PLF 2027: what changes for gifts, apport-cession, life insurance and LMNP?

The draft Finance Bill for 2027 contains several measures that could significantly alter certain wealth planning strategies: lifetime gifts, contribution and subsequent sale (apport-cession), life insurance and furnished rental investment are among the schemes directly affected.

Tabled in the National Assembly on 1 October 2026, the draft Finance Bill for 2027 (PLF 2027) is currently before Parliament. Its debate in plenary session in the National Assembly is due to begin on 13 October 2026. The provisions discussed below may therefore still be amended before the text is finally adopted.

Among the proposed tax measures, several directly concern the management and transfer of wealth. The bill provides in particular for a temporary regime in favour of certain gifts of money, a substantial change to apport-cession, tighter rules for certain life insurance policies and a stricter depreciation regime for non-professional furnished landlords (LMNP). Its tax audit provisions are analysed separately in our article on the new powers the PLF 2027 would give the tax authorities.

1. Could the PLF 2027 change wealth transfer strategies?

Temporarily lighter taxation for certain gifts of money?

Article 4 of the PLF 2027 provides for two temporary measures, reserved for gifts of money made in full ownership between 1 January and 30 June 2027. Gifts of real property, securities or bare ownership would not qualify.

The first measure raises the ceiling of the exemption for family gifts of money under Article 790 G of the French General Tax Code (Code général des impôts, CGI), which would rise from 31,865 euros to 50,000 euros. The current conditions would still apply: the donor must be under 80 and the recipient — a child, grandchild, great-grandchild or, failing descendants, a nephew or niece — must be of age or emancipated. This exemption can already be combined with the ordinary allowances, in particular the 100,000-euro allowance between a parent and child under Article 779 of the CGI.

The second measure would apply a flat 6% rate to gifts of up to 100,000 euros per donor and recipient, instead of the progressive rates under Article 777 of the CGI, which can reach 45% for transfers between direct ascendants and descendants and 55% for transfers from an uncle to his nephew. It covers the same recipients, who would also have to be under 50 on the date of the gift. No age condition would, however, apply to the donor.

This rate would be reduced to 5% if the recipient, before the gift is declared, passes on at least 1.1% of the sums received to certain organisations assisting people experiencing hardship or victims of domestic violence referred to in Article 200, 1 ter of the CGI, without claiming the tax reduction attached to that donation.

According to the example given by the Government, a parent who has already used their 100,000-euro allowance would pay 6,000 euros in duties on a gift of 100,000 euros to their child, compared with around 18,200 euros today. If the allowance is still available, they could thus transfer 250,000 euros for 6,000 euros in duties: 100,000 euros under the allowance, 50,000 euros under the raised exemption and 100,000 euros taxed at 6%. The bill as tabled does not, however, spell out how these mechanisms interact, which remains to be confirmed during the debates.

In both cases, the gift would have to be declared to the tax authorities within the following month: by the recipient for a simple bank transfer, or by the notary where the gift is recorded in a notarial deed, in accordance with Article 635 of the CGI.

Finally, gifts taxed at 6% would not be subject to the look-back rule in Article 784 of the CGI, which aggregates gifts made between the same persons over the previous fifteen years: like gifts exempted under Article 790 G, they would not be taken into account when calculating the duties payable on a subsequent gift or inheritance.

Would a gift or inheritance end the tax deferral on apport-cession?

Article 5 of the PLF represents a far more structural change.

The apport-cession mechanism under Article 150-0 B ter of the CGI allows, under certain conditions, the capital gain realised when a taxpayer contributes the shares of a company to a holding company they control to be placed under a tax deferral.

At present, a gratuitous transfer of the shares received in exchange for the contribution does not end the deferral; only a sale for consideration has that effect. On a gift, the deferred gain is therefore permanently extinguished where the recipient does not control the holding company. Where they do control it, the deferral passes to them and the gain is only permanently extinguished if they keep the shares for six years, extended to eleven years in the event of a sale followed by reinvestment; failing that, it is taxed in their name. On death, the deferred gain is permanently exempted, with no holding condition.

The PLF 2027 proposes to break with this approach. A gift or inheritance of the shares received in exchange for the contribution would become an event ending the tax deferral. The gain deferred until then would become taxable in the contributor’s name, with the corresponding income tax and social levies immediately payable.

To soften the effect of this taxation, a new Article 1681 G of the CGI would allow the taxpayer, on request made no later than the payment deadline, to spread the corresponding income tax over the five years following the year in which the gain becomes taxable. This payment plan would be subject to compliance with current tax obligations and the provision of security. Social levies are not covered by this mechanism.

The bill also provides that the stay of payment enjoyed by taxpayers subject to exit tax would end on a gratuitous transfer of the shares concerned, whether the gains were placed under deferral before or after the transfer of tax domicile outside France.

One of the most sensitive points is the proposed entry into force: the bill provides that these new rules would apply to transfers made from 1 October 2026, the date on which the bill was tabled. The Minister for the Economy announced on 6 October 2026, however, that this article would be reworked during the debates: its final wording remains particularly uncertain.

If the text were adopted as it stands, a gift hitherto regarded as a wealth transfer tool would have to be reconsidered in the light of the immediate taxation of the deferred gain.

2. Would the tax regime for life insurance be more tightly regulated?

Which life insurance policies would be affected by the new restrictions?

Article 6 of the PLF 2027 does not call into question the general operation of life insurance. It targets policies with dedicated investment vehicles, that is, unit-linked funds reserved for a single policy or a limited number of policies, which the bill would regulate in a new Article L. 131-1-3 of the French Insurance Code.

These vehicles, common in high-end policies, notably Luxembourg policies, can hold almost tailor-made unlisted assets. It is then possible to place in them bonds issued by the policyholder’s holding company, units in their non-trading company or a receivable owed by one of their companies.

The bill would prohibit this: these vehicles could no longer include assets issued, guaranteed or owed by the policyholder, the insured or a beneficiary of the policy, or by their spouse or PACS partner, their ascendants, descendants, brothers and sisters, or companies they control. Assets whose value depends mainly on such assets would also be excluded.

The aim is to prevent life insurance from being used to place the policyholder’s business or family assets in a tax-favoured wrapper. Standard unit-linked funds, available to all of an insurer’s clients, would not be affected.

Policies taken out with foreign insurers would only retain the French life insurance tax regime if their assets have characteristics similar to those permitted under French regulations and comply with the same prohibition.

In what cases could the tax advantages of life insurance be withdrawn?

Life insurance enjoys one of the most favourable tax regimes. Gains are only taxed on surrender and, on a policy held for more than eight years, they benefit from an annual allowance of 4,600 euros for a single person and 9,200 euros for a couple, then from a reduced rate of 7.5% on the portion corresponding to premiums not exceeding 150,000 euros across all policies, under Article 125-0 A of the CGI.

Social levies on life insurance remain set at 17.2%, compared with 18.6% for most other investments since 1 January 2026.

On the death of the insured, sums deriving from premiums paid before age 70 fall outside inheritance tax and are subject to a specific levy under Article 990 I of the CGI: each beneficiary has an allowance of 152,500 euros, then the portion received between 152,500 and 852,500 euros is taxed at 20%, and the portion above 852,500 euros at 31.25%. For premiums paid after age 70, only the portion exceeding an overall allowance of 30,500 euros is subject to inheritance tax and the gains are exempt, in accordance with Article 757 B of the CGI. A beneficiary spouse or PACS partner is fully exempt.

The bill would make the life insurance tax regime subject to three conditions: premiums paid in cash, assets comparable to those permitted under the Insurance Code and, for dedicated vehicles, the absence of the prohibited assets described above. Failing this, the reduced 7.5% rate on surrenders would no longer be available.

The penalty would be heaviest on death. Under the paragraph II bis that the bill would reinstate in Article 757 B of the CGI, sums paid under a non-compliant policy would be subject to inheritance tax according to the degree of kinship, gains included, without the 152,500-euro allowance per beneficiary or the 20% and 31.25% rates of Article 990 I, and without the 30,500-euro allowance applicable to premiums paid after age 70.

The new framework would apply to policies taken out from 1 October 2026 and, for existing policies, from 1 July 2027, the date from which the regime on death would also apply. Holders of policies with dedicated vehicles, particularly those taken out abroad, would therefore be well advised to have their composition reviewed before then.

3. Does the PLF 2027 tighten the taxation of non-professional furnished lettings?

How would the deduction of depreciation be capped for LMNP?

Article 7 of the PLF continues to bring the taxation of unfurnished lettings and that of non-professional furnished lettings closer together. The Government thus intends to make more attractive the “Jeanbrun” scheme, created by the Finance Law for 2026, which allows depreciation of an unfurnished rental property at an annual rate of between 3% and 5.5% of its acquisition price, capped at 12,000 euros a year, subject in particular to an affordable rent condition.

Under the actual-expenses regime, the appeal of LMNP currently lies in the ability to deduct depreciation of the property and its furnishings, within the limits laid down in Article 39 C of the CGI, which often neutralises most of the taxable rental income.

The bill would limit depreciation of furnished premises to a rate of 2.5% a year, capped at 7,000 euros per tax household. For furnished tourist accommodation, the rate would be limited to 1.5% and the cap to 5,000 euros. Residences for students, elderly or disabled people and people requiring long-term care would be exempt from this cap, but not from the abolition of the carry-forward discussed below.

This measure would complement the reform in the Finance Law for 2025 which, for disposals made since 15 February 2025, already adds back, subject to exceptions, the depreciation deducted when calculating the capital gain. The PLF 2027 would this time act upstream, on the deduction itself: the profitability of a furnished investment could no longer be assessed on the basis of the historical LMNP rules alone.

What would happen to depreciation not yet deducted at 1 January 2027?

Depreciation recorded for financial years ended before 2027 and still carried forward would remain deductible until 31 December 2036, but only up to half of the taxable profit remaining after deduction of the year’s depreciation.

Depreciation for 2027 and subsequent years that could not be deducted, whether because it exceeds the new caps or the amount of rent less expenses, would be permanently lost, as it could not be carried forward. Yet this carry-forward has so far been one of the main levers for neutralising taxable profit over the long term.

For landlords already under the actual-expenses regime, the analysis will therefore have to cover not only the new caps, but also the amount of depreciation carried forward and the realistic prospect of using it before 2036.

The PLF 2027 thus takes two contrasting approaches: it would temporarily favour certain transfers of cash, while reducing several advantages that have so far been widely used, whether the transfer of shares after apport-cession, highly individualised life insurance policies or LMNP depreciation.

None of these measures is yet final and their wording may change during the debates. The effective date planned for Article 5, set at 1 October 2026, nevertheless justifies taking them into account now: the task is to check whether a planned transaction remains worthwhile, whether a transfer should be brought forward or postponed, and whether the structure of an investment or a policy should be adapted.

Based in Nice, the Valenor firm assists private individuals and company directors in analysing and securing their wealth planning transactions, in particular with regard to transfers of wealth, apport-cession, life insurance and property taxation.

Our objective is to anticipate the tax consequences of planned transactions, identify the options for providing greater tax certainty and adapt wealth strategies to legislative changes where they become relevant. The passage of the draft Finance Bill for 2027 through Parliament will be followed closely in this respect.

Bruno Gherardi
Tax lawyer in Nice - Cabinet Valenor