French Wealth Taxation: The Basics for Each Asset Type

French wealth taxation is a labyrinth. The PFU (flat tax), social contributions, real estate capital gains, IFI (wealth tax on property), holding-period allowances… Each asset type has its own rules, and the exceptions are nearly as numerous as the rules themselves.

This article does not attempt to cover everything — an entire book would not suffice. But it lays the foundations: the major tax mechanisms that apply to different asset types in France, so you understand the rules of the game without getting lost in the details.

Note: this article describes the tax framework applicable to French tax residents. The rates and mechanisms reflect the situation as of early 2026. French tax law changes with each annual finance act (loi de finances). This is informational content, not tax advice — consult a tax professional for your specific situation.

The PFU: the flat tax that simplifies (almost) everything

Since 2018, the PFU — Prélèvement Forfaitaire Unique, commonly called the "flat tax" — applies by default to investment income in France. The rate: 30%, broken down into 12.8% income tax and 17.2% social contributions (prélèvements sociaux).

If you are familiar with the UK or US systems, think of it as a single combined rate covering both income tax and national insurance/social security on investment income — but applied as a flat rate rather than progressively.

What it covers

The PFU applies to interest from taxable savings accounts, stock dividends, and capital gains on securities (shares, ETFs, bonds). When you sell ETF shares in a standard brokerage account (compte-titres ordinaire, or CTO) with €5,000 of capital gains, the calculation is straightforward: 5,000 × 30% = €1,500.

The progressive tax option

You can opt to be taxed under the progressive income tax scale instead of the flat PFU. This may be beneficial if your marginal tax rate (TMI — taux marginal d'imposition) is below 12.8% — typically for households with modest income. But it is an all-or-nothing choice: it applies to all your investment income for the year, not to individual lines. The election is made annually with your tax return.

What escapes the PFU

Regulated savings accounts — the Livret A, LDDS, and LEP — are completely tax-exempt. Life insurance (assurance-vie) after 8 years benefits from a more favourable specific regime. The PEA (equity savings plan) after 5 years is subject only to social contributions (17.2%), with no income tax. These are the famous "tax wrappers" (enveloppes fiscales).

Tax wrappers: the container matters as much as the content

In France, taxation often depends more on the wrapper than on the product itself. An MSCI World ETF held in a PEA is not taxed the same way as the identical ETF in a standard brokerage account. The content is the same — the container changes everything.

This concept has parallels abroad: the UK's ISA vs general investment account, or the US 401(k)/IRA vs taxable brokerage. The principle is universal — some containers offer tax advantages with constraints, others offer freedom with no tax benefit.

PEA (Plan d'Épargne en Actions)

After 5 years, gains are subject only to social contributions of 17.2%. No income tax. Contribution ceiling: €150,000. It is the most tax-efficient wrapper for equities and ETFs over the long term. For full details, see the dedicated article on PEA and ETFs.

Assurance-vie (life insurance)

After 8 years of holding, an annual allowance applies to gains upon withdrawal: €4,600 for a single person, €9,200 for a couple. Beyond this allowance, the rate is 7.5% + 17.2% social contributions = 24.7% — less than the 30% PFU. Assurance-vie is also a powerful estate-planning tool with its own allowances. See the dedicated article on life insurance.

CTO (Compte-Titres Ordinaire — standard brokerage account)

PFU of 30% on capital gains and dividends. No tax advantage, but no constraints either: no contribution ceiling, no geographic restrictions, no minimum holding period. It is the "neutral" wrapper — the one you use when the tax-advantaged wrappers are full or unsuitable.

The key principle

The logic is straightforward: wrappers with tax advantages (PEA, assurance-vie) come with constraints — ceilings, asset restrictions, holding periods. The CTO has no constraints but no advantages. Each wrapper has its own characteristics, and understanding how they work is essential before placing your money.

Real estate: a separate tax world

Real estate in France has its own tax regime, distinct from financial investments. It is a world unto itself.

Capital gains on property

Capital gains on property sales are taxed at 19% income tax + 17.2% social contributions = 36.2%. However, progressive allowances apply based on holding period: full income tax exemption after 22 years, and full social contributions exemption after 30 years.

The primary residence (résidence principale) is completely exempt from capital gains tax — regardless of holding period or gain amount.

Example: you sell a rental property purchased for €150,000 ten years ago for €220,000. The gross gain is €70,000. After holding-period allowances (10 years = 60% income tax allowance, 16.5% social contributions allowance), the taxable gain is significantly reduced. The exact calculation depends on several parameters, but the principle is clear: the longer you hold, the less you pay.

Rental income (revenus fonciers — unfurnished lettings)

Rental income from unfurnished properties is taxed at the progressive income tax rate + 17.2% social contributions. Two regimes coexist:

Micro-foncier: if gross rental income is below €15,000 per year, a flat 30% deduction is applied. Simple but not always the most advantageous.

Régime réel (actual expenses): you deduct real costs — loan interest, renovation work, management fees, building insurance, property tax. More complex but often more beneficial when costs are significant. This is an important factor in calculating rental yield.

LMNP (Location Meublée Non Professionnelle — non-professional furnished letting)

The LMNP status offers a specific mechanism: depreciation of the property. The value of the building (excluding land) is "consumed" on the books over several decades. This depreciation reduces — sometimes to zero — the taxable rental income. The result: it is possible to receive rent for several years without paying income tax on it, entirely legally.

SCPI (real estate investment trusts)

Income from SCPI is taxed as rental income — progressive income tax + social contributions (17.2%). For SCPI invested in European real estate outside France, tax treaties apply to avoid double taxation. The mechanism (tax credit or effective rate method) is complex, but the principle is simple: you do not pay tax twice on the same income.

The IFI: the real estate wealth tax

The IFI (Impôt sur la Fortune Immobilière) replaced the former ISF (Impôt de Solidarité sur la Fortune) in 2018. Its distinguishing feature: it applies only to real estate wealth.

Who is affected

Households whose net real estate wealth (property value minus property-related debt) exceeds €1.3 million. This concerns approximately 150,000 households in France — a minority, but one that grows with rising property prices.

What is included

All property held directly (primary residence with a 30% discount, secondary homes, rental properties) and indirectly (SCPI shares, OPCI, SCI holdings). Associated debts (property loans) are deducted.

What is NOT included

Financial investments: shares, ETFs, assurance-vie invested in equity unit-linked funds, crypto, cash. This is the major difference from the old ISF, which taxed all forms of wealth. For investors with substantial financial portfolios but modest real estate, this distinction is significant.

Rate schedule

Progressive, from 0.5% to 1.5% depending on brackets. The calculation applies to the portion of net real estate wealth above €800,000 (the trigger threshold is €1.3M, but the scale starts at €800,000).

Social contributions: the tax you forget

Social contributions (prélèvements sociaux) are a 17.2% block that applies to nearly all investment income. They comprise the CSG (9.2%), CRDS (0.5%), and solidarity levy (7.5%).

Why they deserve your attention

Because they are everywhere — and often forgotten in calculations.

When people say "PFU of 30%", social contributions are included (12.8% income tax + 17.2% social contributions = 30%). When people say "fonds euros at 2.5%", social contributions are not included — the net return is approximately 2.07%.

The real-world impact

A €1,000 dividend under the PFU leaves just €700. A fonds euros at 2.5% gross yields only 2.07% net of social contributions — and with inflation at 2%, the real return is close to zero. Social contributions are the "base cost" of any investment in France — only regulated savings accounts escape them.

Why understanding taxation changes how you track wealth

Gross performance does not tell the full story. It is net performance — after taxes and contributions — that measures what you actually earn.

Net returns change comparisons

A product returning 5% gross in a CTO yields approximately 3.5% net after PFU. A product returning 4% in a PEA after 5 years yields approximately 3.3% net after social contributions only. The two seem close — but the second is achieved with a lower gross return. The wrapper made the difference.

"True" net worth

What you truly own is what you would receive if you sold everything after taxes. A PEA worth €200,000 with €100,000 of unrealised gains is not "worth" €200,000 net — it is worth 200,000 − (100,000 × 17.2%) = €182,800 net of tax. The difference is not trivial.

Tracking by wrapper

Organising assets by tax wrapper (PEA, assurance-vie, CTO, real estate) allows you to visualise not just the allocation by asset type, but also the tax allocation. It is a complementary lens for reading your net worth — and an essential parameter in any wealth projection.

The limits of this article

Taxation is a field where nuances matter as much as rules. A few important reminders.

Tax law changes every year. French finance acts regularly modify rates, thresholds, and mechanisms. The information in this article reflects the situation as of early 2026 — it may change.

Every situation is different. Your tax bracket, marital status, tax residency, and the amounts involved all affect the calculation. What works for one profile does not necessarily work for another.

This article provides the basics, not solutions. Understanding tax mechanisms is one thing. Applying them to a personal situation is another. For an analysis tailored to your circumstances, a wealth management advisor (CGP — conseiller en gestion de patrimoine) or a chartered accountant (expert-comptable) is the right contact.

Orizen is a tracking and decision-support tool, not a tax advisor. The platform allows you to track your assets by type and by wrapper, visualise the evolution of your net worth over time, and project different trajectories. It does not provide investment advice or tax optimisation.

Conclusion

Wealth taxation is not a detail. It is a parameter that affects the real performance of every euro invested. Understanding the major rules — PFU, tax wrappers, real estate taxation, social contributions — allows you to read your wealth with the right lens.

Wealth tracking allows you to see the concrete impact over time. Not to optimise — but to understand what you truly own, net of everything.