France Debates 2026 Budget Reforms: Dutreil Pact Extension for SMEs and Controversy Over Zucman Tax
France's 2026 budget discussions focus on extending the Dutreil pact to help small business employee buyouts and contentious debates over the wealth-targeting Zucman tax, highlighting political divisions and economic priorities.
- • Minister Serge Papin proposes adapting the Dutreil pact to support employee buyouts in small businesses to prevent closures upon owner retirements.
- • Papin also suggests a new tax on small imported packages to protect local businesses from non-compliant foreign products.
- • Government spokesperson Maud Bregeon reiterates opposition to the Zucman tax if it impacts productive sectors like factories and startups.
- • The Socialist Party introduces a lighter version of the Zucman tax to gain support, exempting innovative and family businesses amid Assembly's political fragmentation.
Key details
As France prepares for its 2026 budget discussions, key fiscal proposals are under intense debate, notably the adaptation of the Dutreil pact to aid small business transfers and the contentious Zucman tax targeting high wealth.
Serge Papin, the Minister for SMEs and Purchasing Power, has put forward a significant proposal to extend the Dutreil pact, which currently benefits family business transfers with a 75% tax reduction, to include employee buyouts in small businesses (TPE). Papin highlighted the risk of business closures when sole owners retire, proposing a 'pacte Dutreil salarié' to enable employees to legally and fiscally inherit the business. This adaptation is aimed at maintaining economic sovereignty and supporting France's small enterprises. Additionally, Papin suggested a two-euro tax per item on small imported packages from non-compliant platforms like Temu and Shein, to protect local businesses starting in 2026 (ID 119428).
Meanwhile, the highly debated Zucman tax remains a flashpoint. Designed as a minimum wealth tax on fortunes exceeding 100 million euros, it faces strong opposition from the government, particularly spokesperson Maud Bregeon, who insists the government opposes any tax measures impacting the productive sector, including factories and innovative startups. Bregeon noted, "as long as it affects factories or major startups that create innovation, we will be against it," underscoring concerns over economic weakening. The Socialist Party (PS) has responded with threats of censure and proposed a diluted version of the tax—a 3% minimum on wealth starting at 10 million euros, exempting innovative and family businesses—to garner centrist support amid a fragmented Assembly lacking a clear majority (IDs 119430, 119431).
The Zucman tax debate reflects deep political divisions, with various leftist factions backing different versions. The PS’s softened proposal aims to balance wealth taxation with economic growth safeguards. Yet, no consensus appears imminent as the Assembly wrestles with budget negotiations.
These developments illustrate France’s struggle to foster economic equity while protecting its small enterprises and innovation-driven sectors. The Dutreil pact extension embodies a pragmatic step to preserve business continuity, whereas the Zucman tax controversy reveals the complexities of progressive taxation within a delicate political environment.