September 17, 2026

The French 3% Tax on Real Estate: A Guide to Treading in Perilous Waters

September 17, 2026/ Ruchelman P.L.L.C.

No rule is more easily ignored than one no one seems to have heard of, and few provisions of French tax law make the point as neatly as the annual 3% tax on the fair market value of French real estate held by legal entities (taxe annuelle sur la valeur vénale des immeubles). Indeed, while having a very broad scope – the 3% tax is never far away where a French real estate property is not owned directly by an individual – it seems to be often overlooked by international investors, exposing them to significant tax risks. The 3% tax was initially conceived as a tracking device to seek out individuals attempting to avoid wealth tax or registration duty. Assessment of the tax is not time-barred until the end of the sixth year following the year involved, leading in the most egregious case to a 21% tax based on the real estate value. In their article, Xenia Lordkipanidze, a Partner in the Tax Department of OVERSHIELD Avocats, Paris, and Clement Pere, a Senior Associate in the Tax Department at the same firm, take a deep dive into the rules, explaining (i) how the tax is computed when a chain of corporations stands between the individual and the property, (ii) the persons who a deemed to be authorized to receive notices from the French Tax Authority, (iii) the 30-day grace period to file late that is offered to first time offenders, (iv) seven applicable exemptions to the 3% tax, (v) adverse case law for persons and entities that challenge the tax, and (vi) several items of practical guidance for affected individuals.

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