France's 2026 finance law: the tax on passive holding companies applies at the 31 December year-end

By the Big4PM team · Published 13 November 2026 · 2 min read

In brief. France's finance law for 2026 (law no. 2026-103 of 19 February 2026) creates a 20% tax on certain non-business assets held by passive holding companies, due for financial years ending on or after 31 December 2026. It also lengthens the Dutreil commitment and tightens holding contributions. For many families, the first year-end concerned is weeks away.

The tax on passive holding companies

It targets holding companies that meet three tests: assets worth at least €5m, passive income (dividends, interest, rents, royalties) above 50% of their income, and control of at least 50% by an individual, alone or with their family group.

• Rate: 20% of the market value of the assets concerned.
• Assets concerned: hunting and fishing assets, non-business cars and pleasure boats, jewellery and precious metals, racehorses and show horses, wines and spirits, and some personal-use property. The exact property scope should be checked in the text with your adviser.
• Timing: financial years ending on or after 31 December 2026.
• Foreign holding companies: the tax is due by the French-resident shareholders who control them.
• Assets subject to this tax are exempt from French real-estate wealth tax (IFI): they do not bear both.

Dutreil pact: a 6-year individual commitment

For transfers since the law was published in late February 2026, the individual holding commitment goes from 4 to 6 years, 8 years in total with the 2-year collective commitment. The 75% exemption now applies only to assets used in the operating business: residences, cars, boats, art and collectibles held by the company fall outside it (see the guide).

Holding contributions: more reinvestment, for longer

• Economic reinvestment raised from 60% to 70% of the sale price.
• Reinvestment period extended from 2 to 3 years.
• Reinvested assets must be kept for 5 years instead of one.
• Real estate activities excluded from reinvestment.

These rules apply to sales since the law was published (see the guide). The 2027 budget bill also proposes taxing the gain on a gift (read our analysis).

High earners: the minimum tax extended

The differential contribution on high incomes, which guarantees a minimum 20% tax rate, is extended until the public deficit falls below 3% of GDP. A large sale can trigger it in the year it takes place.

What we advise before 31 December

1. List the holding company's assets and classify each one: operating, financial, personal use.
2. Check the three tests (€5m, 50% passive income, 50% control) at the year-end date.
3. For a Dutreil being prepared, isolate the value of non-operating assets that will no longer be exempt.
4. For a recent holding contribution, check that the reinvestment plan meets 70%, 3 years and 5 years' retention.

This article is general information. It is not investment, legal or tax advice. The rules quoted must be checked by your advisers before any decision.