France Enacts Targeted Wealth Holding Taxes Amid Rising National Tax Burden
France implements a focused wealth holding tax on luxury assets amid record-high national tax burdens reaching 46% of GDP.
Key details
- 2027 finance law targets companies with assets over €5 million and luxury assets with a 20% tax rate.
- Cash and financial investments are excluded to protect family SMEs and ETIs.
- New amendment taxes deposits, securities, and contracts at 2% with reinvestment conditions.
- France leads Europe with a 46% tax burden of GDP in 2025, an increase driven by new fiscal measures and income tax hikes.
France's 2027 finance law introduces a refined tax on wealth holding companies focusing on luxury assets, while the country simultaneously sees its tax burden reach a new European high of 46% of GDP. The new tax policy narrows from an initial broad proposal taxing all non-professional assets at 2% to a more targeted approach. It now applies to companies subject to corporate tax with assets over €5 million controlled by at least 50% by individuals, where passive income exceeds 50% of total income. Luxury goods such as cars, yachts, non-commercial aircraft, racehorses, fine wines and spirits, jewelry, precious metals, and property provided to partners are taxed at a dissuasive 20% based on market value, effective for fiscal years ending after December 31, 2026. Cash and financial investments are excluded to safeguard family SMEs and ETIs, resulting in reduced projected revenue of €100 million compared to an initial €1 billion estimate.
An amendment to the finance law introduces a new asset category taxed at 2%, including deposits, term accounts, securities, and capital contracts, while excluding productive investments. Holdings must commit to reinvesting funds within three years or face penalties.
Concurrently, France tops Europe with the highest tax rate at 46% of GDP in 2025, up from 45.1% in 2024, marking the fifth time in ten years it has led in tax burden according to Eurostat. This is fueled by new fiscal measures raising approximately €23 billion in state revenues, with an expected additional €25 billion from income tax hikes and a recovering real estate market. The government aims to reduce the public deficit to 5% of GDP by implementing €54 billion in budget efforts for 2027, including €18 billion from new tax revenue measures, suggesting continued tax pressure in the near future.
