French law on Combating Social Security and Tax Frauds

Law No. 2026-534 on Combating Social Security and Tax Frauds was promulgated on 25 June 2026 and published in the Official Journal on 26 June 2026. Unless otherwise provided, the provisions of the Law entered into force on 27 June 2026.

These provisions form part of a broader framework aimed at combating fraud, money laundering and terrorist financing. Several of them have immediate practical implications for both individual and corporate taxpayers.

This newsletter outlines the main tax measures introduced by the Law.

 

REAL ESTATE TAXATION

New Formal Requirements for Transfers of Shares in Real Estate-Rich Companies

The Law introduces a new Article 1865-1 into the French Civil Code which provides that, under penalty of nullity, any transfer of shares or equity interests in a real estate-rich company (société à prépondérance immobilière or SPI), within the meaning of Article 726,I,2° of the French Tax Code (FTC), must be evidenced by one of the following instruments:

• a notarial deed;
• an agreement countersigned by a lawyer within the meaning of Article 1374 of the French Civil Code; or
• solely in cases where the professional is legally authorised to do so, a private instrument prepared by a certified public accountant.

Accordingly, a standard private agreement is no longer sufficient.

The measure applies to SPIs as defined in Article 726,I,2° of the FTC, namely any legal entity whose assets consist predominantly of real property (or real property rights) located in France, or shares in entities that are themselves real estate-rich. Such status is assessed on the date of the transfer or during the twelve-month period preceding the transfer.

The scope of the measure is by no means limited to passive real estate holding companies. It may also affect operating businesses whose real estate assets represent a predominant portion of their balance sheet, including companies operating in the hospitality or healthcare sectors. Conversely, the legislation expressly excludes certain collective investment vehicles, notably OPCIs and SCPIs.

Failure to comply with this new requirement may result in the transfer being declared void. In addition, the newly enacted Article 635-0 A of the FTC makes the registration of the transfer conditional upon production of a compliant agreement. Failing this, the tax authorities may refuse both to register the transaction and to collect the corresponding transfer duties.

This measure applies to transfers entered into on or after 27 June 2026.

Annual 3% Tax on Real Estate: Toward Enhanced Reporting Obligations

As a reminder, the annual 3% tax (Articles 990 D et seq. of the FTC) generally applies to legal entities that directly or indirectly hold French real estate assets. Certain entities may nevertheless qualify for an exemption from the tax, provided, among other conditions, that they comply with an annual reporting obligation (Form No. 2746-SD), enabling the French tax authorities to identify the chain of ownership as well as the nature and value of the underlying real estate assets.

The Law significantly reinforces this framework through two main measures:

• Tightening of the Reporting Regime - Entities may no longer benefit from the exemption from the annual 3% tax merely by undertaking to provide certain information upon request. Going forward, the exemption is strictly conditional upon the annual filing of the required return.

• Mandatory Appointment of a Tax Representative for Foreign Entities - The Law introduces a mandatory requirement for entities subject to the tax that do not maintain a permanent establishment in France to appoint a French tax representative. In the absence of an express appointment, the Law establishes a default representation mechanism under which the entity closest to the real estate assets within the ownership chain known to the tax authorities will be designated as representative. Such representative is authorised to receive all communications and notices issued by the tax authorities in connection with audits relating to the annual 3% tax.

 

CORPORATE TAXATION

Extension of the Retention Period for Accounting Records from Six to Ten Years

The Law extends from six to ten years the period during which certain records must be retained for tax audit purposes. The measure applies to the books, registers, documents and supporting records referred to in Article L.102 B of the French Tax Procedures Code (FTPC), over which the tax authorities may exercise their information-gathering, investigation and audit powers.

This change aligns taxpayers’ record-retention obligations with the extended reassessment period available to the tax authorities in certain circumstances, notably where an undisclosed activity is discovered, thereby ensuring the effectiveness of tax audits.

The measure applies to records and supporting documents whose retention period expires after 1 January 2027.

Exemption from French Reporting Obligations for Crypto-Asset Service Providers Reporting in Another Jurisdiction

The Law clarifies the conditions under which a crypto-asset service provider may be exempt from filing a report in France. Such exemption is contingent upon the filing of reports in another State or territory based on substance requirements equivalent to those provided under Article 1649 AC ter of the FTC, as well as compliance with reporting obligations equivalent to those laid down in Article 1649 AC bis of the FTC.

 

INDIVIDUAL TAXATION

Replacement of the Concept of “Digital Assets” with “Crypto-Assets” and Introduction of a Tax Regime for NFTs

The Law aligns French tax legislation with the terminology used at the European level under the MiCA Regulation by progressively replacing the concept of “digital assets” (actifs numériques) with that of “crypto-assets”. This change notably affects the non-commercial profits regime, the taxation of capital gains realised by individuals on disposals of crypto-assets, and reporting obligations relating to foreign accounts and wallets.

The Law also introduces a specific tax framework for unique and non-fungible crypto-assets (NFTs). Rather than establishing a single tax regime, the legislation provides that gains realised upon the disposal for consideration of NFTs, or rights relating thereto, will be taxed in accordance with the regime applicable to the underlying asset or right represented by the NFT, subject to the rules governing professional income where applicable.

Finally, reporting obligations relating to foreign-held crypto-assets are strengthened so as to cover not only crypto-assets, but also NFTs held or used outside France.

New Reporting Obligation for Trustees upon the Death of the Settlor

The Law strengthens trustees’ obligations regarding inheritance and gift tax matters. In addition to the existing obligation to pay the tax due upon the death of the settlor, trustees must now file a detailed valuation return in a format prescribed by the French tax authorities. The return must notably identify the beneficiaries and include all information necessary to determine the taxable base and assess the tax due.

Extension of the 80% Penalty for Failures to Report Trust Assets

In connection with the strengthening of reporting obligations applicable to trusts, the Law expands the scope of the 80% surcharge applicable in the event of reporting failures. Previously limited to real estate assets, the surcharge now applies to all assets and rights held through a trust.

25% Surcharge to CSG on Income Derived from Unlawful Activities

The Law introduces a non-deductible social contribution (CSG) at an increased rate of 25% on income derived from certain unlawful activities.

 

TAX AUDITS AND ENFORCEMENT MEASURES

One-Year Extension of Certain Special Reassessment Periods

The Law extends the period available to the French tax authorities to assess and collect taxes established under certain special reassessment procedures. The measure notably applies where the reassessment results from international administrative assistance procedures, the initiation of judicial proceedings for tax fraud, or the disclosure of omissions in the course of judicial proceedings or tax litigation.

The relevant deadline is extended until 31 December of the second year following the event triggering the special reassessment period, whereas previously it expired on 31 December of the first year following such event. The maximum reassessment periods themselves remain unchanged. This measure applies to reassessment periods expiring on or after the publication date of the Law.

Extension of International Administrative Assistance to Cooperative Non-EU Jurisdictions and Corresponding Extension of the Reassessment Period

The Law broadens the scope of the international administrative cooperation mechanisms provided for under Article L.45 of the FTPC in matters relating to the fight against tax fraud. These mechanisms are now extended to cooperative jurisdictions that are not members of the European Union. Where such an administrative cooperation procedure is initiated, the reassessment period available to the French tax authorities is extended by an additional three years.

Extension of Tax Adviser Liability to Tax Offences Giving Rise to a 40% Penalty

Article 1740 A bis of the FTC provides for the imposition of a tax penalty on people who intentionally provide, in the course of their professional activities (including advisory services), services that directly contribute to the design or implementation of fraudulent or abusive arrangements intended to evade taxation. The Law expands the scope of this provision by extending the penalty regime applicable to advisers involved in facilitating tax offences to situations where the taxpayer is subject to a 40% surcharge on the tax avoided. Previously, the regime applied only where the taxpayer had incurred an 80% surcharge.

Digitalisation of Information Requests Addressed to Financial Institutions

When exercising their statutory information-gathering powers vis-à-vis credit institutions and similar financial institutions, the French tax authorities and customs administration may now require responses to be provided in electronic format.

Extension of the Right to Copy Documents During Audits of Charitable Organisations

The Law extends the tax authorities' right to make copies of documents during audits of organisations that receive donations and issue tax receipts entitling donors to tax relief.

Until now, the right of copy provided under Article L.13 F of the FTPC did not apply in this context. Tax auditors were permitted to review documents but could not retain copies. Going forward, any documents examined in the course of such audits may be copied, and the audited organisation may not object to such copying.

Strengthening of Supervisory Powers over Endowment Funds

The competent administrative authority may order the dissolution of an endowment fund (fonds de dotation) that has remained inactive for two consecutive years. Such decision must be reasoned and may only be issued after the fund has been afforded an opportunity to submit its observations.

Criminalisation of Organised Fraud Against Public Finances

The Law strengthens the repression of organised fraud against public finances. The measure targets fraud committed against a public body, a social security institution or an entity entrusted with a public-service mission, where the objective is the improper receipt of benefits, allowances, payments or other advantages. Such conduct will no longer fall within the scope of ordinary criminal offences (délits), but will instead constitute a serious criminal offence (crime), thereby significantly increasing the severity of potential sanctions.

The legislation also introduces an additional confiscation penalty covering all or part of the assets owned by convicted persons, or assets over which they have free disposal rights, irrespective of whether such assets are movable or immovable, wholly or jointly owned, subject to the rights of bona fide owners.

Enhanced Investigatory Powers and Increased Penalties for Facilitating Tax Fraud

The penalties applicable to the offence of providing instruments or arrangements facilitating tax fraud are aligned with those applicable to tax fraud itself. The offence is punishable by five years' imprisonment and a fine of EUR 500,000. Where the offence involves the use of an online communication service, the penalties increase to seven years' imprisonment and a fine of EUR 3 million. An aggravating circumstance is also introduced where the offence is committed by an organised criminal group.

In addition, the Law extends the use of special investigative techniques to offences involving tax fraud, accounting fraud and the facilitation of tax fraud, particularly where such offences are organised or complex in nature. Finally, jurisdiction of the National Financial Prosecutor's Office (Parquet National Financier) is extended to offences involving the provision of instruments facilitating tax fraud.

Digitalisation of Procedural Documents and Preservation of Records Seized During Tax Searches

The Law clarifies the rules governing the preservation of records and documents seized during tax search operations carried out pursuant to Article L.16 B of the FTPC where the taxpayer challenges the legality of the procedure. In such circumstances, the seized materials must be retained until a final decision that is no longer subject to appeal has been rendered, thereby preventing their premature destruction while litigation remains pending. Until the proceedings are definitively resolved, the tax authorities may not make use of the seized documents.

The Law further authorises the digitalisation of procedural documents, including official reports and inventories, as well as the use of electronic signatures in connection with search and seizure operations.

Transmission of Information by Judicial Tax Officers as an Exception to Investigative Confidentiality

The Law authorises judicial customs officers and judicial tax officers to transmit information obtained through criminal investigations directly to their respective administrations. This transmission constitutes an exception to the confidentiality obligations applicable to criminal investigations and judicial proceedings. The mechanism is strictly regulated and requires prior authorisation from either the Public Prosecutor or the investigating judge who issued the judicial commission, following consultation with the Public Prosecutor.

Protection of the Identity of Public Officials in Relation to Public Statements and Media Reports

The Law extends identity-protection measures applicable to officials involved in anti-fraud activities, particularly public finance officials who may be assigned to judicial functions within the National Anti-Fraud Office (ONAF). The disclosure, through any form of communication, of the identity of officials belonging to units whose duties require anonymity for security reasons will be subject to criminal sanctions. By doing so, the legislation extends to public finance officials a protection regime that already applied to certain police officers, members of the armed forces, civilian personnel of the Ministry of Defence and customs officers.

 

TAX COLLECTION

Extension of the Administrative Garnishment Procedure (SATD) to Crypto-Asset Wallets

The Law adapts the French administrative garnishment procedure (saisie administrative à tiers détenteur – SATD) to crypto-assets held by a taxpayer through a digital asset service provider. Under the new rules, the French tax authorities may seize the entirety of a crypto-asset wallet maintained with the service provider, without having to identify or target a specific crypto-asset. The seizure may be effected up to the amount of the outstanding tax liability to be recovered.

The legislation further establishes the procedure for converting seized crypto-assets into euros or other currencies. In the first instance, the taxpayer is granted a period of time, to be determined by decree, during which they may dispose of the seized assets themselves. Failing such disposal, the sale may be carried out directly by the service provider, provided that it is legally authorised to do so.

Anonymity Protection for Public Officials Involved in Tax Collection Proceedings

The Law expands the scope of the anonymity regime available to public finance officials under Article L.286 B of the FTPC. Until now, this protection primarily applied in the context of tax audits, tax collection procedures and tax litigation. The new legislation extends this regime to certain compulsory enforcement and debt recovery procedures. As a result, public finance officials may benefit from anonymity protection not only in traditional tax proceedings but also in the context of certain formal service procedures and enforcement measures implemented to recover public debts. The protection may also be relied upon in the framework of coordinated anti-fraud operations conducted at the ministerial or inter-ministerial level.

 

OTHER MEASURES

Information Exchanges with the INPI for the Purposes of Automatic Registration or Deregistration

The Law strengthens information exchanges between the French tax authorities and the One-Stop Shop for Business Formalities (Guichet unique des formalités d'entreprises), operated by the French National Institute of Industrial Property (INPI). The measure is intended to enable the automatic registration of persons carrying on an undisclosed activity (activité occulte), as well as the deregistration of persons that fail to comply with their obligation to appoint a tax representative in France.

The information exchanged between the tax authorities and the INPI is limited to that which is strictly necessary for these purposes, namely the identity of the person concerned, the nature of the undisclosed activity identified by the tax authorities, and information establishing the failure to comply with the obligation to appoint a French tax representative.

Reports Requested from the Government

The Law requires the Government to submit an annual report assessing the extent of social security fraud, tax fraud and customs fraud. In addition, the Government must submit, before the end of 2026, a specific report evaluating the operation and effectiveness of the mechanism for collecting the French Financial Transaction Tax.