Family Office Tax Structure in France: Definition and Taxation

I. What is a family office?

A. Single family office and multi family office

A family office is an organisation that manages the wealth of an affluent family as a whole: investment allocation, oversight of shareholdings and real estate, consolidation and reporting, coordination of advisers (bankers, lawyers, notaries, accountants), family governance and succession planning. In practice it serves the families that market studies classify as UHNWIs, whose definition we set out in our article on HNWIs and UHNWIs.

A single family office (SFO) is dedicated to one family, which controls and funds it; a multi family office (MFO) is an independent provider serving several families. The former is an internal organisational tool; the latter is a service business whose investment advice to third parties falls within financial regulation.

B. No specific status under French law

French law does not recognise the family office as such. A single family office usually takes the form of a company, often the family's top holding company, sometimes a separate service company that invoices its services to the family companies. It is that organisational choice, not the family office label, that determines the tax regime: corporate tax or tax transparency, characterisation as an operating or passive holding company, and exposure to the new tax on non-business assets.

II. How is the family office structure taxed?

A. The holding company subject to corporate tax and the participation exemption

A family holding company subject to corporate tax benefits from the parent-subsidiary regime on dividends from subsidiaries in which it holds at least 5% of the capital, provided it keeps the shares for two years (Article 145 of the French Tax Code, Code général des impôts, CGI). The dividends are then deducted from its taxable income, less a 5% share of costs and expenses, reduced to 1% within a tax-consolidated group (Article 216 CGI). The holding company can thus accumulate and reinvest the family business's cash flows without personal taxation of the shareholders, which only arises on distribution.

B. Operating or passive holding company: a decisive distinction

The statute distinguishes a company managing its own movable or real estate assets, whose activity is not regarded as industrial or commercial, from an operating holding company (holding animatrice), which actively participates in the conduct of its group's policy and, where relevant, provides internal services to its operating subsidiaries (Article 787 B CGI). This characterisation governs, in particular, access to the Dutreil regime. A family office that merely manages investments is a passive holding company; one that genuinely steers the family's operating companies may be an operating holding company, provided this is documented.

C. The tax on non-business assets of passive holding companies

The 2026 Finance Law introduced a 20% tax on certain assets held by passive holding companies (Article 235 ter C CGI). It targets companies subject to corporate tax, or an equivalent tax abroad, that meet three conditions at the financial year-end:

• the market value of their assets is at least €5 million;
• an individual, taking account of their close family, holds at least 50% of the voting or financial rights, or exercises de facto decision-making power;
• their passive income (dividends, interest, royalties, rents) exceeds 50% of their operating and financial income.

The tax does not apply to all the holding company's assets, but to an exhaustive list of assets not used in a business: yachts, aircraft and passenger cars, jewellery and precious metals, racehorses, wines and spirits, hunting and fishing assets, and homes the family uses free of charge or for less than market rent. It is due for financial years ending on or after 31 December 2026. Where the holding company is established outside France, the tax is due by its French-resident shareholders, unless they show that the choice of location was not mainly aimed at circumventing French law. Ownership through a trust triggers a presumption that the control condition is met.

For a family office that holds the family's second home, a boat or a wine collection in its holding company, the issue is immediate. We recommend listing these assets before the 2026 year-end and assessing their treatment: keeping them and paying the tax, charging a market rent, or taking them out of the holding company, each option having its own tax consequences.

III. How are the family and succession taxed?

A. Personal taxation of family members

Distributions from the holding company are taxed in the shareholders' hands at the 31.4% flat rate, comprising 12.8% income tax (Article 200 A CGI) and 18.6% social levies, unless the progressive scale is elected. Family members whose net real estate wealth exceeds €1,300,000 are liable to the real estate wealth tax (IFI), including on real estate held through companies (Article 964 CGI). The highest incomes also bear the high-income contributions described in our article on HNWIs and UHNWIs.

B. Succession: the Dutreil regime and its limits

The Dutreil regime exempts from gift and inheritance tax 75% of the value of shares in an operating company or an operating holding company transferred by gift or on death, subject to a collective holding undertaking of at least two years, an individual six-year undertaking by each heir or donee, and the exercise of a management role (Article 787 B CGI). Two limits directly concern family offices. The exemption is excluded for a company managing its own assets. Nor does it apply to the portion of the share value represented by luxury assets or homes not used in the business, including where they are held by a controlled subsidiary. We analyse these exclusions and the issue of surplus cash in our article Dutreil pact: how excess cash can threaten the exemption.

IV. Family offices and international wealth: what are the risks?

A. Locating the structure outside France

International families often consider establishing their family office in Luxembourg, Switzerland, the United Arab Emirates or Singapore. A company's location cannot simply be declared: if decisions are taken in France, the tax authorities may argue that it is taxable there. For French-resident shareholders, a foreign entity subject to a privileged tax regime and consisting mainly of financial assets has its profits taxed in their hands, whether or not distributed (Article 123 bis CGI). We explain this mechanism in our study French CFC Rules for Individuals: Article 123 bis After 2026 Rulings. The new tax on passive holding companies also reaches companies established outside France.

B. Trusts and the residence of family members

Many international families hold part of their wealth through trusts, whose French tax treatment is autonomous and demanding; we cover it in our French tax guide to foreign trusts and foundations. The tax residence of each family member must be monitored with the same rigour: leaving France may trigger the exit tax, and returning may bring worldwide wealth back within the scope of French tax.

The tax lawyer's role in a family office

A family office coordinates many advisers; the tax lawyer holds a particular place among them. Bound by professional secrecy and with no stake in the solution adopted, the tax lawyer characterises the structure in law (operating or passive holding company), quantifies holding and succession options, secures the documentation supporting the group's management, and defends the family in the event of an audit. Our practice is set out on our private wealth taxation page.

Conclusion

The family office has no status under French law; its taxation is that of the company that carries it. Characterisation as an operating or passive holding company governs access to the Dutreil regime, while the 20% tax introduced in 2026 now hits personal-use assets held in passive holding companies.

We recommend a full review of the family holding company before the 2026 year-end: an inventory of non-business assets, documentation of the group management role, and consistency with existing Dutreil undertakings and with family members' residence. The resulting choices are easier to implement before the first due date of the tax than after it.