from 30% to 50%.

Real estate wealth tax (articles 4 quaterdecies and 4 quindecies, fell). From the IFI due for 2027, homes let unfurnished as a main residence, outside the family circle, to tenants within income limits and at a capped rent, and let for at least eight months in the previous year, would be excluded from the tax base. Rural property let on a long-term lease would be fully exempt without any condition of family relationship with the tenant (article 976, III).

Position at 6 November 2026: only article 7, in its version as tabled, is sent to the Senate. The additional articles, which came from parliamentary amendments several of which were offset by a tax on tobacco, may be tabled again in the Senate or at a new reading; nothing guarantees that the Government will take them up.

Real estate VAT: adjustments to the CIBS still to be examined

The recodification of VAT in the Code des impositions sur les biens et services (CIBS) comes into force on 1 January 2027. Article 19 of the bill ratifies ordinances No. 2025-1247 of 17 December 2025 and No. 2026-671 of 27 July 2026 and adjusts several rules relevant to real estate: an exemption, with an option transaction by transaction, for lettings resulting from a lease conferring a right in rem (building lease, emphyteutic lease, bail réel immobilier or bail réel solidaire), new article L. 231-35-1; VAT on the sale of a building to be constructed becoming chargeable as each payment is received, new article L. 231-36-1; an option to tax the letting of undeveloped land to a non-taxable person made subject to that person's express agreement in the contract.

Position at 6 November 2026: the deputies had not examined the article before the rejection of the first part; the Senate will deliberate on its version as tabled. See the CIBS VAT recodification.

Other measures in the bill: what the deputies had deleted returns to the Senate

• Article 3, 10% allowance on retirement pensions: the bill caps it at €3,000 for retirement pensions; the deputies had deleted the article, which returns in the text sent to the Senate.
• Article 15, exceptional contribution of large companies: deleted by the deputies, it returns in its version as tabled (extension for one financial year). The additional contribution of 5% on the portion of distributions exceeding 1.2 times the average of the previous five financial years, voted by the deputies for companies with turnover of at least one billion euros (article 15 decies), fell.
• Article 17, capital reductions: the bill as tabled is limited to adjustments to the exemptions from the article 235 ter XB tax (employee share ownership, mergers and demergers). The repeal of that tax and the 10% registration duty on cancellations of shares by listed companies with a market capitalisation above €7 billion, voted by the deputies, fell.
• Article 30, anti-fraud measures: not examined by the deputies before the rejection; the Senate will deliberate on its version as tabled. It would make permanent the automated collection, by the tax authorities, of public content on online platforms, in particular to detect breaches of the tax residence rules of article 4 B, and would extend administrative garnishment to securities accounts.