France has a 40-year history of wealth tax, marked by regulatory back-and-forth, a millionaire exodus, and persistent debate over the tax’s effectiveness. The past 10 years brought significant changes to France’s approach to taxing wealth, turning the country’s aggressive wealth-tax regime into a much more narrowly targeted one.
In this article, we’ll examine the current iteration of France’s wealth tax, Impôt sur la Fortune Immobilière (IFI). We’ll explain:
- Who is liable to pay the tax, and which assets are targeted by it
- How France came to have a real estate wealth tax
- What are the recent developments regarding wealth and asset taxation in France
Does France Have a Wealth Tax?
France currently doesn’t have a general wealth tax with broad asset targeting. Instead, the country has a real estate wealth tax (IFI), which is often referred to as the French wealth tax. Under the tax regime, only individuals with a taxable net worth larger than EUR 1.3 million (USD 1.5 million) incur wealth tax liability.
To understand the French wealth tax on property, we’ll examine:
- Who is liable for the tax
- Which property is taxable
- What are the French wealth tax rates
Who Is Liable for the Tax?
The French real estate tax applies to any individual who owns more than EUR 1.3 million (USD 1.5 million) worth of property. It makes a distinction between tax residents and non-residents:
- French tax residents are taxed on their worldwide property
- Non-residents are only taxed on the property located in France
The tax is applied on the household level. Unmarried individuals who live alone form a household, with all the properties owned by the individual being under the scope of the tax.
For married couples, each person’s individually owned property is added to jointly owned property to determine the household’s tax liability. If the couple has children, any property they own is also included in their taxable net worth.
Which Property Is Taxable?
Taxable property for the purposes of the French real estate wealth tax includes:
- Fully developed property, including houses, apartments, and any connected buildings, like garages
- Real estate that is still under construction
- Undeveloped real estate, such as land and agricultural property
- Shares and units in real estate companies
- Rights relating to real estate, such as usufruct
Some types of property are completely or partially exempt from the tax. Property used for professional activity falls under this category, as does forest property under exploitation. Long-term or professionally rented rural properties, as well as furnished rental properties held for professional activity, can also be exempt from the tax.
What Are the French Wealth Tax Rates?
France’s wealth tax on property uses a progressive tax rate with six tax brackets:
| Tax Bracket | Tax Rate |
| Up to EUR 800,000 (USD 930,000) | 0% |
| EUR 800,000 (USD 930,000)–EUR 1.3 million (USD 1.5 million) | 0.5% |
| EUR 1.3 million (USD 1.5 million)–EUR 2.57 million (USD 3 million) | 0.7% |
| EUR 2.57 million (USD 3 million)–EUR 5 million (USD 5.8 million) | 1% |
| EUR 5 million (USD 5.8 million)–EUR 10 million (USD 11.6 million) | 1.25% |
| More than EUR 10 million (USD 11.6 million) | 1.5% |
When calculating the tax base, taxpayers are allowed certain allowances and deductions. The value of a main residence, for example, is reduced by 30%, and the following liabilities can be deducted:
- Loans used to purchase property (up to the remaining sum due for repayment)
- Expenses for improvement, construction, reconstruction, or expansion of the property
- Funds used to acquire shares or units, up to the value of the property in question
- Maintenance expenses, including those not recovered from tenants by the end of the tax year
- Tax payments on the property in question, such as inheritance or property tax
For French tax residents, the wealth tax on property is one of the taxes subject to the 75% tax cap. This means that, if the total of worldwide income tax and the wealth tax exceeds 75% of worldwide income, the wealth tax is reduced by the difference between the total taxes and the thresholded portion of worldwide income.
The History of Wealth Tax in France
The current wealth tax, IFI, came into force after its predecessor, Impôt de Solidarité sur la Fortune (ISF), was repealed in 2018. The real estate wealth tax inherited the threshold, brackets, and rates from the solidarity tax, while drastically changing the taxable assets.
Households were liable for the ISF if they had more than EUR 1.3 million (USD 1.5 million) in the following types of assets:
- Developed or undeveloped real estate
- Cash and financial investments
- Personal property such as furniture, vehicles, and jewellery
- Gold and other precious metals
- Professional goods that do not meet the conditions for exemption
The regulations carved out some exemptions for certain types of property, such as qualifying professional assets, antiques and works of art, intellectual property rights held by their creators, certain investments in small and medium enterprises and funds, and certain compensation payments and annuities.
Bonus read: Learn about jurisdictions with a more favourable tax environment than France in our guides on countries with no income, crypto, corporate, capital gains, or property tax.
Why Did France Repeal Its Wealth Tax?
France’s decision to repeal the ISF and replace it with the IFI was driven by concerns about the tax’s economic effects and impact on investment. The government officials at the time argued that the old wealth tax discouraged productive investment, encouraged the flow of capital towards real estate or abroad, and made it harder to attract investment and retain talent in France.
These concerns were confirmed by the fact that the wealth tax encouraged wealthy taxpayers to leave the country. Between 2003 and 2016, an average of 750 tax-eligible households left the country every year, taking roughly EUR 3 billion (USD 3.5 billion) in wealth with them. As a result, the number of taxable households reduced by 0.2% each year, while the tax base reduced by 0.4%.
At the same time, the wealth tax’s contribution to the total tax revenue of the country wasn’t impressive. In 2017, for example, ISF revenue was EUR 5.1 billion (USD 6 billion), making up roughly 1.6% of the country’s total tax revenue.
The structure of the contributors to the EUR 5.1 billion (USD 6 billion) gathered by the ISF also demonstrated some of the wealth tax’s shortcomings, including an uneven distribution of the tax burden.
The cap on the wealth tax meant that the wealthiest 0.1% of households subject to tax paid an effective tax rate of 0.2%, compared to a 1.5% marginal tax rate. As a result, roughly half of the income generated by the wealth tax came from households with less than EUR 3 million (USD 3.5 million) in taxable assets.
What Were the Effects of the Tax Repeal?
The effects of the replacement of the general wealth tax with a targeted wealth tax were mixed. France saw a net gain of households subject to the new tax: between 2018 and 2021, an average of 380 households returned each year, while 260 departed. For comparison, between 2011 and 2016, 370 households subject to ISF returned each year, while 950 left.
The tax revenue from returning taxpayers, however, was small. In 2021, they collectively contributed EUR 5.5 million (USD 6.4 million), or 0.3%, to total IFI revenue.
Other effects of replacing ISF with IFI included:
- Most former ISF taxpayers saw lower tax bills, with two-thirds not being liable for IFI
- A drop in tax revenue, with IFI generating EUR 1.23 billion (USD 1.43 billion) in 2018, compared to EUR 4.2 billion (USD 4.9 billion) generated by ISF a year earlier
- By 2022, the new tax didn’t produce a noticeable shift of capital away from real estate
- The tax cap continued to benefit the wealthiest taxpayers
New Developments in French Tax Law
Even though France repealed its general wealth tax, the debate over broad wealth taxation continues in French society, occasionally prompting attempts to introduce new levies.
In 2025, two proposals for a wealth tax were brought before France’s National Assembly:
- The Socialist Party proposal, which aimed to introduce a minimum 3% tax on assets over EUR 10 million (USD 11.6 million), with an exception carved out for family-run and innovative businesses
- A proposal supported by Gabriel Zucman, a French economist, which intended to introduce a 2% tax on wealth over EUR 100 million (USD 116 million), affecting roughly 1,800 households
Neither of the proposals was voted into law. However, the 2026 Finance Act introduced a new, narrow wealth tax, targeting certain luxury alternative assets.
The 2026 Luxury Assets Tax
The luxury assets tax is a 20% levy that targets luxury assets held through holding companies. Set to go into effect from January 1, 2027, it will apply to companies that meet the following four criteria:
- The company is subject to the French corporate tax or is controlled by a person who is a French tax resident
- The market value of the assets held by the company is at least EUR 5 million (USD 5.8 million)
- At least half of the income is derived from passive revenue, such as dividends, interest, or rental income
- The company is controlled, directly or indirectly, by one or more persons who hold at least half of the voting or financial rights, or can otherwise exercise decision-making power
The tax targets non-operational assets, such as:
- Land used for hunting or fishing
- Vehicles that are not used to conduct business, including cars, yachts, and aircraft
- Jewellery and precious metals, as long as they are not displayed at a museum or otherwise made accessible to the public
- Race or competition horses
- Wine and spirits
Residential property held by a company can also be subject to the tax if it’s made available for use to one of the controlling individuals, either for free or below market value. Dwellings rented out under fictitious agreements are also subject to the tax.
Planning Beyond the Next Finance Law
France’s wealth tax history and recent developments demonstrate how structures meant to protect your assets from taxation today can easily lose their effectiveness tomorrow.
Wealth taxes are increasingly part of public discourse in the world’s biggest economies, including the U.S. and the UK, as well as in some of the most tax-friendly jurisdictions, such as Singapore, prompting high-net-worth individuals to consider taking actions such as:
- Identifying the assets or vehicles most vulnerable to proposed regulatory changes
- Moving assets into structures not targeted by upcoming regulations
- Disposing of at-risk assets and gaining exposure to alternative assets
- Accelerating succession and estate planning strategies
- Monitoring upcoming regulatory changes to facilitate timely action
Another strategy you can use to reduce liability to a potential wealth tax is to change your tax residency to a tax-advantaged jurisdiction. By carefully choosing the new country of residence, you can protect your existing wealth, reduce your income tax liability, access more favourable estate and inheritance rules, and manage your wealth in a stable tax framework with no unexpected policy changes.
The biggest challenge in changing your tax residence stems from navigating immigration and tax regulations in two countries simultaneously. However, working with consultants who specialise in international asset protection and global mobility can help you avoid any costly or time-consuming mistakes.
For assistance with your international tax residency strategy and its execution, contact Nomad Capitalist.
Protect Your Assets With Nomad Capitalist
Nomad Capitalist is an advisory firm that specialises in cross-border mobility and asset protection. We’ve helped more than 1,500 clients achieve their financial and lifestyle goals by obtaining residency abroad, structuring assets to reduce tax liabilities, accessing international banking, and exploring investment opportunities in foreign countries.
Our core service is the Action Plan, a blueprint for executing your international strategy. We tailor each Plan to our clients’ current circumstances and needs, ensuring every step in the guide is manageable and sequenced to minimise potential waste of time and money.
Here’s what partnering with Nomad Capitalist looks like:
- We ask you to fill out a form to help us determine whether we’re a good match
- We schedule a 45-minute onboarding call to learn about your circumstances and desires
- Your case manager develops an Action Plan and presents it for your approval
- We implement the Plan over 12 months, ensuring the process stays on track
- You continue receiving support from us even after the Plan is implemented
If you’re worried that a proposed tax change in your home country may increase your liabilities, Nomad Capitalist can help you become a tax resident in a tax-friendly jurisdiction. We can assist you in choosing a destination country, obtaining residency, and structuring your assets for optimised tax exposure. To start the process, contact Nomad Capitalist now!
