Exceptional contribution on the profits of large companies (2025 and 2026)
The Finance Law for 2025 introduced an exceptional contribution on the profits of companies with turnover greater than or equal to 1 billion euros (EUR).
This contribution was initially only applicable for the first financial year (FY) ending on or after 31 December 2025.
The Finance Law for 2026 extended the contribution for a second year but only to companies with a turnover greater than or equal to EUR 1.5 billion.
See the Taxes on corporate income section for more information.
Capital gain on qualifying participation: Introduction of a safeguard mechanism
The Finance Law for 2026 has established a safeguard mechanism to secure the benefit of the capital gain exemption regime. This applies to securities representing at least 5% of voting rights in a company or that were acquired through a takeover bid by the initiating company.
Companies can book these securities in a designated section of their balance sheet (‘securities subject to the long-term capital gains regime’). Choosing this option creates an irrebuttable presumption, in the case of a tax audit, that the securities qualify for the capital gain exemption regime, applicable to the capital gain taxation. Note that such booking is binding to the taxpayer.
The new provision applies to FYs ending on or after 31 December 2025.
Deduction of interest paid to minority shareholders companies
For corporate income tax (CIT) purposes, interest deductions paid to minority shareholders are, in principle, capped at the average rates credit institutions charge on variable-rate loans with maturities over two years.
The Finance Law for 2026 allows deduction of interest paid to minority shareholders companies up to the rate obtainable from independent financial institutions under similar conditions. This exception was previously only available to majority shareholders. The new provision applies to FYs ending on or after 31 December 2025.
Tax on capital reductions resulting from the buyback of their own shares by large companies
The Finance Law for 2025 introduced a tax on capital reductions resulting from the buyback of their own shares by large companies (i.e. French companies with individual or consolidated turnover > EUR 1 billion in the last FY). The tax applies to capital reductions resulting from share buyback operations with few exceptions.
The rate of the tax is 8%, and the tax base is very specific (and not directly related to the fair value of the shares). It is not deductible from the taxable income.
Tax on non-operational assets of holding companies
The Finance Law for 2026 introduced a tax on non-operational assets of holding companies.
A French company subject to CIT or an individual shareholder (domiciled in France) of a foreign company subject to a tax equivalent to CIT or joint-stock company is subject to this tax if:
- the fair market value of the assets exceeds EUR 5 million
- an individual (defined as the family circle) holds, directly or indirectly, at least 50% of the shares, and
- passive income represents more than 50% of operating and financial income (excluding reversals, provisions, and depreciation).
Where the holding company is resident, the tax base is the market value of the luxury assets held by the company on the closing date of the FY for which the tax is due (i.e. assets allocated to hunting and fishing; vehicles not allocated to a professional activity, passenger vehicles, yachts, sailing or motor pleasure craft, and aircraft; jewellery and precious metals [except allocated to a museum or historical monument or exhibition in a place accessible to the public or to the company's employees], racehorses or competition horses, wines and spirits; dwellings for which the individual retains a right of use [market value minus the debts attached to these assets, under certain conditions]). Please note that assets are excluded from the tax base in proportion to their allocation to an eligible professional activity.
Where the holding company is non‑resident and owned by an individual domiciled in France, the tax base consists of the fraction of the market value of the shareholdings held in the company having its registered office outside France representing the value of the assets mentioned above.
The tax, at a rate of 20%, applies as of the fiscal year ending on 12 December 2026. The tax is not deductible from CIT.