---
title: "2027 Draft Finance Bill: What Are the Implications for Wealth Planning Strategies?"
id: "10791"
type: "post"
slug: "2027-draft-finance-bill-what-are-the-implications-for-wealth-planning-strategies"
published_at: "2026-10-26T11:22:58+00:00"
modified_at: "2026-10-26T11:26:00+00:00"
url: "https://www.august-debouzy.com/en/legal-article/2027-draft-finance-bill-what-are-the-implications-for-wealth-planning-strategies/"
markdown_url: "https://www.august-debouzy.com/en/legal-article/2027-draft-finance-bill-what-are-the-implications-for-wealth-planning-strategies.md"
taxonomy_category:
  - "Legal Article"
taxonomy_language:
  - "English"
taxonomy_post_translations:
  - "pll_6adf3812493fc"
taxonomy_tax_expertise:
  - "Tax"
---

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The 2027 Draft Finance Bill (the “2027 DFB”), submitted on 1 October 2026, contains two measures directly affecting the transfer of wealth. Article 4 temporarily reduces the taxation of gifts of money to accelerate the transfer of wealth between generations. Article 5, by contrast, puts an end to the elimination of capital gains subject to tax deferral under Article 150-0 B ter of the French General Tax Code (“FTC”) upon the contributor’s gift or death.

**I – Article 4: Temporary tax relief for gifts**

Article 4 of the 2027 DFB seeks, for a limited period, to encourage the transfer of a portion of the savings held by older generations to younger beneficiaries. The Government justifies this measure by the increasingly advanced age at which wealth is transferred and its intention to channel savings more quickly into consumption, home purchases or business creation.

The scheme applies to outright gifts of money made between 1 January and 30 June 2027.

It comprises two separate measures. First, the exemption threshold under Article 790 G of the FTC (available every 15 years) is temporarily increased from €31,865 to €50,000. The ordinary conditions governing family gifts of money remain applicable, notably that the donor must be under 80 and the donee must be an adult or an emancipated minor.

Second, qualifying family gifts of money to beneficiaries aged 18 or over but under 50 would be subject to a flat rate of 6%, up to €100,000 per donor and per donee. The bill provides that this rate could be reduced to 5% if the donee passes on at least 1.1% of the amount received to certain non-profit organisations referred to in Article 200 of the FTC. Such payment would not entitle the donee to the tax reduction normally available for the donations concerned. This new option would be cumulative with the €100,000 allowance available every fifteen years under Article 779 of the FTC.

**II – Article 5 : Ending the elimination of deferred capital gains under Article 150-0 B ter**

***1 – Overview of the current tax deferral regime under Article 150-0 B ter***

Article 150-0 B ter of the FTC, introduced by the 2012 Amending Finance Act, defers taxation of the capital gain arising on a contribution of shares to a company subject to corporate income tax that is controlled by the contributor.

The deferral ends, in particular, upon a sale for consideration, repurchase, redemption or cancellation of the shares received in exchange for the contribution, or where the holding company sells the contributed shares within three years without reinvesting at least 70% of the proceeds in eligible business activities within three years. These requirements were tightened by the 2026 Finance Act: the reinvestment threshold was raised from 60% to 70%, the holding period for reinvestments increased from twelve months to five years, and the scope of eligible activities narrowed.

Conversely, two situations allowed the gain to escape taxation permanently:

- **the death of the contributor,** which was not an event triggering the end of the deferral: the capital gain was extinguished and the heirs received the shares at their value on the date of death;
- **a gift of shares in the holding company** (paragraph II of the Article): the deferral was transferred to the donee who acquired control of the company and was then extinguished if the donee retained the shares for six years, or eleven years in the event of reinvestment in funds.

This “elimination” of deferred gains made the holding company a wealth-transfer vehicle in its own right.

***2 – Abolition of the elimination of deferred capital gains***

Article 5 amends Article 150-0 B ter in two respects:

- in points 1 and 3 of paragraph I and point 1 of paragraph IV, the words “sale for consideration” are replaced by “transfer”. **Gifts, informal gifts, gifts by way of partition (including transgenerational gifts by way of partition), and inheritances would therefore bring the deferral to an end;**
- paragraph II is repealed. **The transfer of the deferral to the donee is abolished.**

In practice, a gift of the shares received in exchange for the contribution would make income tax and social security contributions immediately payable by the donor. Upon death, the tax would be payable in the deceased’s name and constitute a liability of the estate. It would be calculated at the rate applicable in the year of the contribution.

To address the absence of liquidity, a new Article 1681 G of the FTC would allow income tax to be paid in instalments over the following five years, upon application made no later than the payment deadline. This arrangement is conditional on compliance with ongoing tax obligations and the provision of security, which the tax collection officer may require to be supplemented at any time; the surcharge under Article 1730 is capped at the statutory interest rate, and the arrangement is terminated in the event of default.

The provision applies to transfers made on or after 1 October 2026, the date on which the bill was submitted.

***3 – Tightening of the exit tax regime***

Article 5 makes corresponding amendments to paragraph VII of Article 167 bis of the FTC, which specifies the events terminating the suspension of payment of exit tax. Two situations must be distinguished.

**Deferral established before departure.**Before the reform, the suspension of payment of exit tax ended only on a sale for consideration of shares subject to deferred taxation. In the event of death or a gift made from an EU Member State or a treaty jurisdiction, the exit tax was therefore discharged. Following the reform, a gift or the death of an expatriate taxpayer would terminate the suspension and make the tax payable, irrespective of their country of residence. The relief that previously eliminated exit tax on gratuitous transfers from abroad would no longer apply to those shares.

**Contribution made after departure.**Before the reform, a taxpayer who left France and then contributed to a holding company shares carrying an unrealised capital gain assessed upon departure could obtain relief from exit tax in the event of death or a gift made from an EU Member State or a treaty jurisdiction. Following the reform, a gratuitous transfer of the shares received in exchange for that contribution would terminate the suspension and make the tax immediately payable; the relief is expressly excluded.

A contribution to a holding company after departure does not, in itself, affect the suspension of payment; however, it subsequently deprives the taxpayer of the relief available to someone who retained direct ownership of the shares. Yet the tax concerned relates not to a gain on contribution but to the unrealised capital gain assessed on departure, which has never been realised

The payment plan under Article 1681 G is available to expatriates on the same terms, including the security requirements.

***4- Practical implications of the reform***

**A scope extending beyond contribution-and-sale transactions.**The reform would not be limited to contribution-and-sale arrangements. It would apply to all capital gains deferred under Article 150-0 B ter, including where the holding company has never sold the contributed shares. The measure would therefore also affect business owners who established a holding or active holding company without contemplating a sale of the contributed shares.

**A high combined tax burden**. In the event of death following the contribution, the combined tax burden would comprise capital gains tax, the exceptional contribution on high incomes (CEHR) and the differential contribution on high incomes (CDHR), totalling 38.6%, plus inheritance tax at a marginal rate of 45%. As capital gains tax is deductible from the inheritance tax base, the resulting overall tax burden would be 66.23%.

**A disincentive to gifts.**As making a gift would trigger taxation in the donor’s name without generating any liquidity, donors would be tempted to retain their shares until death. This runs counter to the policy of encouraging early transfers of businesses, particularly under the Dutreil regime, with which no coordination is provided. Capital turnover would therefore be hampered.

**Reduced benefits of a contribution.**The reinvestment requirement would remain in place, while the deferral would become merely a postponement of payment, with tax becoming due no later than death. For some taxpayers, a direct sale, or even a gift followed by a sale, would become more attractive.

***5 – Questions raised by the proposed legislation***

**Split ownership.**The bill does not address gifts of bare ownership with retention of usufruct. Under current administrative guidance, only the portion of the capital gain attributable to the right transferred would be taxed. Yet usufruct expires upon death without being transferred: on a literal reading, the portion attributable to it might never be taxed. Moreover, the tax liability remains with the donor-usufructuary rather than their heirs.

**Partial transfers.**Paragraph V of Article 150-0 B ter, which determines the proportion of the deferred gain becoming taxable, still refers only to shares “sold for consideration, repurchased, redeemed or cancelled”. The treatment of a gift of only some of the shares is not addressed.

**Deferrals already transferred to donees.**No transitional provision confirms that donees who received shares before 1 October 2026 remain subject to the holding period, even though paragraph II, on which their tax liability is based, is repealed.

**Limited scope of payment by instalments.**The plan under Article 1681 G covers only income tax, not social security contributions, which account for most of the expected revenue.

**Entry into force.**Applying the reform to transactions carried out since the bill was submitted, i.e. since 1 October 2026, was intended to prevent windfall effects. While that reasoning may hold for gifts, it seems difficult to justify in relation to deaths. More importantly, the reform would apply to all deferrals established since 14 November 2012, even though the French Constitutional Council requires a sufficient public-interest justification for subjecting capital gains automatically placed under deferral to tax assessment rules that had not been determined when the gains arose.

*

Overall, these provisions of Article 5 of the 2027 DFB are likely to be amended during parliamentary debate, or even removed. Nevertheless, the proposed effective date of 1 October 2026 makes it necessary to consider their implications now.

More generally, this represents another blow to investment, adding to the changes made by the 2026 Finance Act, which had already tightened the conditions for applying Article 150-0 B ter of the FTC.

Initial parliamentary discussions to date suggest that the 2027 DFB may be rejected in its current form. Further developments in the debates will need to be closely monitored.

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### Authors

2

- [Xavier Rohmer](https://www.august-debouzy.com/en/collaborateur/xavier-rohmer/)
- [Jeanne Borde](https://www.august-debouzy.com/en/collaborateur/jeanne-borde/)

### Practice Area

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- [Tax](https://www.august-debouzy.com/en/tax-expertise/tax/)

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