The Constitutional Council issued its decision yesterday regarding the constitutionality of several provisions of the 2026 Finance Act (Decision No. 2026-901 DC of February 19, 2026).
As a reminder, the Prime Minister had referred the matter to the Constitutional Council regarding:
- The Tax on Wealth-Management Holding Companies (Art. 7)
- The Dutreil Pact (Art. 8)
- Contribution-in-kind (Art. 11)
The Constitutional Council stated, however, that it was not its role to conduct an in-depth review in the absence of any claims of unconstitutionality.
Consequently, all of these provisions were adopted, or at least declared “not contrary to the Constitution.”
As a reminder, here are the consequences of adopting these provisions
✔️ Introduction of a new “Holding” tax on financial assets:
➨ Rate of 20%
➨ Threshold for application: at least €5 million in assets
➨ Tax base: non-business assets held by a holding company (excluding assets related to productive activities and cash).
➨ Works of art, collectibles, and antiques are excluded
✔️ The Dutreil Pact is now subject to stricter regulations:
➨The scope of eligible assets has been narrowed: luxury items (works of art, cars, and especially residential property) that are not exclusively used for business purposes are excluded from the tax break.
➨These assets may still qualify for the Dutreil exemption if they are used exclusively for the company’s business for at least 3 years prior to the transfer and until the end of the holding period
➨The individual holding period for company securities has been extended from 4 to 6 years.
✔️ The “contribution-disposal” mechanism has been tightened:
➨The holding company must reinvest at least 70% of the proceeds from the disposal (up from 60%)
➨The mandatory reinvestment period has been extended from 2 to 3 years
➨The acquired assets must be held for at least 5 years (up from 1 year)
➨ and, most importantly, real estate activities as defined in Section L of the NAF classification—including real estate brokers, developers, and land subdivers, as well as real estate management and operation activities—are now excluded
Adoption does not mean guaranteed constitutionality; therefore, the QPC remains open.
The lack of thorough oversight means that the following issues may still be debated:
- Respect for the principle of equality before public obligations
- Proportionality in Relation to Property Rights
- A potentially confiscatory nature
- The alignment of taxation with actual ability to pay.
The Farewell team can assist you with litigation involving these provisions.
