Analysis · Finance Act for 2026, art. 7 · Art. 235 ter C, French Tax Code

French wealth-holding company tax: 20% a year on luxury assets

Since the Finance Act for 2026, article 235 ter C of the French Tax Code levies an annual tax of 20% on the market value of luxury assets (yachts, aircraft, vehicles, jewellery, wines, horses, homes reserved for the shareholder's own use) held by wealth-holding companies. It applies to financial years ending on or after 31 December 2026: for a company with a 31 December year end, the first tax depends on this year's balance sheet.

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Analysis by François Ouairy, partner · Paris · Updated 5 October 2026

What is the French wealth-holding company tax?

It is an annual tax of 20% created by article 7 of Law no. 2026-103 of 19 February 2026 and codified in article 235 ter C of the French Tax Code. It targets companies subject to French corporate income tax (or to an equivalent tax abroad) which, at the end of the financial year, meet three conditions: total assets with a market value of at least EUR 5 million; an individual who, together with close family, holds at least 50% of the voting or financial rights or exercises de facto decision-making power; and passive income exceeding 50% of revenue.

The tax does not apply to the whole balance sheet: it is limited to a closed list of assets, excluding those used in an industrial, commercial, craft, agricultural or professional activity. Cash, securities and property let at market rent are outside the tax base, but they count towards the EUR 5 million threshold. The tax applies to financial years ending on or after 31 December 2026, is not deductible for corporate income tax purposes and, as at 5 October 2026, the 2027 finance bill does not amend it.

To find out in a few minutes whether your company is within scope, use the firm's 235 ter C check.

Sources: art. 235 ter C, French Tax Code (Légifrance), version in force since 21 February 2026; Law no. 2026-103 of 19 February 2026, art. 7. Checked on 5 October 2026.

— In brief

Rate: 20% a year of the market value of the listed assets
Companies in scope: Assets ≥ EUR 5m, ≥ 50% control by an individual and close family, passive income > 50%
First deadline: Financial years ending on or after 31 December 2026; payment by 15 May 2027 at the latest for a 31 December year end
2027 finance bill: Tabled on 1 October 2026: no amendment to article 235 ter C so far

— Check

Is your holding company in scope? Six questions before 31 December

The 235 ter C check walks through the statutory conditions in six questions: legal form and seat of the company, total value of its assets, control by an individual, share of passive income, nature of the assets held and their use in an economic activity. It gives a first indication, which the firm then verifies on documents.

The company is subject to French corporate income tax, or it is a foreign company with a controlling shareholder who is tax resident in France
The market value of all its assets reaches EUR 5 million at the year end
An individual, alone or with their spouse, civil partner, cohabiting partner, ascendants, descendants, brothers and sisters, holds at least 50% of the voting or financial rights, or exercises de facto decision-making power
Dividends, interest, rents, royalties and similar income exceed 50% of the year's operating and financial income
The company holds at least one asset listed in section II of article 235 ter C that is not used in an industrial, commercial, craft, agricultural or professional activity

If all five boxes are ticked at the year end, the tax is in principle due. Run the check or request an audit of the holding company.

— 2027 finance bill

The holding company tax and the 2027 finance bill: status as at 5 October 2026

The finance bill for 2027 was tabled at the National Assembly on 1 October 2026 (no. 3210). As tabled, it does not amend article 235 ter C: the 20% rate, the EUR 5 million threshold, the list of taxable assets and the start date are unchanged. The tax therefore remains due for financial years ending on or after 31 December 2026.

The same bill does affect family holding companies in another way: its article 5 ends the exemption of deferred contribution gains (article 150-0 B ter of the French Tax Code) when the holding company shares are gifted or inherited. The firm analyses this on its page 2027 budget: Dutreil, contribution-disposal and gifts.

Parliamentary debate is now starting: amendments concerning the holding company tax may be tabled and adopted. This section will be updated at each stage (National Assembly vote, Senate, final text, Constitutional Council decision).

Source: finance bill for 2027, no. 3210, registered with the Presidency of the National Assembly on 1 October 2026, full text reviewed on 5 October 2026.

— 01

The essentials in 30 seconds

The tax is levied on the market value, at the year end, of the luxury assets held by a wealth-holding company: it is due every year for as long as the assets remain in the company. At 20% a year, the cumulative tax equals the value of the asset after five years, at constant value.

Where the company has its seat in France, the company is liable. Where the seat is abroad, the tax is due by the individuals tax resident in France who control it, in proportion to their interest, unless they show that the choice of seat and the holding of the shares do not have the main purpose of circumventing French tax law.

Article 975, VII of the French Tax Code exempts from the real-estate wealth tax (IFI), on the following 1 January, the shares of the company where it bore the tax for a financial year ended in the previous year: subject to conditions, this avoids both the tax and the IFI applying to shares representing the homes concerned. Constitutional Council decision no. 2026-901 DC did not examine the tax on the merits: a priority question of constitutionality (QPC) remains possible; it does not, in itself, suspend payment.

— 02

Scope, tax base and calculation

1. Companies in scope

Three cumulative conditions, assessed at the year-end date.

Form: company with its seat in France subject to corporate income tax, automatically or by election; foreign company subject to an equivalent tax, or a capital company, with a controlling shareholder tax resident in France
Size: market value of all assets ≥ EUR 5 million, all assets included (cash and securities too)
Control: ≥ 50% of voting or financial rights held by an individual, directly or through a chain of companies (an interest of at least 50% counts as 100%), or de facto decision-making power
Close family: spouse, civil partner, cohabiting partner, ascendants, descendants, brothers and sisters are deemed to form a single person; a voting agreement on dividend policy has the same effect
Presumptions: holdings through a trust or an entity in a non-cooperative jurisdiction, unless proven otherwise (the irrevocable or discretionary nature of the trust is not enough on its own)
Passive income > 50% of operating and financial income: dividends, interest, royalties, copyright income, rents and proceeds from the sale of the assets producing them

2. Taxable assets (closed list)

The tax base is the sum of the market values, at the year end, of the assets listed in section II of article 235 ter C, and of those assets only.

Assets used for hunting or fishing
Vehicles not used in a business activity, passenger cars, yachts and pleasure boats, aircraft
Jewellery and precious metals, except those used for a museum or historic monument, or displayed in a place open to the public or to employees (offices excluded)
Racing or show horses
Wines and spirits
Homes reserved for the controlling shareholder's own use: occupied free of charge or below market rent, or let fictitiously; acquisition loans are taken into account under specific rules, and debts owed to the shareholder or their companies are in principle disregarded
Not on the list: cash, securities, property let at market rent; works of art and collectors' items are not targeted as such, unless by their nature they qualify as jewellery or precious metals

3. Assets used in a business activity

A listed asset is excluded from the base in proportion to its use, during the year, in an industrial, commercial, craft, agricultural or professional activity.

Activity carried on by the company itself or by a related company within the meaning of article 965, 2°, a or b
Professional activity of the controlling shareholder carried on under the conditions of article 975, I
Activity of a company in which that shareholder works under the conditions of article 975, II to IV
Use is proven by facts (contracts, turnover, usage logs): a sham activity exposes the company to a reassessment

4. Calculation, filing and payment

The tax equals 20% of the base. The rules differ depending on where the company has its seat.

French company: filed under the corporate income tax rules, with an appendix detailing the calculation of the base; paid spontaneously no later than the corporate income tax balance date, i.e. 15 May 2027 for a year ending 31 December 2026
The tax is not deductible for corporate income tax purposes (IX)
Foreign company: the tax is reported by the individuals tax resident in France on their income tax return for the year following the year end, in proportion to their interest; similar taxes paid abroad are credited (VI) and a 75%-of-income cap applies (X)
Example: EUR 30m holding company (securities EUR 18m, yacht EUR 8m, jewellery EUR 3m, wine cellar EUR 1m), mainly passive income, family-controlled: tax base EUR 12m, tax EUR 2.4m a year
Example: EUR 6m holding company owning, without borrowing, a EUR 2m flat occupied free of charge by the shareholder and a EUR 0.5m passenger car: tax EUR 500,000 a year; with EUR 4.9m of total assets, the company would be out of scope

— 03

Restructuring before 31 December 2026: four options

No option is tax-neutral: each one must be costed before it is implemented.

The conditions are tested at the year end: the timetable is short

For a company with a 31 December year end, the position at 31 December 2026 determines the first tax. Any reorganisation must rest on genuine reasons: the tax authorities can rely on the abuse-of-law procedures (articles L. 64 and L. 64 A of the French Tax Procedure Code), and the statute contains its own anti-avoidance rules. A hasty restructuring can cost more than the tax.

Four options to weigh up

1. Taking the assets out of the company

Selling or distributing the assets to the shareholder takes them out of the tax base at the next year end, the other conditions still being tested at each year end. The cost is immediate: corporate income tax on the gain realised by the company, then tax on the distribution in the shareholder's hands (flat tax of 31.4% in 2026). For a home, it also ends the IFI exemption under article 975, VII. This one-off cost is to be compared with a 20% tax every year.

2. Using the assets in a genuine business

A yacht chartered commercially, jewellery displayed in a place open to the public, a home let to a third party at market rent leave the base to the extent of that use. The activity must be real, commercially coherent and documented.

3. Revisiting control or the nature of income

The 50% threshold aggregates close family: gifting shares to children does not take the company out of scope. Only a genuine change in the shareholding or the business (operating income becoming the majority) alters the analysis. A gift of bare ownership remains useful for succession planning, not for this tax.

4. Demerging, winding up or relocating

Isolating the luxury assets in a separate structure, liquidating a company with no remaining purpose or moving the structure and the family out of France are heavy options. The departure of the director alone is not enough where the company keeps its seat in France: the company itself is liable. For the Swiss option, see relocating your holding company to Geneva.

— 05

Lead counsel: François Ouairy

François Ouairy, partner admitted to the Paris Bar, audits wealth-holding companies under article 235 ter C for families and their advisers: testing the conditions at the year end, valuing the assets, costing the exit scenarios, implementation and, where needed, defence in a tax audit or a constitutional challenge. The firm is ranked in Best Lawyers 2026.

François Ouairy Partner, private wealth and international tax

— 04

Summary diagram of the regime

Conditions, tax base and entry into force of the tax under article 235 ter C of the French Tax Code.

Diagram of the French wealth-holding company tax (art. 235 ter C): companies in scope, taxable luxury assets, 20% rate — French wealth-holding company tax (art. 235 ter C): companies in scope, luxury-asset base, 20% annual rate. BENSAID Avocats.

— 06

Frequently asked questions on the wealth-holding company tax

What does article 235 ter C of the French Tax Code provide?

It levies an annual tax of 20% on the market value of certain assets not used in an industrial, commercial, craft, agricultural or professional activity (yachts, aircraft, vehicles, jewellery and precious metals, wines and spirits, racing horses, hunting and fishing assets, homes reserved for the shareholder's own use) where they are held by a company with at least EUR 5 million of assets, at least 50% controlled by an individual and close family, and whose passive income exceeds 50% of revenue. It stems from article 7 of Law no. 2026-103 of 19 February 2026.

From when is the tax due?

For financial years ending on or after 31 December 2026. For a French company with a 31 December year end, the tax is filed with the corporate income tax return and paid by 15 May 2027 at the latest. A year ending 30 June 2026 is not affected; the year ending 30 June 2027 will be.

Does the 2027 finance bill change the holding company tax?

No: as tabled on 1 October 2026 (no. 3210), the bill contains no provision on article 235 ter C. Amendments remain possible during the parliamentary debate; this page is updated at each stage. The bill does, however, change the contribution-disposal regime (article 150-0 B ter) when holding company shares are passed on.

Are works of art held by a holding company taxed?

In principle, no. Works of art and collectors' items are not targeted as such by the list in section II of article 235 ter C. An object that by its nature qualifies as jewellery or precious metal (antique jewellery, a gold piece of silverware, for example) remains taxable, unless displayed in a place open to the public or to employees. Works of art also count towards the EUR 5 million total-asset threshold.

Is a foreign holding company affected?

Yes, where it is subject to a tax equivalent to corporate income tax or is a capital company, and a controlling shareholder is tax resident in France. The tax is then due by the individuals resident in France, on the portion of their interest that represents the taxable assets, with a credit for similar foreign taxes and a cap at 75% of income. It is not due if the taxpayer shows that the choice of seat and the holding of the shares do not have the main purpose of circumventing French tax law.

Does gifting the holding company shares to my children avoid the tax?

As a rule, no. For the 50% threshold, the individual, their spouse or partner, ascendants, descendants, brothers and sisters are deemed to be a single person: their rights are still aggregated after the gift. The gift keeps its value for succession planning.

Is the tax deductible for corporate income tax purposes?

No. Section IX of article 235 ter C expressly excludes its deduction from the corporate income tax base.

Can the tax be challenged before the Constitutional Council?

When reviewing the Finance Act for 2026, the Constitutional Council noted that article 7 had been adopted under a procedure consistent with the Constitution, without examining it on the merits (decision no. 2026-901 DC of 19 February 2026). A priority question of constitutionality may therefore be raised in the course of a dispute, in particular on equality before public charges. It does not, in itself, suspend the obligation to file and pay.

Cité par

— See also

Have your holding company audited before 31 December 2026

Send us the structure (articles, shareholding, balance sheet, list of assets held and how they are used): the firm checks whether the tax applies, quantifies it and compares the exit scenarios.

Request an audit Run the 235 ter C check

Updated: 5 October 2026

© BENSAID Avocats. The information published on this website does not constitute legal advice. Sources: Law no. 2026-103 of 19 February 2026 (Finance Act for 2026), art. 7; French Tax Code art. 235 ter C, 975, VII, 965 and 1668; French Tax Procedure Code art. L. 64 and L. 64 A; Constitutional Council decision no. 2026-901 DC of 19 February 2026; finance bill for 2027, no. 3210 (National Assembly, 1 October 2026). Updated: 5 October 2026.