The French Act on the Fight Against Tax and Social Security Fraud, published in the Journal officiel on 26 June 2026, significantly amends the rules governing the annual 3% tax on the fair market value of French real estate (Articles 990 D et seq. of the French Tax Code).

These new provisions will apply for the first time to the 2027 filing season (based on the ownership situation as at 1 January 2027) and considerably strengthen the reporting obligations applicable to entities holding French real estate, whether directly or indirectly. Groups with French real estate investments should therefore review their compliance procedures well in advance.

Key Takeaways

  • The "undertaking to disclose" exemption will be abolished: affected entities will now be required to file an annual return in order to benefit from the exemption.
  • New obligation for entities without a French permanent establishment to appoint a French representative.
  • First application: 2027 filing season.
  • Uncertainty remains regarding the continued application of the administrative practice applicable to French real estate partnerships (SCI) filing Form 2072.
  • A review of existing holding structures is recommended to ensure continued eligibility for the exemption.

Abolition of the "Undertaking to Disclose" Regime

Until now, certain entities could benefit from an exemption from the 3% tax by undertaking to provide, upon request, information relating to the French real estate held and to their shareholders or beneficial owners.

This exemption mechanism has now been abolished.

As from the 2027 filing season, entities previously relying on this regime will be required to file an annual return in order to continue benefiting from the exemption. The reform therefore replaces a disclosure-on-request regime with a mandatory annual filing requirement.

Affected groups should therefore start preparing by:

  • identifying the entities concerned;
  • reviewing the legal basis for their current exemption;
  • collecting the information required regarding French real estate holdings and ownership chains;
  • implementing the necessary administrative procedures (including the creation of online tax accounts where required, and the adaptation of internal compliance processes).

The reform does not affect prior years. Entities that validly relied on the former undertaking regime remain protected for past filing periods. However, from the 2027 filing season onwards, continued entitlement to the exemption will depend upon compliance with the new reporting obligations.

Appointment of a French Representative: A New Requirement

The reform also introduces new Article 990 FA of the French Tax Code.

Legal entities, organisations, trusts and similar arrangements subject to the reporting obligations and having no permanent establishment in France will now be required to appoint a representative established in France, authorised to receive all communications, procedural documents and notifications issued by the French tax authorities in relation to the 3% tax.

Failing such appointment, the French tax authorities may validly serve notices on the legal entity closest to the French real estate asset within the ownership chain, regardless of whether that entity itself benefits from an exemption.

International groups should therefore ensure that appropriate internal procedures are in place to deal promptly with communications received from the French tax authorities, particularly in view of the 30-day deadline available to remedy a first reporting failure.

Recent Case Law Confirms a Stricter Approach

Beyond the legislative changes, recent case law illustrates the increasingly strict approach adopted by French courts regarding the conditions for benefiting from the exemption.

The courts consistently emphasise that the purpose of the 3% tax is to ensure transparency regarding the ultimate owners of French real estate, and are applying increasingly demanding standards when assessing whether reporting obligations have been properly fulfilled.

Recent decisions notably confirm:

  • stricter scrutiny regarding the identification of shareholders, partners and ultimate beneficial owners, together with supporting evidence of their status;
  • increased attention to the accuracy and consistency of the information reported.

These decisions highlight the importance of carefully documenting the conditions for benefiting from the exemption and retaining appropriate supporting documentation.

Uncertainty Regarding French Real Estate Partnerships (SCI) Filing Form 2072

The reform does not clarify whether the long-standing administrative practice under which certain French real estate partnerships (Sociétés Civiles Immobilières or SCI) filing Form 2072 are exempt from filing the specific 3% tax return will continue to apply.

Pending further guidance from the French tax authorities, we believe that this administrative practice should remain applicable. However, this point should be confirmed by the French Tax Legislation Department (Direction de la législation fiscale — DLF) or through the forthcoming administrative guidelines.

Until such clarification is issued, affected SCI should carefully assess their reporting obligations for the 2027 filing season.

Preparing for the 2027 Filing Season

Entities holding French real estate, directly or indirectly, should review their position well in advance in order to:

  • confirm the legal basis of their current exemption;
  • determine whether an annual 3% tax return will now be required;
  • collect the information relating to the ownership chain and relevant shareholders or partners;
  • appoint, where necessary, a French representative;
  • ensure that their internal compliance procedures are aligned with the new reporting requirements.

Our team remains at your disposal to assess the impact of these new rules on your French real estate holding structures and to assist you in preparing for the 2027 filing season.