Should shares in property-rich companies held by Luxembourg residents be subject to French real-estate wealth tax (IFI)?
In a landmark ruling of 2 April 2025, the French Cour de cassation held that shares in property-rich companies located in France are subject to wealth tax (ISF) in the hands of Luxembourg residents. But is that solution transposable to the IFI under the new 2018 France–Luxembourg tax treaty? Partner Benoît Dambre examines its — uncertain — scope.
Luxembourg residents frequently hold French real estate through an interposed Luxembourg company, for largely non-tax reasons (avoiding joint ownership, financing, governance).
In an unpublished ruling of 2 April 2025 (no. 23-14.568), the French Cour de cassation held that shares in property-rich companies ("SPI") located in France must be treated as real property for the purposes of the former France–Luxembourg tax treaty of 1 April 1958 — making them subject to the former wealth tax (ISF).
The key question is whether that solution can be transposed to the current real-estate wealth tax (IFI) under the new France–Luxembourg treaty of 20 March 2018. The author argues there are serious grounds for doubt: unlike the former treaty, the new one contains interpretation rules referring back to domestic law — much like the France–Monaco treaty, under which the Cour de cassation had, conversely, treated company shares as movable property.
The scope of this ruling therefore remains uncertain, at a time when the tax authorities' reassessment window could reach the years 2020 to 2026 — a high-stakes issue for many Luxembourg residents and their advisers.
Article by Benoît Dambre, partner (Andersen, Société d'Avocats), published in the Revue Internationale du Patrimoine — Doctrine (RIP 2026/20, Legitech).