Which Jurisdictions Still Allow Exemption From the French 3 % Tax

Before any question of what to file, or who to name, a structure seeking exemption from the French 3 % tax has to clear a threshold condition: it must be established in a State that qualifies. If it is not, no return, however carefully prepared, will produce an exemption.

That condition changed quietly in October 2025, and French official guidance has not caught up.

The short version

The list of qualifying States was replaced on 8 October 2025.

The previous list had been fixed as at 1 January 2012. The new one is considerably wider.

The guidance on the 3 % tax, unchanged since 2016, still refers to the old list.

Structures previously ruled out on this ground may now meet the condition.

What the condition actually requires

Article 990 E of the French Tax Code reserves the exemptions in its paragraph 3° to entities established in one of three situations:

• In France or in a Member State of the European Union.

• In a country or territory that has concluded with France a treaty providing for administrative assistance with a view to combating tax fraud and evasion.

• In a State bound to France by a treaty containing a non-discrimination clause allowing the entity the same treatment as an entity established in France.

Every exemption in that paragraph runs through this gate: the 100,000 euro and 5 % thresholds, pension and public-interest bodies, regulated real estate funds, and above all the two filing-based exemptions that nearly all private wealth structures rely on.

Seat means place of effective management

French guidance is unambiguous: the seat means the place of effective management (BOI-PAT-TPC-20-20). The authorities may rely on the registered office, but it is not binding on them where the real seat is elsewhere.

The asymmetry is deliberate. An entity whose registered office sits in a favourable State but which is in fact managed from another cannot invoke the more favourable treaty on the strength of that difference; the authorities, for their part, may rely on the place of effective management in applying the tax.

For trusts, fiducies and investment funds, guidance presumes establishment in the State or territory of the governing law. The Conseil d'État has held that this guidance does not add to the statute precisely because it states a presumption, which does not prevent an entity from proving the contrary and displacing the connecting factor (CE, 9 May 2019, no. 426431). The burden, however, lies with the entity.

What changed on 8 October 2025

Until that date, the list of non-EU States having concluded a treaty on administrative assistance for the purposes of article 990 E sat in a dedicated annex to French guidance. That list had been fixed as at 1 January 2012 and had not moved since.

On 8 October 2025, the annex was emptied. It no longer contains a list, but a single sentence: its commentary is updated and transferred to another annex with effect from that publication.

The replacement is not a like-for-like list. It is a general inventory: on one side, the provisions of French domestic law that require an exchange-of-information clause or a clause on assistance in recovery; on the other, a table of countries, setting out for each the type of clause available and the tax concerned.

That change of format calls for a caution. A State appearing in the table does not, by itself, establish that the seat condition is met: the relevant line has to be read against the relevant column, rather than taken as a yes or no. This is a line-by-line exercise, file by file.

Two things follow.

First, article 990 E appears among the provisions requiring only an exchange-of-information clause. Assistance in recovery is not required. That alone widens the field, because many jurisdictions have signed exchange-of-information agreements without accepting assistance in recovery.

Second, the consolidated 2025 list covers a range of States and territories that bears no relation to the 2012 list. Between those dates France concluded a series of exchange agreements, and multilateral mechanisms took effect. Jurisdictions that were plainly outside the scheme in 2012 appear in it today.

The guidance on the 3 % tax was never updated

This is what makes the position confusing in practice. The guidance that practitioners rely on for the seat condition dates from 5 October 2016. For the list of States, it refers to the old annex, and describes it as « list updated as at 1 January 2012 ».

That reference now leads nowhere, because the annex it points to no longer contains a list. An adviser following the guidance step by step reaches a dead end and generally concludes that nothing has changed. That is precisely the conclusion to avoid.

The same observation applies to the second route, the non-discrimination clause. Its annex carries a list fixed as at 1 January 2012 and has not been revised since 2015. A note records that, for a small number of States only, the clause extends to entities without legal personality. That detail is decisive for trusts and foundations, and is rarely noticed.

What this means in practice

If your structure has been paying the tax for years

This is the most common situation, and the most expensive. An entity incorporated in a jurisdiction treated as non-qualifying has paid 3 % a year, sometimes for a decade, because its adviser concluded, correctly on the 2012 list, that no exemption was available.

If the State of its seat appears in the consolidated list, the seat condition may now be satisfied, and the question becomes from which year. That calls for an analysis year by year, turning on the date the relevant agreement entered into force rather than the date the annex was published.

The amounts justify the exercise. On a property worth 3,000,000 euros, a single year is 90,000 euros.

If you are about to acquire

The choice of jurisdiction for the acquiring structure should be made on the 2025 list, not the 2012 one. A decision taken five years ago on the old basis is worth revisiting before the next transaction.

If your structure is already exempt

Nothing changes, except that the State of the seat should be confirmed against the consolidated list. Removals are less likely than additions, but the list is not fixed and the test applies at 1 January of each tax year.

Clearing the seat condition is not the end of it

This has to be said plainly, because enthusiasm would be a poor adviser here.

Meeting the seat condition confers no exemption. It opens access to the exemptions in paragraph 3° of article 990 E, each with its own requirements. In the great majority of cases, the entity will then have to file every year, by 15 May, the location, description and market value of the property, together with the identity and address of every holder of more than 1 % of the rights.

That is where many structures established in the newly listed jurisdictions come unstuck. A foundation with no designated beneficiary, a fully discretionary trust, an entity whose rights are suspended has nobody to disclose at 1 January. The Cour de cassation has held that only real economic beneficiaries at that date can be treated as shareholders, to the exclusion of contingent beneficiaries (Cass. com., 10 May 2024, no. 21-11.230).

So the seat condition may be newly satisfied and the exemption remain out of reach. Two checks, not one. See Trusts, Foundations and the French 3 % Tax: Who Must Be Disclosed.

Since the reform of 25 June 2026 there is also the obligation to appoint a French representative for entities with no permanent establishment in France, and the abolition of exemption by simple undertaking to disclose. See The French 3 % Tax on Property-Owning Entities: What Changed on 25 June 2026.

How to check, in practice

Four steps, repeated each year.

• Establish where the entity is in fact managed at 1 January, and assemble the evidence: where board meetings are held, where the directors reside, where documents are signed, where banking is conducted. This is a question of proof, not of what the constitutional documents say.

• Check whether that State is in the European Union, appears in the consolidated list, or benefits from a non-discrimination clause. For an entity without legal personality, check in addition that the clause relied on covers that type of entity.

• Confirm that the clause relied on was in force at 1 January of each year concerned, since the seat condition is tested at that date. What governs is the law year by year, not the date the annex was published nor the position today.

• Then confirm that the entity can actually satisfy the filing-based exemption, meaning that it has real holders who can be identified and evidenced at 1 January.

If all four are cleared, the question becomes one of regularising the past and complying for the future.

Frequently asked questions

My adviser told me in 2015 that no exemption was available. Is that still right?

It was probably right at the time, on the list then in force, fixed as at 1 January 2012. That list was replaced on 8 October 2025 by a considerably wider one. The answer is worth revisiting, without prejudging the outcome.

Can we reclaim the years already paid?

The question arises, but the answer turns on when the relevant agreement entered into force, on the time limits for claims, and on whether the entity could have satisfied the filing conditions for those years. A claim filed without that analysis has little prospect.

Is an exchange-of-information agreement enough, or is a full tax treaty needed?

The statute refers to a treaty providing for administrative assistance with a view to combating tax fraud and evasion. The 2025 annex places article 990 E among the provisions requiring only an exchange-of-information clause, without assistance in recovery. A standalone exchange agreement may therefore suffice, which changes the position for several jurisdictions.

Our entity has no separate legal personality. Does that matter?

Yes, and often decisively. For the administrative assistance route, it must be checked that the treaty covers entities without legal personality, or that its exchange-of-information clause is not confined to persons covered by the treaty. For the non-discrimination route, only a few States have a clause wide enough. An entity that fails on this point does not meet the seat condition.

Can the list change again?

Yes. It is tested at 1 January of each tax year, and the October 2025 publication shows that the authorities do revise it. This is an annual check, not a settled position.

How we work

Sassi Société d'Avocats has acted for more than thirty years in international tax and French tax audits for foreign investors, groups and families holding property in France.

On this question, our work is to establish and evidence the place of effective management, to check the position of the State concerned under the rules in force for each open year, to determine whether the filing-based exemption is in fact available, and then either to bring the structure into compliance or to file a claim.

We do not establish offshore structures. We work on structures that exist, and on what can be defended before the French authorities.

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