Presentation of the tax on assets not allocated to an operational activity of patrimonial holding companies

Published on March 27, 2026

Ahmed Ali Rashid AL-KINDI

Elysa PINCHAULT

Legal news in one click, it's fun!

Presentation of the tax on assets not allocated to an operational activity of asset-holding companies

The 2026 Finance Act and the new version of Article 235 ter C of the CGI introduce a new tax.

This measure targets structures holding assets but without so-called operational activity.

This could lead to a broader reconsideration of holdings traditionally referred to as "patrimonial."

I. CONDITIONS OF LIABILITY

The tax applies to companies that have their registered office in France and are subject to IS[1].

It also applies to companies with their registered office outside France, subject to an equivalent of corporate income tax or being a capital company and where at least one individual partner has their tax domicile in France.

Liability to the tax is subject to 3 cumulative conditions[2]:

The total market value of all assets held by the holding company is equal to or greater than 5 million euros.
Au moins a natural person associée exerce en fait le pouvoir de décision ou détient une fraction des droits de vote ou des droits financiers equal to or greater than 50%:
- Directly, through full ownership,
- Indirectly, through an intermediary company,
- Taking into account family ties (spouse; civil partnership partner; established cohabitant; ascendants; descendants; brothers and sisters)
- Partners acting in concert or bound by a distribution agreement,
- Through a trust or via a legal entity located in a non-cooperative state or territory (possible ability to establish that the company is not held by a natural person, proof can only result from the irrevocable nature of the trust or the discretionary management power of its trustee).

The holding company receives passive income representing more than 50% of the cumulative amount of operating income and financial income over the entire financial year, excluding reversals of provisions and depreciation.

A. A tax based on the market value

The tax is calculated on the sum of the market value of non-professional assets, as of the closing date of the fiscal year for which the tax is due.

This tax is applied at a rate of 20% of the market value of said assets held by the company.

B. The absence of a predominant operational activity of the holding company

The operational activity of the holding company must be predominant to avoid being subject to this tax.

An operating holding company is a company that, in addition to managing a portfolio of investments, actively participates in the conduct of its group's policy and the control of its subsidiaries; and, where applicable and purely internally, provides specific administrative, legal, accounting, financial, and real estate services.[3]

It participates in the management, active management of subsidiaries, and intervenes in the strategy of the held companies. If the holding company does not demonstrate a real economic activity, the luxury assets it holds are included in the taxable base.

C. Passive income

Article 235 ter C of the CGI targets passive income of companies.

Passive income is defined as:

– dividends (interest, bond income, receivables, deposits, and guarantees);

– royalties from the transfer or licensing of operating licenses, patents for inventions, trademarks, manufacturing processes or formulas, and other similar rights;

– copyright royalties;

– rents;

– proceeds from the disposal of an asset that generates income when they constitute operating income or financial income.[4]

Consequently, assets are not taken into account for the application of the tax to the extent that they have been allocated to the exercise of an agricultural, industrial, commercial, artisanal, or liberal activity or are the subject of such an activity[5].

Assets, known as operational assets, which are directly used for professional activity, are not included in the taxable base.

II. THE TAXABLE BASE

The tax base is attached to luxury assets not allocated to a real economic activity[6].

The basis is composed of the sum of the market values of the assets held by the company.

These notably include[7]:

Assets allocated to hunting and fishing activities: hunting grounds, dedicated installations and equipment (without any exclusion); water bodies, fishing facilities and equipment;
Wines and alcohols kept for collection or personal enjoyment purposes by the controlling partner;
Race or competition horses held for prestige or leisure purposes;
Vehicles not assigned to a professional activity, passenger vehicles, yachts, sailing or motor pleasure boats and aircraft;
Housing that the natural person reserves for their own use free of charge or with a rent that is clearly below market value, or in the case of fictitious rentals.

These assets may escape this taxation if it is justified that they are necessary for the company's activity by reason of its very purpose.

The holding company must have as its object, exclusive or not, the lucrative exploitation of these assets.

Nota bene:

The text does not provide for any deduction of liabilities, including when assets were financed through debt.

For housing included in the base, certain real estate debts remaining the responsibility of the company at the closing date are deductible according to rules close to the IFI, subject to anti-abuse provisions which target in particular intra-group debts or debts contracted from the partner.

Articulation with the IFI

Assets subject to the 20% tax are exempt from IFI, in order to avoid any double taxation[8].

III. TAXPAYERS AND PAYMENT OF THE TAX

A. Taxpayers of the tax

If the holding company is established in France, the tax is borne by the company itself, declared on an appendix attached to the corporate income tax return.

The tax is not deductible from the taxable result for corporate income tax; it will be deducted in the accounts but added back for tax purposes.

If it is a holding company established abroad, the tax is due by French resident partners holding at least 50% of the company's capital.

In this specific case, there is a capping mechanism to limit taxation to 75% of worldwide income.

The tax is reduced by the difference between:

The total of this tax and taxes due in France and abroad on income and products of the previous year, calculated before deduction of only the tax credits representing tax paid abroad and non-exempt withholding tax;

And

75% of the total worldwide net income after professional expenses of the previous year, after deduction only of categorical deficits as well as income exempt from income tax and products subject to a final withholding tax realized during the same year in France or outside France.

B. Payment of the tax

The tax is due from fiscal years ending December 31, 2026.

It will apply to eligible assets held by the company at the close of its financial year.

This tax will be due for the first time in 2027.

The asset strategy of holding companies must therefore be fundamentally rethought, both in its very construction and in its modalities.

Ahmed Ali Rashid MANDEVILLE

Avocat à la Cour

Macfarlanes LLP

Elysa PINCHAULT

Court Attorney

Macfarlanes LLP

[1] Art. 235 ter C, I-A of the CGI