French Act No. 2026-534 of 25 June 2026 on combating social and tax fraud, which came into force for these purposes on 27 June 2026, significantly amends the conditions under which certain legal entities may benefit from an exemption from the annual 3% tax on real estate located in France. Until now, entities eligible for the exemption provided for under Article 990 E(3)(d) of the French General Tax Code (Code général des impôts, “CGI”) could benefit from it on the basis of a simple undertaking to provide information to the French tax authorities. The reform abolishes this option and replaces it with an annual reporting obligation, thereby requiring increased vigilance from both French and foreign real estate holding structures.
Family groups, private investors and international wealth-holding structures should start preparing now for the 2027 filing deadline.
The end of the disclosure undertaking: a major change for exempt entities
As set out in Article 990 D of the CGI, the annual 3% tax applies, in principle, to French or foreign legal entities holding, directly or indirectly, real estate located in France or rights in rem relating to such property. Whilst numerous statutory exemptions allow entities to avoid this tax, eligibility for these exemptions remains subject to compliance with specific conditions, particularly regarding reporting obligations.
For the entities concerned, eligibility for the exemption provided for under Article 990 E CGI now requires the filing of an annual return, no later than 15 May, setting out in particular:
- the location, description and value of the immovable property held as at 1 January;
- the identity and address of shareholders, partners or other members holding, in any capacity whatsoever, more than 1% of the shares, interests or other rights in the entity; and
- the number of shares, interests or other rights held by each person.
The reform therefore changes neither the tax rate nor the basis on which it is assessed. Rather, it tightens the transparency and reporting requirements that condition the availability of certain exemptions.
Holding structures must be reassessed, sometimes after many years
The reform is particularly relevant for structures that have historically benefited from an exemption on the basis of a disclosure undertaking. However, since this undertaking was given, the underlying asset and ownership situation may have changed considerably as a result of property acquisitions or disposals, gifts, inheritances, restructurings, the interposition of holding companies, changes in shareholding structures or transfers of tax residence. In international holding structures, the analysis may prove particularly complex.
The indirect ownership of French real estate through several entities does not necessarily mean that each entity falls under the same exemption regime or is subject to the same reporting obligations.
The legal classification of the entities involved, their tax residence, the composition of their assets and the identification of their interest holders may require separate analyses at each level of the ownership chain. The abolition of the disclosure undertaking therefore requires a review not only of the applicable reporting requirements, but also of the legal basis for the exemptions claimed.
Increased vigilance for foreign entities
The reform also introduces a new Article 990 FA into the CGI, which provides that entities subject to the obligations relating to the 3% tax and which do not have a permanent establishment in France must now designate, in their annual return, an individual domiciled in France or a legal entity having its registered office in France, authorised to receive on their behalf communications, procedural documents and notifications from the French tax authorities. This designation must be distinguished from that of a tax representative personally liable for the payment of the tax. It is therefore an additional compliance consideration for foreign entities, particularly within holding structures involving several non-resident entities.
The 2027 deadline: time to prepare
The upcoming filing period will be particularly important for entities that have until now relied on a disclosure undertaking. However, simply filing a return will not, in itself, be sufficient to secure an exemption if the conditions for that exemption have not been reassessed for several years.
In this context, it is therefore strongly recommended that a preliminary review of real estate holding structures be carried out in order to verify the exemptions applicable at each level of ownership, identify the corresponding reporting obligations and, where appropriate, assess whether any prior situations should be regularised. The issue now goes beyond simply preparing a tax return: the aim is to ensure that the legal structuring of the assets continues to allow the relevant 3% tax exemptions to be claimed with legal certainty.
Stéphanie Barreira
Partner, Paris
