French Finance Bill 2026: Key Measures for Individuals and Businesses

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The Finance Bill for 2026 was published on October 14, 2025, introducing a range of tax measures anticipated by both individuals and businesses. Key provisions include the introduction of a tax on financial assets held by holding companies, the planned abolition of the CVAE (tax on added value of businesses), the extension of minimum taxation for high-income earners, adjustments to the exceptional corporate income tax contribution for large companies, amendments to Pillar Two rules, and changes to taxpayers’ obligations regarding electronic invoicing and data transmission.

Tax Treatment for High-Income Earners and High Net Worth Individuals

Extension of Additional Contribution for High-Income Taxpayers

The 2025 Finance Act introduced a minimum taxation mechanism for taxpayers whose household income exceeds €250,000 for single individuals or €500,000 for joint filers. If their effective tax rate is below 20%, they are subject to an additional contribution ensuring a minimum 20% tax burden. Originally, this measure applied only to income earned in 2025, but the Finance Bill 2026 extends it for one additional year.

Introduction of a Tax on Financial Assets Held by Holding Companies

The Finance Bill 2026 introduces a 2% tax on financial assets of holding companies. The aim, according to the explanatory memorandum, is to curb tax avoidance strategies that allow undistributed income to escape taxation.

Scope:

  • Applies to companies headquartered in France and subject to corporate income tax.

  • Also applies to foreign companies subject to an equivalent corporate tax or structured as limited companies.

Conditions for tax liability:

  • Market value of all assets ≥ €5 million.

  • ≥33.33% owned by an individual or their family (for non-resident holdings, the controlling person must be French tax resident).

  • Passive income constitutes >50% of combined operating and financial income (including dividends, interest, royalties, copyrights, and proceeds from asset sales generating such income).

  • Not controlled by another taxable company (control defined as majority ownership).

Taxpayer responsibility:

  • French holding companies: liable for the tax directly.

  • Foreign holding companies: French-resident individuals owning ≥33.33% are liable.

Tax base:

  • Resident entities: sum of market value of tangible and intangible property (excluding certain professional assets), a fraction of cash and securities, and market value of holdings in unlisted subsidiaries.

  • Non-resident entities: tax falls on the controlling individual; base corresponds to the company’s market value, with limits defined in the Bill.

  • Double taxation prevention: assets already subject to IFI (property wealth tax) are exempt from this tax.

Effective date:

  • French holding companies: fiscal years ending on or after Dec 31, 2025.

  • Foreign holding companies: fiscal years ending on or after Dec 31, 2026.

Measures Relevant to Companies

Exceptional Contribution on Corporate Income for Large Corporations

The exceptional contribution on large company profits, first applied to fiscal years ending on or after Dec 31, 2025, will be extended by one year. The calculation remains based on the average corporate income tax of the current and prior fiscal year.

Adjusted rates for the second fiscal year:

  • Companies with turnover < €3 billion: reduced from 20.6% to 10.3%.

  • Companies with turnover ≥ €3 billion: reduced from 41.2% to 20.6%.

Global Minimum Taxation for Groups (Pillar 2)

Amendments will apply to the minimum tax regime for large companies (“Pillar Two“):

  • For fiscal years ending on or after Dec 31, 2025, definitions like ultimate parent entity and consolidated financial statements will be adjusted for mutual banking and insurance groups.

  • New rules for allocating the Qualified Domestic Minimum Top-up Tax (QDMTT) within groups will apply where current allocation rules fail.

  • From fiscal years ending on or after Dec 31, 2023, adjustments to deferred taxes in the effective tax rate calculation will follow OECD guidance published in June 2024.

  • Rules for Investment Entities (IE) and Insurance Investment Entities (IIE) under QDMTT will be modified: a designated French entity must be liable, or isolated entities are exempt to maintain tax neutrality.

  • Administration may require amended filings if obvious errors are identified, effective immediately after publication.

Anticipated Gradual Abolition of CVAE

  • Initially scheduled for complete abolition in 2024, the CVAE repeal was postponed to 2030 by subsequent Finance Acts.

  • The Finance Bill 2026 sets definitive abolition in 2028, with phased rate reductions: 0.28% → 0.19% in 2026 → 0.09% in 2027.

Modifications to Electronic Invoicing and Data Transmission Obligations

  • Adjustments for the widespread electronic invoicing system coming into effect Sept 1, 2026.

  • Updates reflect prior government announcements (Oct 2024), including mandatory use of approved platforms.

  • Scope of obligations clarified, simplification commitments formalized, and penalties adapted.

  • Implementation will follow the reform’s established timetable.

Miscellaneous Measures

Tax on On-Demand Audiovisual Content Access Services

  • Adjusted to reflect changes in digital business models.

  • Opaque intermediaries taxed on retained fractions of the price (commissions).

  • Exemption for taxpayers with ≤ €200,000 income; reduced rate for €200,001–€220,000.

  • Effective Jan 1, 2026, with retroactive limitation from Jan 1, 2022.

Tax on Handling Costs for Small Parcels from Third Countries

  • New tax: €2 per small parcel item, before applicable VAT.

  • Applies until an equivalent EU mechanism is in place.

  • Immediate purpose: fund management and control of shipments.

  • Effective Jan 1, 2026.

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