On 27 June 2026, Law no. 2026-534 came into force, introducing a fundamental shift in how non-resident legal entities owning French real estate must report to the French tax authorities. For decades, foreign companies, soci\u00e9t\u00e9s civiles immobili\u00e8res<\/em> (SCIs, or non-trading property-holding companies), trusts, investment funds and comparable structures could claim an exemption from France\u2019s 3% annual tax on real estate by providing information only when requested. That era has ended. The new law transforms a passive compliance system into an active, mandatory annual filing regime, with the first declarations due by 15 May 2027. For British, American and Australian nationals who have structured their French property through a legal entity\u2014whether an offshore company, a family SCI<\/a>, or a trust\u2014the practical implications are immediate and significant. Failure to comply triggers an automatic 3% annual charge on the full market value of the property, without any deduction for acquisition debt. This article examines the statutory framework, the scope of the new obligations, the available exemptions, and the practical steps that non-resident owners must take before the first filing deadline.<\/p>\n The starting point is Article 990 D of the Code g\u00e9n\u00e9ral des imp\u00f4ts<\/em><\/a> (CGI, or French Tax Code), which provides that any legal entity\u2014a company, a partnership, a trust (fiducie<\/em>), or a comparable institution\u2014that directly or indirectly owns one or more immovable properties located in France is liable for an annual tax equal to 3% of the market value (valeur v\u00e9nale<\/em>) of those properties or real property rights. The concept of indirect ownership is drafted broadly: an entity is deemed to hold French real estate indirectly whenever it holds a participation, \u00ab\u00a0quelles qu\u2019en soient la forme et la quotit\u00e9\u00a0\u00bb (in whatever form and proportion), in another legal entity that itself owns the property, regardless of how many intermediary entities are interposed in the chain of ownership. This anti-avoidance provision means that a British limited company holding shares in a Luxembourg soci\u00e9t\u00e9 \u00e0 responsabilit\u00e9 limit\u00e9e<\/em> (SARL) that in turn owns a French apartment is, for the purposes of Article 990 D, treated as indirectly owning that apartment.<\/p>\n The tax is calculated on the property\u2019s fair market value as of 1 January of the relevant tax year. For a property worth \u20ac500,000, the annual charge would amount to \u20ac15,000. For a portfolio of several properties or a high-value asset, the financial exposure can be substantial. The 3% rate is flat: it does not vary with the number of properties held, the duration of ownership, or the entity\u2019s other activities. It is a pure in rem<\/em> charge on the French real estate, independent of the entity\u2019s worldwide income or profits.<\/p>\n The French Cour de cassation has consistently applied the principle that contractual transparency and good faith govern all property transactions under French law. Under Article 1104 of the Code civil<\/em><\/a>, contracts must be negotiated, formed, and performed in good faith\u2014\u00ab\u00a0Les contrats doivent \u00eatre n\u00e9goci\u00e9s, form\u00e9s et ex\u00e9cut\u00e9s de bonne foi\u00a0\u00bb. This provision is of ordre public<\/em> (mandatory public policy) and cannot be contractually excluded. While Article 1104 operates in the sphere of private law obligations, it reflects a broader legislative trend in French law towards mandatory transparency in property matters, of which Law 2026-534 is the most recent and far-reaching expression in the tax domain.<\/p>\n Before Law 2026-534, the 3% tax was widely understood to be avoidable through a set of exemptions codified in Article 990 E of the CGI<\/a>. The most commonly relied-upon exemptions were those available to entities having their registered office in France, in another EU Member State, or in a jurisdiction that had concluded with France a treaty containing an administrative assistance clause for combating tax fraud and evasion. Such entities could claim exemption if their share of the French real estate was worth less than \u20ac100,000 or less than 5% of the property\u2019s fair market value (Article 990 E, 3\u00b0(a)). Alternatively, entities could claim exemption by filing an annual declaration listing the situation, composition and value of the properties held as of 1 January, together with the identity and address of all shareholders, partners or members holding more than 1% of the shares, units or other rights (Article 990 E, 3\u00b0(d)).<\/p>\n In practice, however, the pre-2026 system operated largely on a self-assessment and on-request basis. Many non-resident entities that qualified for exemption under Article 990 E simply omitted to file anything, and the French tax authorities (Direction g\u00e9n\u00e9rale des finances publiques<\/em>, DGFiP) would request information only sporadically, typically upon a property sale or a tax audit. This led to significant under-reporting and, as the French legislator expressly noted in the preparatory works for Law 2026-534, a structural information asymmetry between the tax administration and foreign-held real estate assets.<\/p>\n The shift in approach echoes the evolution of pre-contractual disclosure obligations in French property law more broadly. Article 1582 of the Code civil<\/em><\/a> defines sale as a convention \u00ab\u00a0par laquelle l\u2019un s\u2019oblige \u00e0 livrer une chose, et l\u2019autre \u00e0 la payer\u00a0\u00bb (by which one party undertakes to deliver a thing and the other to pay for it). But this simple definition has been progressively enriched by a web of mandatory disclosure obligations, from the duty to inform under Article 1112-1 of the Code civil<\/em><\/a> to the statutory diagnostic reports required by the Code de la construction et de l\u2019habitation<\/em>. The Cour de cassation has reinforced these obligations with increasing rigour. In a decision of 19 February 2026 (no. 24-10.524, published in the Bulletin)<\/a>, the Third Civil Chamber ruled that when a plan de pr\u00e9vention des risques naturels<\/em> (natural risk prevention plan) had been approved between the signing of the promesse de vente<\/em> (preliminary sale agreement) and the final acte authentique<\/em> (notarial deed), the vendor was required to provide an updated risk disclosure statement at the time of the final deed. The Court held that \u00ab\u00a0si, apr\u00e8s la promesse de vente faisant \u00e9tat d\u2019un plan de pr\u00e9vention des risques naturels pr\u00e9visibles prescrit, celui-ci a \u00e9t\u00e9 approuv\u00e9 avant la signature de l\u2019acte authentique, le dossier de diagnostic technique doit \u00eatre compl\u00e9t\u00e9 par une mise \u00e0 jour de l\u2019\u00e9tat des risques r\u00e9sultant du plan approuv\u00e9 valant servitude<\/a> d\u2019utilit\u00e9 publique\u00a0\u00bb (if, after the preliminary sale agreement recording a prescribed natural risk prevention plan, that plan was approved before the signing of the notarial deed, the technical diagnostic file must be supplemented by an updated risk statement reflecting the approved plan constituting a public-law easement). The principle is clear: static information is not enough; the law demands current, verified disclosure. Law 2026-534 extends this logic to the relationship between non-resident property-owning entities and the tax administration.<\/p>\n The core innovation of Law 2026-534, codified in the revised Article 990 F of the CGI<\/a> (in force since 27 June 2026), is the transformation of the exemption declaration from a facultative option into a mandatory obligation. The new Article 990 F provides that \u00ab\u00a0les redevables ainsi que les entit\u00e9s juridiques mentionn\u00e9es aux d ou e du 3\u00b0 de l\u2019article 990 E doivent d\u00e9clarer au plus tard le 15 mai de chaque ann\u00e9e la situation, la consistance et la valeur des immeubles et droits immobiliers en cause\u00a0\u00bb (the taxpayers as well as the legal entities mentioned in d or e of 3\u00b0 of Article 990 E must declare, no later than 15 May of each year, the situation, composition and value of the immovable properties and real property rights concerned).<\/p>\n This declaration, accompanied by payment of the tax if applicable, must be filed using Form 2746-SD<\/strong> at the place designated by order of the Minister responsible for the budget. The filing is mandatory even for entities that qualify for a full exemption. The DGFiP will now review exemption claims based on completeness, consistency, and mandatory electronic filing. The era of voluntary, on-request disclosure is definitively closed.<\/p>\n Several practical requirements flow from the new regime:<\/p>\n The structural architecture of property ownership through a legal entity is itself governed by the Code civil<\/em>. Article 1832 of the Code civil<\/em><\/a> defines a soci\u00e9t\u00e9<\/em> (company or partnership) as a contract by which two or more persons agree to contribute assets or their industry to a common enterprise with a view to sharing the profit or benefiting from the resulting economy. An SCI is the most common vehicle for holding French residential property, particularly among foreign families who wish to manage inheritance planning or avoid the forced heirship rules (r\u00e9serve h\u00e9r\u00e9ditaire<\/em>) that apply to direct ownership. Under the new Article 990 F, an SCI whose registered office is in France and that previously relied on the information-on-request practice must now, like any other entity, file Form 2746-SD annually by 15 May.<\/p>\n The Cour de cassation has consistently upheld strict compliance with contractual deadlines in property matters, reminding practitioners that a party who fails to act within the prescribed period bears the consequences. In a decision of 15 February 2024 (no. 22-23.458)<\/a>, the Third Civil Chamber considered a promesse unilat\u00e9rale de vente<\/em> (unilateral promise of sale) where the beneficiaries sought to withdraw from the transaction on the basis of a condition suspensive<\/a> (condition suspensive<\/em>) relating to urban planning matters. The Court approved the lower court\u2019s finding that the beneficiaries had failed to establish that the condition had genuinely failed, and upheld the forfeiture of the indemnit\u00e9 d\u2019immobilisation<\/em> (immobilisation indemnity) of \u20ac75,000. The lesson is transferable: in French property law, procedural deadlines are not aspirational\u2014they carry concrete financial consequences. The 15 May deadline under Article 990 F must be treated with equivalent seriousness.<\/p>\n The consequences of non-compliance are severe. Under the new Article 990 F, an entity that fails to file the annual declaration by 15 May will be assessed the 3% annual tax on the full market value of the property, without any deduction for acquisition debts. The tax is recouvred according to the rules, sanctions and guarantees applicable to droits d\u2019enregistrement<\/em> (registration duties). In the event of a sale of the property by a non-resident entity, the tax representative designated under Article 244 bis A of the CGI<\/a> is personally responsible for the payment of any tax remaining due. Furthermore, any intermediary entity in the chain of ownership is jointly and severally liable (solidairement responsable<\/em>) for the payment of the tax.<\/p>\n For a British or American family that acquired a holiday home in Provence through a UK limited company twenty years ago and has never filed a declaration under Article 990 E, the entry into force of Law 2026-534 creates immediate exposure. The entity must now (i) register with the French business registry to obtain a SIREN number, (ii) appoint a tax representative in France, (iii) determine the fair market value of the property as of 1 January 2027, (iv) identify all shareholders holding more than 1% of the shares, and (v) file Form 2746-SD by 15 May 2027. Each of these steps requires time, professional assistance, and coordination across jurisdictions. Entities that hold French real estate indirectly through multiple layers of ownership\u2014for example, a US trust holding shares in a Delaware LLC that owns a French SCI\u2014face particular complexity in tracing the ownership chain and establishing the values at each level.<\/p>\n Certain categories of entities are automatically exempt from the 3% tax and, by extension, from the full reporting obligation. Under Article 990 E, 1\u00b0, international organisations, sovereign states, and their political and territorial subdivisions are exempt. Under Article 990 E, 3\u00b0(b), entities constituted to manage retirement pension schemes (r\u00e9gimes de retraite<\/em>), as well as entities recognised as being of public utility (reconnues d\u2019utilit\u00e9 publique<\/em>) or whose management is disinterested and whose activity or financing justifies the ownership of the properties, are exempt. Non-profit associations that meet these criteria are also automatically exempt.<\/p>\n A de minimis exemption remains available under Article 990 E, 3\u00b0(a): entities having their registered office and effective place of management in France or in another qualifying EU Member State are exempt if their share of the French real estate is worth less than \u20ac100,000 or less than 5% of the property\u2019s fair market value. However, this exemption does not extend to entities established in third countries such as the United Kingdom (post-Brexit), the United States, or Australia, unless those countries have concluded with France a convention d\u2019assistance administrative (administrative assistance convention) and a treaty providing equivalent treatment. This is a critical point for British buyers post-Brexit and for American and Australian investors: the availability of exemptions depends on the existence and precise terms of the bilateral tax treaty between France and the entity\u2019s country of establishment.<\/p>\n Entities that own French non-real-estate assets whose value exceeds the value of their French real estate assets may also be exempt, whether the assets are held directly or indirectly. An investment fund that holds a diversified portfolio of French securities alongside a single French property should verify whether the non-real-estate assets outweigh the real estate component in value, which could bring the entity within the scope of the exemption under Article 990 E, 2\u00b0(a).<\/p>\n For entities structured as a trust (fiducie<\/em> or comparable institution), the reporting obligation applies at the level of the trust itself and, depending on the structure, at the level of any underlying holding entity. The French tax administration treats trusts as entit\u00e9s juridiques<\/em> for the purposes of Article 990 D, and a trust holding French real estate directly or through a chain of participations is a taxable person. The new mandatory reporting framework eliminates the previous ambiguity about whether a trust that had never been contacted by the DGFiP was required to file anything. Under Law 2026-534, the answer is unequivocally yes.<\/p>\nI. The French 3% Tax on Real Estate Held by Foreign Legal Entities: Scope and Mechanics<\/h2>\n
A. Article 990 D of the French Tax Code: The Annual 3% Charge<\/h3>\n
B. The Pre-2026 Exemption System and Its Limitations<\/h3>\n
II. Law 2026-534: A New Mandatory Reporting Framework<\/h2>\n
A. From Voluntary Disclosure to Compulsory Annual Filing<\/h3>\n
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B. Practical Compliance and Pitfalls for Foreign Property Owners<\/h3>\n