Budget 2026: How the New Measures Will Impact Taxes in France
The 2026 Finance Bill, currently reviewed by the National Assembly, introduces significant changes that will reshape taxation in France. From higher levies on multinationals to exemptions for overtime and family support, the measures adopted, modified, or rejected by MPs reveal the fiscal direction France is taking for 2026.
Overview: What the 2026 Budget Means for French Taxes
After intense debates, MPs approved multiple amendments impacting income tax, corporate tax, inheritance tax, and more. The bill aims to increase public revenues by taxing large companies and high earners while easing the burden on working families.
Although the review is not yet complete, several measures already indicate how French taxpayers and businesses will be affected in 2026.
1. Exit Tax Reinstated
The original “exit tax,” designed to prevent wealthy shareholders from relocating abroad to avoid taxes, has been reinstated. Expected to bring in €70 million, it strengthens France’s fight against tax evasion.
2. Easier Taxation on Property Sales
The holding period for capital gains exemption on secondary homes is reduced from 22 to 17 years. This encourages property sales and may increase real estate capital gains tax activity.
3. Stricter Dutreil Pact
Transfers of family businesses will now exclude non-professional assets from the Dutreil tax exemption. This prevents tax abuse and ensures the pact benefits genuine business transfers.
4. No Tax on Long-Term Sick Leave
The proposal to tax allowances for long-term illness was rejected, maintaining tax-free benefits for affected workers.
5. Inheritance Tax for Stepchildren
The allowance for stepchildren increases from €1,594 to €15,932, reducing inheritance tax burdens for blended families.
6. Wealth Tax on Unproductive Assets
The reform extends the Wealth Tax (IFI) to include luxury goods, non-productive real estate, digital assets, and life insurance funds. This broadens the taxable base for high-net-worth individuals.
7. Higher Tax on Share Buybacks
The rate rises from 8% to 33%, targeting large corporations and expected to generate €8 billion in revenue. A special “super dividend” tax was also added.
8. Corporate Tax for Multinationals
Large companies operating in France will be taxed proportionally to their French activity, potentially adding €26 billion in state revenue. The minimum 15% corporate tax now applies to firms with over €500 million annual turnover.
9. Child Support Tax Changes
Recipients of child support will benefit from a tax exemption up to €4,000 per child, while payers will now include these payments as taxable income.
10. Overtime Tax Exemption
All overtime pay becomes fully tax-free, removing the previous €7,500 limit. This supports workers and boosts net income at an estimated €1 billion cost to the state.
11. Tax Credit for Nursing Home (EHPAD) Expenses
The former 25% tax reduction becomes a refundable tax credit, allowing low-income residents to benefit directly.
12. Journalists’ Allowance Adjusted
Only journalists earning under €75,676 (3.5× minimum wage) will keep the €7,650 allowance, ensuring targeted tax relief.
13. End of Fast-Fashion Tax Benefits
Tax breaks for fast-fashion companies (like Shein and Temu) are abolished, removing eligibility under Article 238 bis CGI.
14. Extended High-Income Contribution
Households earning over €250,000 will continue paying a minimum 20% rate until France’s deficit drops below 3% of GDP, expected by 2029.
15. Corporate Profit Tax Adjustments
Corporate profit taxes increase for the largest firms, expected to raise €6 billion instead of €4 billion initially planned.
16. Double Tax on GAFAM
The digital services tax for tech giants (Google, Apple, Facebook, Amazon, Microsoft) doubles from 3% to 6%, strengthening France’s stance on fair digital taxation.
17. Tax on Holding Companies
The threshold for taxing holding companies rises from 33% to 50%, reducing the number of affected firms but maintaining symbolic pressure on large holdings.
18. Zucman Wealth Tax Rejected
The proposed 2% minimum tax on global wealth over €100 million was rejected, as was the lighter Socialist version.
19. Anti-Evasion Tax Rejected
The universal tax targeting citizens who move abroad to avoid French taxation narrowly failed (132–131 votes).
20. Freeze of the Income Tax Scale Rejected
Instead of freezing tax brackets, MPs indexed them to inflation (1.1%) to protect taxpayers from “fiscal drift.”
Conclusion: A New Fiscal Direction for 2026
The 2026 French budget marks a turning point in tax policy. It reinforces equity by targeting wealth, large corporations, and digital giants, while supporting working families and retirees. However, it also signals higher overall taxation for high earners and multinational groups.
ESCEC International can help you understand how these fiscal changes will affect your business or personal tax situation in France.
