New French Tax CHP wealth tax replacing the Impôt sur la Fortune Immobilière (16 December 2025)
France is in the process of profoundly reshaping its approach to wealth taxation through the draft PLF/PLFSS 2026. Under the current proposals, the Impôt sur la Fortune Immobilière (IFI) would be eliminated and replaced by a new levy, the CHP (Contribution sur le Haut Patrimoine). Unlike the IFI, which applied only to real estate assets, the CHP is designed as a much broader wealth-based contribution. It would apply once a taxpayer’s taxable base exceeds a threshold set at €2.57 million, a level intended to target high-net-worth households rather than the upper middle class.
The most significant change lies in the definition of the taxable base. While real estate remains included (including a primary residence after a 30% allowance), the CHP extends beyond property to encompass a wide range of assets, notably cash holdings and money-market–type instruments such as bank accounts, savings accounts, and similar liquid placements. By contrast, many long-term financial investments—such as life insurance contracts, retirement savings vehicles, equity portfolios, and collective investment funds—are largely excluded from the base. Movable assets (such as valuables and vehicles), crypto-assets, and certain intellectual property rights are also brought into scope.
For our French tax resident clients, the inclusion of cash and cash-equivalent assets is likely to be the most impactful element of this reform. Many portfolios currently maintain substantial liquidity for risk management, optionality, or future investment opportunities. Under the CHP framework, these cash balances would now directly increase the taxable base, creating a materially different tax profile compared to the former IFI regime. This represents a clear policy signal favoring invested and productive capital over idle liquidity.
As a result, portfolio construction and asset allocation strategies for French fiscal residents will need to be reviewed carefully. While liquidity remains essential from an investment and risk perspective, maintaining excessive cash balances could become fiscally inefficient under the new rules. Going forward, we will need to assess, on a case-by-case basis, how to rebalance portfolios in a way that preserves flexibility and prudence while mitigating the additional tax exposure created by the CHP. We will continue to monitor the legislative process closely and advise clients proactively as the final contours of the law are confirmed.