Special stopgap legislation, Article 49.3 used twice, no-confidence motions defeated, and the Constitutional Council even referred by the Prime Minister himself… France’s 2026 Finance Act (loi de finances) has finally been promulgated. Here is an overview of the measures that matter most.
For the second year in a row under the Fifth Republic, France had to wait until mid-February to secure a budget. The 2026 Finance Bill went through an especially chaotic parliamentary process: the National Assembly rejected the first part in November, the joint committee (CMP) failed to reach an agreement, and then Article 49.3 was triggered twice by Sébastien Lecornu—first on the bill’s renewed reading and then on the final reading—despite his solemn pledge not to resort to it. Meanwhile, a special stopgap act was adopted in late December 2025, closely mirroring the previous year’s scenario (see our article from last year), allowing the State to collect taxes and borrow until the deadlock was resolved. After both no-confidence motions were defeated, the budget was ultimately adopted on 2 February.
Referred to by four separate petitions—including the extremely rare referral by the Prime Minister himself—the Constitutional Council delivered its decision on 19 February, validating most of the text. Procedural complaints and challenges to the “sincerity” of the forecasts were dismissed: the Council recalled that budgetary sincerity is assessed by the absence of any intention to distort the main lines of fiscal balance, rather than by perfect accounting accuracy. The budget aims to bring the public deficit down to 5% of GDP (from 5.4% in 2025), with public debt projected to exceed 118% of GDP by end-2026.
Large groups hit by a corporate income tax surcharge
The so-called “exceptional” contribution on large companies’ profits (CEBGE) is exceptional in name only: it is renewed for 2026 with a significantly revised scope. The liability threshold is raised from €1 billion to €1.5 billion in turnover, allowing mid-caps that were liable in 2025 to fall out of the regime. Roughly 300 groups remain concerned, for an expected yield of about €7.5 billion. For these large groups, effective corporate tax rates can rise to 30%–35% depending on size, with a 98% instalment due as early as 15 December 2026. As regards the CVAE (local value-added tax), the government had to abandon plans to accelerate its phase-out: the timetable set by the 2025 Finance Act remains unchanged, with full abolition scheduled for 2030.
Succession, holding companies and contribution-and-sale : a three-part squeeze
This is likely the most closely watched part of the budget for business owners and shareholders—and it triggered a rather unusual constitutional episode. The Prime Minister personally referred Articles 7, 8 and 11 to the Council without raising any constitutional objection, leading the Council to limit itself to a formal review, without ruling on the merits. As a result, these three provisions were declared neither constitutional nor unconstitutional, leaving affected taxpayers free to raise them later via a priority constitutional question (QPC).
The Dutreil succession relief, which provides a 75% exemption on the value of a transferred family business, sees its tax base tightened. Assets are now excluded from the relief if they were not used exclusively for an industrial, commercial, craft, agricultural or liberal professional activity for at least three years prior to the transfer. The exclusions include hunting and fishing assets, passenger vehicles, yachts and aircraft, jewellery and precious metals, racehorses, wines and spirits, as well as houses and residential property. The individual holding period for shares is also extended from four to six years. A prior audit of the asset composition is now essential before any transfer transaction.
The contribution-and-sale regime (French Tax Code, Article 150-0 B ter) is substantially tightened for disposals of contributed shares carried out from 20 February 2026 (the day after promulgation). The period allowed to reinvest the sale proceeds increases from two to three years (a positive change), but the minimum reinvestment threshold rises from 60% to 70%, and the holding period for replacement assets increases from two to five years—a particularly constraining requirement. In addition, eligible reinvestment activities are narrowed, with an explicit exclusion for the management of financial or real-estate assets: more than ever, taxpayers must demonstrate reinvestment into a genuine, operating economic activity to preserve the deferral.
The 2026 Finance Act also introduces a new 20% tax on certain assets held by so-called “patrimonial holding companies.” The tax applies where three cumulative conditions are met: (i) a threshold of €5 million in fair market value of the assets held; (ii) at least 50% of voting rights held by at least one individual; and (iii) predominantly passive income, such as dividends and financial interest. The taxable base includes luxury assets and certain residential properties exhaustively listed under new Article 235 ter C of the French Tax Code. This tax is not deductible for corporate income tax purposes and is due for financial years ending on or after 31 December 2026.
Flat tax, BSPCE and management packages : other changes not to overlook
Although carried by the 2026 Social Security Financing Act rather than the Finance Act itself, the increase in CSG on capital income is worth mentioning given its impact for executives. The rate rises from 9.2% to 10.6%, pushing social contributions from 17.2% to 18.6% and the flat tax from 30% to 31.4%. For households subject to the differential contribution on high incomes (CDHR), the overall rate can now reach 38.6%.
Effective dates vary depending on the type of income. For wealth income (including capital gains on the sale of securities), the increase applies from 1 January 2025 and therefore affects sales completed in that year. For investment income (including dividends), it takes effect only from 1 January 2026. Finally, certain income remains subject to the 17.2% social-contribution rate: rental income, real-estate capital gains, proceeds from life-insurance and capitalisation contracts, and income from CEL, PEL and PEP savings products. Note, however, that capital gains deferred under the contribution-and-sale regime (Article 150-0 B ter) remain subject to the social-contribution rate in force in the year the gain is realised. For business owners partly remunerated through dividends, the salary/dividend trade-off should be recalculated in all cases.
As regards BSPCE (start-up share warrants), issuance and allocation conditions are eased from 1 January 2026: the minimum shareholding threshold by individuals is lowered from 25% to 15%, and warrant grants are extended to executives and employees of sub-subsidiaries, provided that the product of the chain-ownership percentages reaches at least 75%. Time spent working within the intermediate subsidiary is also taken into account when assessing the three-year condition giving access to the reduced 12.8% rate.
For management packages, Article 24 restructures the taxation of the net gain by clarifying the split between the portion taxed as a capital gain and the excess portion taxed as employment income. For this latter category, tax deferral is now possible, under conditions, where it is reinvested into the group via a contribution or share-exchange transaction. The rules in case of gifts are also rewritten: the gain is taxed in the donor’s name in the year of the transfer, rather than in the donee’s name in the year of a later sale. These changes apply to transactions carried out from 15 February 2025, making a swift review of current agreements advisable.
The new “Jeanbrun” scheme creates a tax status for private landlords allowing individuals—and partners in entities not subject to corporate income tax—to depreciate up to 80% of the purchase price of residential property let unfurnished as a primary residence. Depreciation rates vary with the type of letting: 3.5% (intermediate housing), 4.5% (social) and 5.5% (very social) for new property; 3%, 3.5% and 4% for rehabilitated older property, provided works represent at least 30% of the acquisition price. The deduction is capped at €8,000 per year per tax household, increased up to €12,000 where social or very social letting is predominant. The letting commitment is nine years. The scheme applies to acquisitions made up to 31 December 2028. Lastly, C3IV and JEI are extended until 2028.
What next ? QPC challenges waiting in the wings
Promulgation does not end the tax debate. Having been unable to rule on the merits due to the absence of constitutional arguments, the Council has left the door open to QPC challenges for anyone facing these provisions in litigation. Likely targets include the precision of the holding-tax base, the proportionality of the impact on family business succession, and the restriction of reinvestment under the contribution-and-sale regime. Until such disputes mature, practitioners face a busy agenda: securing ongoing successions and restructurings, revisiting the structuring of patrimonial holdings, and rethinking contribution-and-sale transactions in light of the new rules. For now, tax instability remains the primary risk to manage.
