France’s 2027 Finance Bill (PLF 2027): Key Tax Changes for Wealth, Gifts, Life Insurance and Business Owners
Tabled in the French National Assembly on 1 October 2026, France’s 2027 Finance Bill (projet de loi de finances pour 2027, PLF 2027) marks a return to the normal budget timetable. Its thirty-two tax articles (Articles 2 to 33) follow a clear line: no general tax increase, but a targeted crackdown on schemes seen as wealth-planning tools — contribution-and-sale structures, life insurance and furnished rentals — balanced by support for business takeovers and productive investment.
The bill will be debated, and probably significantly amended, in Parliament. Waiting for the final vote would nonetheless be a mistake: several measures are announced as applying from 1 October 2026, before the law is even passed. This is notably the case for gifts of shares held under the contribution-and-sale regime and for the new life insurance rules.
Here is our analysis of the main tax measures of the 2027 French Finance Bill for individuals, business owners, non-residents and companies, and of the decisions to prepare now.
PLF 2027 at a glance: five key dates
1 October 2026: end of the roll-over relief on contributed shares when they are gifted, and new conditions for life insurance premiums;
1 January 2027: income tax brackets indexed by 2.1% and cap on furnished rental (LMNP) depreciation;
1 January to 30 June 2027: window for cash gifts (exemption raised to €50,000 and a flat 6% rate);
1 July 2027: death benefits from non-compliant life insurance policies become subject to inheritance tax;
2027 to 2029: the “Papin” pact for business takeovers and “Industry 4.0” enhanced depreciation.
Individuals: income tax, pensions and wealth transfers
2027 French income tax brackets indexed by 2.1% (Art. 2)
The 11% rate will apply from €11,844, the 30% rate from €30,200, the 41% rate from €86,353 and the 45% rate above €185,737. The cap on the family quotient benefit rises to €1,845 per half-share. Indexation offsets inflation: it prevents a hidden tax rise but is not a tax cut.
10% pension allowance: a new €3,000 sub-cap (Art. 3)
The 10% allowance keeps its overall cap of €4,439, but a specific €3,000 sub-cap for retirement pensions is introduced (Article 158, 5-a of the French Tax Code). Maintenance and disability pensions are not affected. For retired households with high pensions, taxable income will increase by up to €1,439 a year. The measure is expected to raise €1.4 billion from 2027.
Cash gifts: a tax window from 1 January to 30 June 2027 (Art. 4)
For gifts made between 1 January and 30 June 2027, the bill creates two separate mechanisms:
the exemption for family cash gifts under Article 790 G of the French Tax Code rises from €31,865 to €50,000;
a flat 6% rate applies to outright cash gifts to a descendant (or, failing that, a nephew or niece) aged 18 to under 50, up to €100,000 per donor and per recipient. The rate falls to 5% if the recipient passes at least 1.1% of the sum on to a charity helping people in need, with no corresponding tax relief.
These gifts are not added back for future gift tax purposes (Article 784) and must be reported within one month. The measure mainly targets donors who have already used up their allowances: the amount transferred then bears 6%, instead of the progressive direct-line gift tax scale that reaches 45%. How it interacts with the €100,000 allowance of Article 779 is yet to be clarified.
Example: a father who gave €100,000 to his 30-year-old daughter less than fifteen years ago makes a further €100,000 cash gift in March 2027. Subject to the final text, gift tax would be €6,000 (€5,000 with the charitable pass-through), compared with about €18,200 under the standard scale.
Contribution-and-sale (apport-cession): gifts no longer wipe out the deferred gain (Art. 5)
This is the most sensitive measure for business owners and families. The tax deferral under Article 150-0 B ter of the French Tax Code — which applies when shares are contributed to a holding company controlled by the contributor — will now end on any gratuitous transfer of the shares received in exchange, and no longer only on a sale. The specific gift regime, which transferred the deferral to the recipient, is repealed.
In practice:
on a gift, the contributor becomes liable for income tax and social contributions on the deferred gain;
on death, the tax on the deferred gain becomes a tax debt of the estate, deductible from the estate’s assets;
likewise, the deferral of payment of the French exit tax (Article 167 bis) ends on any gratuitous transfer.
To ease the cash impact, payment in instalments over five years is available on request and against guarantees (new Article 1681 G). Above all, the measure applies to transfers made since 1 October 2026: any planned gift of holding company shares should be put on hold and reviewed. Such holding companies may also be exposed to the French holding company tax under Article 235 ter C.
Life insurance: three cumulative conditions to keep the tax benefits (Art. 6)
The favourable tax treatment of life insurance (assurance-vie) — the reduced rate of Article 125-0 A, the Article 990 I regime and the Article 757 B allowance — will be subject to three cumulative conditions (new Article L. 131-1-3 of the French Insurance Code):
premiums paid in cash;
unit-linked funds with features similar to those listed in Article L. 131-1 of the Insurance Code;
no assets in dedicated funds issued, guaranteed or owed by the policyholder, the insured, the beneficiary, their family or entities they control.
Foreign policies, in particular Luxembourg policies, must have similar features. Otherwise, death benefits become subject to inheritance tax according to the family relationship (Article 757 B, II bis). The rules apply to premiums paid since 1 October 2026 and to deaths occurring from 1 July 2027.
The target is clear: the business owner who places the shares of his or her holding company in a dedicated internal fund within a foreign policy. Without the reform, dividends accumulate tax-free, the capital gain is deferred and the assets fall outside the estate.
Furnished rentals (LMNP): depreciation capped at 2.5% and €7,000 a year (Art. 7)
For non-professional furnished rental landlords (LMNP), deductible depreciation on the property is capped at 2.5% and €7,000 per year per household (1.5% and €5,000 for tourist lets), excluding student residences, senior residences and care facilities (Article 39 C).
Depreciation carried forward at 1 January 2027 may only be used until 2036, within the limit of half of the rental profit; any later excess will be permanently lost. This significantly reduces the appeal of the LMNP status, including for non-resident owners of French furnished property.
Companies: business takeovers, investment and large groups
The “Papin” pact: tax support for business takeovers from 2027 to 2029 (Art. 10)
For sales completed between 1 January 2027 and 31 December 2029:
enhanced depreciation (new Article 39 decies J) of investments made by the acquired business: 60% of all depreciable assets for micro-enterprises and 30% of listed production and digital equipment for SMEs, provided the business has operated for at least five years and more than 50% of voting rights (or the whole business) is sold;
employee buy-outs: the fixed allowance of Article 150-0 D ter rises from €500,000 to €1,000,000, and transfer duties on sales of businesses and company shares fall to 0.1% (Articles 721 and 726). The buyer must have been an employee for five of the last ten years and undertake to hold and manage the business for five years.
The Government presents this regime as complementary to the Dutreil pact, which it undertakes to preserve.
Productive investment and sector-specific measures (Art. 8, 9 and 11 to 14)
Industry (Art. 9): “Industry 4.0” enhanced depreciation of 40% for mid-sized companies and 80% for small businesses (80% and 120% in regional aid zones) for robotics, additive manufacturing, software and sensors acquired from 2027 to 2029; extension of the green industry tax credit (C3IV).
Social housing (Art. 8): 25-year property tax exemption extended to 2030 and neutralisation of social housing activities for the Pillar Two global minimum tax.
Other sectors (Art. 11 to 14): extension of cultural incentives to 2029, enhanced depreciation for agricultural projects and tax relief for businesses hit by the summer 2026 wildfires.
Large companies, VAT and vehicles (Art. 15, 19 and 25)
The exceptional surtax on large companies is extended for a third year for groups with turnover of at least €1.5 billion, at reduced rates of 15.7% (€1.5bn to €3bn) and 31.4% (above). In VAT, the bill introduces an option for the letting of undeveloped land, an exemption with option for long-term leases conferring rights in rem, and cash-basis VAT for off-plan sales; VAT on vehicles leased to employees will be based on their market value.
Legal certainty and the fight against tax fraud
Tax rulings: silence means approval, on a trial basis (Art. 29)
Until 31 December 2028, companies in the French “relationship of trust” programme may opt for a guarantee under Article L. 80 A of the Tax Procedures Code where the tax authorities have not replied within three months to a written, precise, complete and good-faith request. A genuine step forward for legal certainty, although limited to a small circle of companies.
Stronger audit and collection powers (Art. 30)
third-party garnishment extended to securities accounts and penalties for financial institutions and crypto-asset service providers that fail to respond;
fines on digital platform operators tripled (from €50,000 to €150,000);
new inspection powers in overseas tax incentive schemes and a qualified deed requirement for sales of shares in real estate companies.
No new voluntary disclosure programme… for now
Despite near-official announcements, the bill contains no provision on regularising undeclared foreign assets. An amendment may still fill this gap. See our earlier analysis of France’s announced 2027 voluntary disclosure window.
Our recommendations: four issues to address now
The 2027 Finance Bill does not overhaul French wealth taxation, but it closes several planning routes with immediate effective dates. Four situations call for early advice:
Holding companies set up through a contribution-and-sale: review any planned gift of shares, as the deferred tax may be payable on transfers made since 1 October 2026, and audit existing deferrals and how the tax would be funded.
Life insurance policies: audit dedicated internal funds and Luxembourg policies holding “in-house” assets before 1 July 2027, and stop paying premiums in securities.
The first-half 2027 gift window: prepare it now, especially where allowances have already been used.
Furnished rental landlords: model the impact of the cap and the fate of carried-forward depreciation, and consider switching to unfurnished letting or the “Jeanbrun” scheme.
For internationally mobile taxpayers, these measures interact with the French exit tax and the territorial scope of French gift and inheritance tax: see our analyses of taxation of financial assets when moving abroad, foreign holding companies and international succession.
Our international tax law firm in Marseille and Geneva advises individuals, business owners and families, in France and abroad, on reviewing their tax deferrals, life insurance policies and succession plans before the 2027 Finance Act comes into force.
FAQ: France’s 2027 Finance Bill explained
When was France’s 2027 Finance Bill presented and when will it apply?
The 2027 Finance Bill (projet de loi de finances pour 2027, PLF 2027) was tabled in the National Assembly on 1 October 2026. Most measures are intended to apply from 1 January 2027, once the law is passed. Some provisions, however, are announced as applying from 1 October 2026, in particular the end of the roll-over relief on contributed shares when they are gifted and the new conditions for life insurance premiums. The bill may still be amended in Parliament.
Does a gift of shares received in a contribution-and-sale (apport-cession) structure now trigger tax on the deferred gain?
Under the bill, yes. The tax deferral under Article 150-0 B ter of the French Tax Code would end on any gratuitous transfer of the shares received in exchange for the contribution, for transfers made since 1 October 2026. The contributor would owe income tax and social contributions on the gift, with the option of paying in instalments over five years against guarantees.
What are the French income tax brackets for 2027 under the bill?
The brackets are indexed by 2.1%. The 11%, 30%, 41% and 45% rates would apply from €11,844, €30,200, €86,353 and €185,737 of income per share respectively. The cap on the family quotient benefit would rise to €1,845 per half-share.
How does the 6% rate on cash gifts in 2027 work?
For gifts made between 1 January and 30 June 2027, outright cash gifts to a descendant (or, failing that, a nephew or niece) aged 18 to under 50 would be taxed at a flat 6%, 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 sum on to a charity helping people in need. Such gifts would not be added back for future gift tax purposes and must be reported within one month.
Is my Luxembourg life insurance policy affected by the reform?
Yes. Foreign policies must have features similar to French policies. Favourable life insurance tax treatment would be limited to policies funded by cash premiums, invested in unit-linked funds comparable to those listed in the French Insurance Code, and whose dedicated funds hold no assets issued, guaranteed or owed by the policyholder, the insured, the beneficiary, their family or companies they control. The rules cover premiums paid since 1 October 2026 and deaths occurring from 1 July 2027.
What changes for furnished rental landlords (LMNP) in France?
Deductible depreciation on the property would be capped at 2.5% and €7,000 per year per household (1.5% and €5,000 for tourist furnished lets), excluding student residences, senior residences and care facilities. Depreciation carried forward at 1 January 2027 could only be used until 2036, within the limit of half of the rental profit.
What is the “Papin” pact in the 2027 Finance Bill?
It is a set of tax incentives for business takeovers completed between 1 January 2027 and 31 December 2029: enhanced depreciation of investments made by the acquired business and, for employee buy-outs, a €1,000,000 allowance on the seller’s capital gain and transfer duties reduced to 0.1%. It complements the Dutreil regime, which the Government has undertaken to preserve.
Does the 2027 Finance Bill create a new voluntary disclosure programme for foreign assets?
No. Despite earlier announcements, the bill contains no provision on regularising undeclared foreign assets. An amendment could still be tabled during the parliamentary debate.
Eve d’Onorio di Méo
Avocat, Tax Law Specialist (Avocat Spécialiste en Droit Fiscal)
Marseille and Geneva Bars (EU/EFTA Lawyer)
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