Calls Intensify for Reform of Pacte Dutreil Tax Loophole Benefiting France's Ultra-Rich

Oxfam France has released a compelling report urging a significant reform of the Pacte Dutreil, a tax exemption mechanism that disproportionately benefits the wealthiest heirs in France. According to the report, the Pacte Dutreil enables the top 0.1% of heirs—who inherit on average 13 million euros—to face an effective tax rate of roughly 10%, a stark contrast to the official 45% rate on inheritances exceeding 1.8 million euros. This loophole reportedly costs the French government nearly 3 billion euros annually and could lead to a cumulative loss surpassing 111 billion euros over the next 30 years if left unaddressed.

Oxfam’s proposal includes capping the exemption at 1 million euros per beneficiary, a measure designed to protect 90% of heirs while allowing the state to reclaim significant revenues. This recommendation arrives amid growing public consensus, with a 2024 poll indicating that 59% of French citizens support higher inheritance taxes on the ultra-rich.

The Cour des comptes, France’s public audit institution, supports these findings and emphasizes the urgent need for a clearer and more transparent debate on France’s fiscal challenges. Amélie de Montchalin, the new president of the Cour des comptes, has highlighted alarming economic indicators, including ever-increasing public debt and debt service costs projected to reach nearly 80 billion euros in 2026 and potentially 100 billion euros by 2030. Such financial pressures underscore the importance of closing costly tax loopholes like Pacte Dutreil.

Layla Abdelke Yakoub from Oxfam has criticized the current government’s reluctance to reform the tax system, calling it out of sync with public opinion which favors fairness in taxation. The convergence of Oxfam’s research, public opinion surveys, and the Cour des comptes’ warnings on France’s economic trajectory is building momentum for a serious reconsideration of this tax exemption.

With the 2027 finance bill and the upcoming presidential election on the horizon, the debate over the Pacte Dutreil is becoming a pivotal issue in France’s quest for fiscal justice and economic sustainability.