French Finance Act 2026: Key Tax Changes for HNWIs

The French Finance Bill for 2026 was adopted by the Parliament on February 2, 2026 and enacted on February 19, 2026. One of our French member firms, Galahad Avocats, reviews how this impacts high-net-worth-individuals within France.

The main measures of interest for professional income and high-net-worth individuals are: 

• A new tax on certain extravagant non-professional assets of holding companies

• The extension of the 20% minimum tax on high income taxpayers, introduced last year as a temporary measure

• Minor changes to the taxation of management packages gains and to the scope of BSPCEs, stock options for startups

Introduction of a tax on non-professional luxury assets held by holding companies

The Finance Act for 2026 introduces a 20% tax on non-professional luxury assets held by certain holding companies. 

This measure applies to: 

• Companies subject to French corporate income tax (CIT) with a registered office in France

• Companies established outside France that are subject to a tax equivalent to French CIT or are incorporated entities, which are at least partially owned by an individual who is a French tax resident.

These companies are subject to the tax if they meet the following cumulative conditions as of the closing date of the relevant financial year: 

• The market value of their total assets equals or exceeds €5 million

• At least one individual (alone or together with members of their household) holds at least 50% of the voting or financial rights or effectively exercises control over the company; and 

• More than 50% of their income consists of passive income (dividends, interest, royalties, etc.), excluding reversals of provisions and depreciation

The tax base corresponds to the market value of “luxury assets” not used for business purposes (e.g., vehicles, yachts, aircraft, jewellery, wines and spirits, or real estate made available for personal use).

The tax amounts to 20% of the value of such non-professional assets recorded on the company’s balance sheet. 

For French entities, the tax is calculated based on the corporate income tax declaration filed by the company. For foreign entities, the necessary information has to be reported in the personal income tax return of the French tax resident shareholder.

Extension of the 20% minimum tax for high-income taxpayers

The 2025 Finance Act created a temporary exceptional tax on French residents whose income exceeds €250,000 (€500,000 for couples) and whose effective tax rate is under 20% of their adjusted taxable income, i.e. taxpayers whose income is mainly composed of passive income, taxed at 12.8% pursuant to French law. 

This measure aims at ensuring a minimum effective tax rate of 20% for high-income taxpayers. 

The contribution corresponds to the difference between the effective income tax paid and 20% of the adjusted taxable income. Each year, an advance payment of the amount of the tax has to be made by the taxpayers between December 1 and 15. 

This minimum tax was supposed to last until 2027, it will now remain in effect until the public deficit drops below 3% of GDP.

Changes to the taxation of management package gains

The Finance Bill for 2025 introduced a new regime for taxation of gains resulting from the sale of shares received as part of the compensation package (see CELIA article from August 2025).

Such regime is slightly amended and clarified on the following aspects: 

• Clarification of the calculation of the threshold in case of earn-out payments 

• Introduction of a tax deferral mechanism in case of reinvestment within the scope of a public offer, merger, demerger, contribution of shares, etc.

• Adjustments to the tax treatment of donations and reinvestment transactions 

• Exclusion of the part of the gain treated like a salary from the wage tax withholding system

• Confirmation that the compulsory withdrawal of management incentive plans instruments from a PEA (share invested savings plan) further to the Finance Bill for 2025 does not trigger closure of the plan or immediate taxation, provided the withdrawal occurs prior to any taxable event

Amendments to BSPCE share warrants

The favorable tax and social security regime applicable to BSPCEs (stock options for startups) now applies to warrants granted to employees and executives of certain indirectly held subsidiaries.

As a reminder, to qualify for the BSPCE regime, the issuing company must: 

• Be incorporated in France or subject to French corporate tax

• Be less than 15 years old

• Be unlisted (or listed on certain SME markets under conditions)

• Be subject to corporate income tax (IS)

• Have a certain portion of its share capital held by individuals (or qualifying entities). This minimum threshold is reduced from 25% to 15% by the Finance Bill, widening the scope of companies allowed to grant BSPCEs

Other measure: Increase in CSG on certain investment income

The Social Security Financing Act for 2026 increased the general social contribution (CSG) on certain types of investment income from 9.2% to 10.6%. 

Consequently, social contributions rise from 17.2% to 18.6%, leading to an increase in the overall flat tax rate (PFU) from 30% to 31.4%. 

This increase mainly affects dividends, capital gains on securities, and some income types previously exempt from social contributions, such as non-professional furnished rentals. However, rental income from real estate, individual capital gains on real estate, and certain regulated savings products remain excluded.

How can CELIA Alliance help?

The French Finance Act 2026 introduces complex and wide-reaching changes that impact both corporate structures and high-net-worth individuals, particularly those with cross-border interests.

Through our French member firms and our international network, CELIA Alliance provides coordinated, multi-jurisdictional support to help you respond with confidence.

We can assist you with:

• Assessing exposure to new taxes – including the 20% levy on non-professional luxury assets held via corporate structures
• Reviewing ownership and holding structures – to ensure they remain efficient and compliant under the updated rules
• Advising high-net-worth individuals – on the extended minimum tax and increased social contributions on investment income
• Supporting management incentive planning – including updated rules on management packages and BSPCE eligibility
• Coordinating cross-border tax advice – ensuring alignment between French rules and international structures

Whether you are restructuring investments, reviewing executive compensation, or managing international assets, our integrated legal and tax specialists can provide tailored, practical guidance.

If you would like to understand how these changes apply to your organisation or personal situation, please get in touch with your local CELIA Alliance contact.