Reforms and future

There were 140,000 declarations for wealth tax when the former ISF was introduced in 1990 but numbers had risen to almost 600,000 by 2010.

This number then halved when reforms by Nicolas Sarkozy took many smaller payers out of the tax.

After François Hollande reintroduced a multi-band system in 2013, the bands remained frozen and the number of payers started to rise steadily again.

In 2016, 351,152 households paid more than €5 billion in ISF.

Likely aware that ending wealth tax completely would be unpopular with many French people but seeking to lighten its burden, President Macron reoriented it towards property, which took about 150,000 households out of the tax.

In 2018, it brought in less than half of the previous amount – around €2 billion, with the average wealth tax bill halved for those who previously paid ISF.

Inevitably this centrist policy of keeping a wealth tax – albeit a diluted one – had critics on both sides.

Those on the left said it was a gift to the rich, whose stocks and shares were mostly exempt.

Others considered it to be punitive for those who had put their money into bricks and mortar, and for those who rent out property, but not as their main business in a 'professional' capacity.

In making the change, President Macron said he wanted to encourage people to invest instead in financing businesses, which he considered more ‘productive’ than making money from renting out properties.

It was also intended to make France more attractive to investors and entrepreneurs.

Despite this, the move to a property-oriented tax also saw the abolition of a specific wealth tax reduction for investing in small businesses, although it was maintained in the first year of IFI.

The French were divided in their opinions on the reform: a survey by Odoxa-Aviva Assurances for Challenges and BFM Business found half were opposed to replacing ISF with IFI and half favoured it.

Removing from the tax certain conspicuously luxurious items attracted controversy, but this was mitigated, for example, by an increase in certain other taxes on yachts and luxury cars.

The gilets jaunes protests of 2019 resulted in calls for a return to a more comprehensive wealth tax but President Macron refused.

At the start of 2025, there were renewed moves to widen the tax, with the Senate voting to turn it into a ‘tax on unproductive wealth’ (perhaps ISFI...) for example to include cars and yachts as well as cryptocurrencies.

However, as last-minute efforts were made to produce a budget for 2025 following political upheavals, a mixed group of MPs and senators voted against this potential reform.

One right-wing MP stated that there had been “a consensus between the MPs and senators on this – it was necessary to minimise any fiscal inflation [meaning to be seen to be raising taxes]”.

The budget did, however, include one new tax measure aimed at the wealthy, and another aimed at large companies.

The former, called contribution différentielle sur les hauts revenus, applies for the year 2025 only and means that people who are French tax residents with income of at least €250,000 for single people and €500,000 for couples, should pay at least an overall (averaged out) income tax rate of 20%.

This is expected to affect especially those with substantial incomes from investments, usually subject (under Macron's presidency) to an income tax ‘flat tax’ rate of 12.8% (plus social charges at 17.2%).

For several years now France has also had an additional income tax for high earners (on top of ordinary income tax – impôt sur le revenu), called contribution exceptionnelle sur les hauts revenus.

This is levied on net income above at least €250,000 for single people and €500,000 for couples. It stands at 3% on the part of income above these amounts, rising to 4% above €500,000/€1 million.