France’s 2027 Budget Bill: Wealth Taxation in Limbo — Where Things Stand on 3 November 2026
Since 13 October, the French National Assembly has been amending the 2027 budget bill (projet de loi de finances pour 2027, “PLF 2027”), often against the Government’s advice, with new amendments adopted every day. More than 11,500 amendments have been tabled, nearly 4,000 of them in plenary on the first part of the bill alone. The state of the text on 3 November, set out below, is therefore only indicative: its fate will depend on the vote on the first part, the back-and-forth with the Senate and, ultimately, the Government’s choices.
Retirees, furnished rentals (LMNP), cash gifts, contribution-and-sale schemes, life insurance, exit tax, the Dutreil pact and personal holding companies: here is, measure by measure, what the bill contains and how to react — whether you live in France or abroad with assets in France.
A tight timetable: 17 November, 17 December
The Assembly must vote at first reading by 17 November at the latest. If the revenue part were rejected, the bill would go to the Senate in its original form, without the changes voted by MPs. If the budget is not finally adopted by 17 December, the Government could implement it by ordinance, and Article 49.3 of the Constitution remains available. In both scenarios, the Government’s original draft would once again become the reference.
1. Retirees: the 10% pension allowance preserved
The Government proposed adding a €3,000-per-household sub-cap to the ceiling of the 10% allowance on pensions, expected to raise €1.4bn. The measure was struck out on 15 October by identical amendments from several groups: the €4,439 ceiling would be maintained. The income tax brackets remain indexed by 2.1%.
2. Furnished rentals and real estate: the LMNP cap dropped, landlord-friendly measures added
Article 7 would have capped the deductible depreciation of non-professional furnished landlords (LMNP) at 2.5% of the property’s value and €7,000 per year per household (1.5% and €5,000 for furnished tourist lets), from the taxation of 2026 income, and gradually abolished the carry-forward of undeducted depreciation. On 30 October, MPs simply removed the provision.
Conversely, they adopted several measures favourable to landlords:
the micro-foncier threshold raised to €30,000 of rental receipts, with the flat allowance increased to 50%;
depreciation under the “Jeanbrun” scheme raised to 4% for new-build property;
unfurnished homes let as a tenant’s main residence, subject to rent and income caps, excluded from the French real estate wealth tax (IFI);
an accelerated allowance on the capital gain on the sale of a furnished property where the buyer undertakes to make it their main residence.
Nothing is final for property taxation: the Senate will examine the original text, and the depreciation cap could return. Non-residents letting property in France should also read our guide to French rental income for Swiss residents.
3. Cash gifts: a reduced 6% rate
The Government’s bill applies a single 6% rate, from 1 January to 30 June 2027, to outright gifts of cash to a descendant aged 18 to 50, up to €100,000 per donor and per recipient. The rate would fall to 5% if the recipient passes at least 1.1% of the amount on to a charity helping people in need. These gifts would not be added back when calculating duties on later gifts and, according to commentators, the 6% rate would apply after the ordinary personal allowances. The bill also raises to €50,000 the exemption for family cash gifts under Article 790 G of the French Tax Code.
The Assembly extended the regime to the whole of 2027 and raised that exemption to €100,000. It also extended until 2030 the exemption for gifts used to buy a new home or fund energy-efficiency works (Article 790 A bis). At this stage only the Government’s version looks reasonably secure: gifts are best made before 30 June 2027. Only cash is covered — not real estate or shares. For context, see our analysis of inheritance tax in Europe.
4. Contribution-and-sale: a gift no longer wipes out the gain
This is the most sensitive measure for business owners who contributed their shares to a holding company before a sale. It targets transfers made since 1 October 2026 — before the law is even passed: a gift of the shares received in exchange for the contribution would end the tax deferral under Article 150-0 B ter of the French Tax Code, whereas until now it could, under conditions, erase the capital gain. The Government’s text also covers transfers on death.
The Assembly narrowed its scope:
transfers on death would have no effect;
a gift would trigger tax only if the holding company sold the contributed shares within eight years of the contribution without economic reinvestment, and only pro rata;
a gift with reserved usufruct would be taken into account only for the value of the bare ownership;
payment of the tax could be spread over ten years, instead of five in the original bill.
Any gift of holding company shares should be postponed until the final vote, and existing deferrals should be reviewed.
5. Life insurance: tighter rules for dedicated-fund contracts
The life insurance article was adopted without substantive change. The favourable regime — the annual allowance on withdrawals after eight years and the allowances applicable on death — would be reserved for contracts meeting three cumulative conditions:
premiums paid in cash;
unit-linked investments comparable to those permitted under French law;
dedicated funds holding no asset issued by the policyholder, the insured, the beneficiary, their family or companies they control.
Foreign contracts, notably Luxembourg policies, are expressly targeted. Otherwise, the proceeds would be subject to inheritance tax according to the family relationship for deaths from 1 July 2027, and the income from premiums paid since 1 October 2026 would lose the favourable income tax treatment (annual allowance and, for foreign contracts, the reduced rate).
An audit of dedicated-fund contracts is essential before that date, and no further premiums should be paid in securities. A hasty surrender is not the answer, however: it forfeits the contract’s tax seniority.
6. Leaving France: the 15-year exit tax returns
MPs restored the 15-year period after which deferred exit tax is cancelled, instead of two years — or five years above €2.57m of shares — since the 2019 Finance Act. The Government did not support the amendment and mentioned “intermediate periods”. Anyone planning to move abroad must factor in this risk, all the more so as the transitional rules remain unclear.
7. Business succession: the Dutreil pact and the “Papin” pact
The Dutreil pact could give a full exemption, instead of 75%, for unlisted companies, subject to a collective holding commitment extended to three years and a ten-year individual commitment. At least one recipient would have to be aged 18 to 60, which would rule out transfers between older generations.
The “Papin” pact, a new Government scheme, supports takeovers of small and medium-sized businesses between 2027 and 2029: enhanced depreciation on post-takeover investments and, where the buyer is an employee of at least five years’ standing, a €1m allowance on the retiring owner’s capital gain and transfer duties cut to 0.1%. MPs opened it to companies majority-owned by employees and allowed the seller to support the buyer for twelve months.
8. Personal holding companies: cash now in the tax base
Introduced in 2026, the tax on personal holding companies applies to companies with at least €5m of assets, controlled by an individual and their family circle and earning mainly passive income. It taxes at 20% luxury assets and homes reserved for the shareholder’s use, and applies for the first time to financial years ending on or after 31 December 2026.
MPs are extending it to cash and financial investments (accounts, securities, investment funds, capitalisation contracts, receivables) at a 2% rate, for financial years ending on or after 31 December 2027. Excluded would be holdings of at least 5% in operating or active holding companies, private equity funds, and amounts reinvested within three years in an operating company or in housing let as a main residence.
Cash kept long-term in a holding company would thus become costly: distribution and investment policies will need to be reviewed, including in light of French dividend taxation.
Key takeaways: four reflexes
The text that emerges from the Assembly is unlikely to apply as it stands, but it outlines the possible compromises. At this stage, four reflexes are called for:
postpone gifts of holding company shares resulting from a contribution-and-sale;
audit dedicated-fund life insurance contracts before 1 July 2027;
schedule cash gifts for the first half of 2027;
wait for the final text before restructuring a furnished rental portfolio or a holding company.
FAQ: France’s 2027 budget bill and wealth taxation
Has France’s 2027 budget bill been finally adopted?
No. On 3 November 2026 the bill is at first reading in the National Assembly, which must vote by 17 November; it then goes to the Senate. If it is not finally adopted by 17 December, the Government could implement the budget by ordinance.
Has the cap on LMNP depreciation been dropped?
MPs removed it on 30 October 2026. But if the revenue part of the bill is rejected, the Senate will examine the Government’s original text and the measure could return: nothing is final.
What reduced rate applies to cash gifts in 2027?
The bill provides a single 6% rate (5% if at least 1.1% is passed on to a charity) on outright cash gifts to a descendant aged 18 to 50, up to €100,000 per donor and per recipient, from 1 January to 30 June 2027. The Assembly extended it to the whole of 2027.
Can I still gift shares received in a contribution-and-sale?
The bill provides that a gift of shares received in exchange for the contribution would end the Article 150-0 B ter tax deferral for transfers made since 1 October 2026. The Assembly’s version limits taxation to sales by the holding company within eight years without reinvestment. Such gifts should be postponed until the final vote.
Are Luxembourg life insurance policies affected?
Yes. Foreign contracts are expressly targeted: unless three conditions are met (cash premiums, unit-linked assets comparable to French ones, dedicated funds holding no assets linked to the policyholder or their family), proceeds would be subject to inheritance tax for deaths from 1 July 2027. An audit is advisable, without a hasty surrender.
Is the French exit tax going back to 15 years?
MPs restored the 15-year period after which deferred exit tax is cancelled, compared with two or five years today. The Government did not support the amendment, and the transitional rules remain to be clarified.
Every estate calls for its own analysis: ownership structure, timing of transfers, life insurance contracts, plans to move abroad. A prior review lets you anticipate the effects of the 2027 budget bill and secure your decisions, in France or from abroad.
Eve d’Onorio di Méo
Avocat Spécialiste en Droit Fiscal
Barreau de Marseille et Genève (Avocat UE/AELE)
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