A Fiscal Turning Point That Redefines High-Net-Worth Taxation

Adopted on 2 February 2026 under Article 49.3 of the French Constitution, the 2026 Finance Act pursues an ambitious fiscal consolidation target of reducing the public deficit to 5% of GDP. To meet this objective, the legislator chose to target high-net-worth individuals, patrimonial holding structures, share contribution schemes, and business transfers — while preserving mechanisms that direct capital towards productive economic activity.

The political choice is clear: rather than penalising “productive” assets — operating businesses, occupied rental properties, regulated investment funds — the legislation targets unproductive accumulation: assets that generate no measurable economic value. This rationale underpins the transformation of the Real Estate Wealth Tax (IFI) into the broader Unproductive Wealth Tax (IFI-I).

For significant wealth on the Côte d’Azur, where art collections, unoccupied secondary residences and family holding companies are common, this reform demands immediate attention. It requires a rigorous inventory of asset composition and a strategic review of existing structures — ideally before the end of the 2026 fiscal year.

IFI-I: Newly Targeted Assets and the Applicable Rate Schedule

The IFI-I applies to households whose total net assets exceed €2 million. This entry threshold — higher than the previous IFI threshold of €1.3M in net real estate assets — aims to exclude median real estate owners while capturing holders of diversified, high-value assets.

The central concept is that of an unproductive asset: any asset that does not generate regular income or direct economic value creation, assessed against objective criteria set by the French tax authorities. The following are expressly targeted:

• Artworks and collectibles not publicly accessible or on loan to qualifying institutions
• Jewellery and precious stones where no demonstrable professional use can be established
• Prestige vehicles (market value above €50,000) used other than exclusively for professional purposes
• Physical precious metals held outside an approved ETF structure or professional context
• Vacant properties subject to no regular rental income and not allocated to professional use

Where the total value of these unproductive assets exceeds €1.4 million, a progressive rate schedule applies — starting at 0.7% on the first tranches and rising to 1.4% for the highest bands. The overall rate of 1% represents the minimum effective levy on total net assets once the €2M threshold is crossed.

Patrimonial Holding Companies: The New 20% Levy

Alongside the IFI-I, the 2026 Finance Act introduces a 20% levy on companies subject to French corporate income tax (IS) whose total asset fair value exceeds €5 million, provided at least one natural person — alone or together with close associates — holds shares in the company.

The legislator is targeting patrimonial holding structures: vehicles typically formed as SAS, SA or SARL entities to hold diversified assets — real estate, equity stakes, cash reserves, prestige assets — while benefiting from the parent-subsidiary regime or tax consolidation. The levy is assessed on the total fair market value of assets at the fiscal year-end closing date.

Concretely, a family holding company with a €3M securities portfolio, a €2.5M investment property and €500k in cash reaches the threshold. An accurate, up-to-date market valuation of each asset held in the structure becomes an immediate priority before any decision is made.

A critical caveat: any restructuring designed to circumvent the levy may be recharacterised by the French tax authorities as an abuse of law (“abus de droit”) if deemed primarily motivated by tax considerations. Arbitrages between dissolution, contribution-sale schemes or retention of the structure must be grounded in robust economic substance to withstand scrutiny.

CDHR Renewed: Capital Income Taxation Can Reach 38.6%

Created by the 2025 Finance Act and initially introduced for a single year, the Differential Contribution on High Income (CDHR) has been renewed for 2026. It guarantees a minimum effective tax rate of 20% on the reference taxable income of households exceeding:

• €250,000 for a single taxpayer
• €500,000 for a married or jointly-taxed couple

Combined with the flat tax of 30% (12.8% income tax + 17.2% social charges), the CDHR can push the effective taxation of certain capital income — dividends, capital gains, interest — to as high as 38.6%. This level is particularly relevant for owner-directors managing their remuneration through a holding company who were planning a significant distribution in 2026.

Substituting planned distributions with repayment of shareholder current accounts, or opting for reinvestment rather than distribution, become alternatives worthy of careful consideration with your wealth manager. The optimal choice depends closely on each individual’s personal tax position, balance sheet structure and medium-term wealth planning objectives.

Adapting Your Wealth Strategy: Four Priorities for 2026

In the face of these changes, several adaptation levers deserve examination — always taking into account your specific situation and ensuring any structuring avoids abusive tax arrangements.

1. Document the Use of Sensitive Assets

To avoid classification as an unproductive asset, evidence of professional or rental use is decisive. A prestige vehicle allocated exclusively to documented professional use (logbook, expenses recorded in accounts), an apartment let under a regular lease, an artwork on loan to a publicly accessible museum: each of these situations may exclude the asset from the IFI-I base. Contractual and accounting documentation must be impeccable starting today.

2. Audit Holding Structures Before Year-End

Holding companies whose total asset value approaches the €5M threshold require a precise and up-to-date wealth audit. Certain restructurings — such as transferring assets to appropriate vehicles (life insurance wrapper, capitalisation contract, fund) — may reduce the taxable base where supported by substantive economic rationale. Operations must be completed before the relevant fiscal year-end closing date.

3. Maximise PER Contributions Before Age 70

From 2026, contributions made after age 70 to a Plan d’Épargne Retraite (PER) are no longer deductible from taxable income. For savers approaching this age, maximising deductible contributions before turning 70 represents a concrete opportunity to reduce immediate tax liability. The PER also remains a powerful estate planning tool: capital is transmitted outside the estate for inheritance purposes in the event of death before age 70.

4. Revisit Planned Share Contribution-Sale Transactions

The definition of eligible reinvestments qualifying for deferral of capital gains taxation has been tightened by the 2026 Finance Act: real estate activities are now expressly excluded (property development, property trading, real estate asset management). For directors who have completed or are planning a share contribution-sale transaction, the reinvestment strategy must be urgently reviewed to avoid loss of the tax deferral and immediate taxation of the related capital gains.