Should shares in property-rich companies held by Luxembourg residents fall within the French real estate wealth tax (IFI)?
In a ruling of 2 April 2025, the Cour de cassation held that shares in French property-rich companies were subject to the former wealth tax (ISF) in the hands of Luxembourg residents. Is that solution transposable to the IFI under the 2018 France–Luxembourg tax treaty? Benoît Dambre, partner, examines its uncertain scope.
Luxembourg residents frequently hold French real estate through an interposed Luxembourg company, for reasons that are largely non-tax: avoiding undivided co-ownership, financing, governance.
In an unreported ruling of 2 April 2025 (no. 23-14.568), the Cour de cassation held that shares in property-rich companies (sociétés à prépondérance immobilière, or SPI) situated in France were to be treated as immovable property for the purposes of the former France–Luxembourg tax treaty of 1 April 1958, and therefore fell within the scope of the former wealth tax (ISF).
The question is whether that solution can be transposed to the real estate wealth tax (IFI) under the current France–Luxembourg treaty of 20 March 2018. There are, in the author's view, serious grounds for doubt: unlike its predecessor, the new treaty contains interpretation provisions that refer back to domestic law — much as the France–Monaco treaty does, under which the Cour de cassation had, conversely, treated shares as movable property.
The reach of this ruling therefore remains uncertain, at a time when the tax authorities' power to reassess could extend to the years 2020 to 2026 — a question of real consequence for many Luxembourg residents and their advisers.
Article by Benoît Dambre, partner at Andersen Société d'Avocats, published in the Revue Internationale du Patrimoine — Doctrine (RIP 2026/20, Legitech).