In Switzerland, the idea of raising inheritance tax for the very wealthy to reduce inequality has been gaining ground, even if a large majority of citizens recently voted against such a move.
In France, by contrast, this notion is losing traction. From the centre to the far-right, many politicians rally behind the the idea, repeated in poll after poll, that French people would oppose any rise in tax on inheritance and gifts with every fibre of their being, even if it only affected the wealthy.
It is true that the French Left has not given up on the issue. At the end of November, for instance, socialist politician Alexandre Ouizille tabled several amendments to the draft 2026 budget - currently at a critical juncture - in France's upper chamber of parliament, the Senate. These changes sought to trim tax breaks on large inheritances and to raise the tax rate on estates worth more than three million euros.
But these amendments were dismissed by the Right, which has a firm grip on the Senate and which is fiercely set against any rise in inheritance tax.
Enlargement : Illustration 1
The far-right, meanwhile, adopts a similar attitude to that of Les Républicains (LR) on the Right: for years Rassemblement National (RN) has argued in its manifesto for the lowering of inheritance tax in France. And the RN's ally Éric Ciotti, from the hard-right Union des droites pour la République (UDR), describes gift and inheritance tax as a “tax on death” that should be reduced to almost nothing.
Even among supporters of Emmanuel Macron - who, it should be recalled, said in March 2016 that he “preferred tax on inheritance to wealth taxes” - the idea of favouring the “productive economy” over the “rentier economy” is no longer as clear-cut as it was.
The centrist president of the National Assembly, Yaël Braun-Pivet, did indeed recently call for higher inheritance taxes. “People getting windfalls, there comes a point when enough is enough,” she said on France 2 television on October 15th. She added “...[T]he transfer of wealth from one generation to the next isn't working well, and that's not healthy.”
But on the other hand, other Macron-supporting MPs, such as Paul Midy, still speak of taxpayers being “plundered” when leftwing amendments to bring more fairness into the inheritance tax scale are discussed at the Assembly. And his MP colleague Guillaume Kasbarian even argues for the extension of tax breaks on gifts to grandchildren and great-grandchildren to help them buy a home.
No financial comfort without inheritance
Yet economic data now shows us that it is becoming less and less possible in France to attain a comfortable standard of living just through one’s work alone. Another way of putting it is that increasingly it is parental wealth that shapes a child's future prosperity. This was the key finding of a 2021 report entitled 'Repenser l’héritage' ('Rethinking inheritance') from the Conseil d’analyse économique (CAE), an economic analysis unit inside the prime minister's office.
The report revealed that “after a decline in wealth inequality and strong economic and social mobility during the second half of the twentieth century [in France], inheritance has again become a decisive factor in accumulating assets”. It stated that the “share of inherited wealth in overall assets now stands at 60% compared with 35% at the start of the 1970s”.
In short, we are “now in a world in which it has become indispensable to have inherited in order to reach a high standard of living. It's a society that has forgotten the merits of hard work,” warned economist Camille Landais, co-author of the CAE paper.
Worse still, this trend is only set to grow over time. In a report issued a year ago, and of which socialist senator Alexandre Ouizille was one of the co-authors, the left-leaning think tanks Fondation Jean-Jaurès and Hémisphère Gauche foresaw that “over the next fifteen years, France will see the largest transfer of wealth in its modern history: more than 9,000 billion euros of wealth held by older French people will be passed on to their children”.
Yet this “great transfer” is of an “extremely unequal” nature, as “10% of households now hold 55% of all wealth in France”. In short, says the report, if nothing is done, France will become a “society in which inherited wealth over-determines an individual's social standing, a society in which the impact of family dynasties outweighs the results of work and effort”.
The problem is that the French tax system is badly designed to counter this phenomenon. For one thing, it taxes gifts and inheritances in the direct line of succession (that is to say from parent to child and from grandparent to grandchild) far too lightly, thanks to a host of allowances; for another, it is full of tax breaks that multimillionaires and billionaires use and abuse. The end result is that while the top marginal rate of death duties on estates is 45% in France to those in the direct line of succession, on average inheritances between parents and children are taxed at an effective rate of only 3%.
A failing tax system
When it comes to allowances, the biggest is the 100,000-euro exemption per parent and per child on a gift, which is renewable every fifteen years. This allows, for example, a couple with four children to gift 800,000 euros in total assets, in theory without paying a single euro in tax; and to do so again fifteen years later.
This tax break has the positive effect of removing from tax liability the 80% of the French population with the least wealth to bequeath. It is therefore false to claim, as some do, that middle-class households in France are robbed by the state when they pass on wealth.
But these tax breaks also work for the ultra-rich, enabling them to avoid inheritance tax too.
There are four main ones which, together, cost the state more than 20 billion euros a year. First there are transfers of investment funds known as an 'assurance vie', which sit inside special schemes that cost the state between 4 and 5 billion euros a year, according to the CAE’s 2021 estimate.
These transfers are highly prized by the wealthiest: the 1,900 richest heirs receive at least 12.5% of the total value of all assurance vie funds that are transferred in France, with an average sum of 2.8 million euros involved, which is lightly taxed.
Another beneficial measure for the ultra-rich is the well-known Dutreil pact, which was recently criticised by the public accounts watchdog the Cour des comptes. This scheme allows an heir to enjoy a 75% tax-free allowance on the value of a company that is passed on, as long as the shares are held for at least four years after the parental gift. This brings the effective tax rate on the inheritance down from 34% to 8%.
The Cour des comptes revealed that the cost of this scheme for the public purse was 5.5 billion euros in 2024, but most importantly it found that this tax break was largely used in the inheritances of billionaires and multi-millionaires. Thus 65% of the total benefit of the Dutreil pact tax break goes to 1% of heirs.
In actual numbers this translates to just 110 people enjoying 65% of the total tax break involved in this scheme in 2024, with an average tax saving per estate of 30 million euros. This is a long way from the original aim of this scheme when it was set up in 2003, which was to help small and medium-sized family manufacturing firms in France to survive.
Good starting point for discussions
Another tax break popular with the ultra-rich, aided by an army of tax lawyers and private bankers, is the splitting of property ownership. This scheme allows an heir to receive only the “bare ownership” of an asset (an intangible or property asset), with the donor keeping a “right of use”. This right of use ends on their death, to the benefit of the heir or heirs, and without any inheritance tax being due. Its cost for the public purse: around 2 to 3 billion euros a year, according to the CAE.
Lastly, there is one more tax break that should be controlled: the non-taxation of unrealised gains on assets when these are passed on through a will. “Profits are only taxed when realised, and it's therefore possible to pass on an asset from one generation to the next without ever paying tax on the gain, even if the heir sells the asset afterwards,” the CAE regretted in its paper.
In the reasons given for one of his amendments, the senator Alexandre Ouizille estimated that the cost to the public purse of not taxing unrealised gains on bequeathed assets was nearly 9 billion euros a year.
So what should be done? In his amendments debated on November 28th in the Senate, Alexandre Ouizille first of all proposed ending the practice of wiping-out unrealised gains at the moment of inheritance for the richest 1%. This would be done by “applying to inheritances equal to or above 4 million euros the same rules that apply to capital gains tax”.
Then he argued for a sliding scale for the Dutreil allowance depending on the worth of the company being passed on: an allowance of 75% up to companies worth 50 million euros, then 50% for those valued between 50 and 100 million euros, and finally 25% for any above 100 million euros. To this there was added a final amendment proposing a new top marginal rate of 50% for transfers above 3 million euros.
The combined total yield for the state from these amendments would be between 10 and 15 billion euros a year, according to the senator. This represents a good basis for debate the day that opinions finally start to change on this issue.
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- The original French version of this analysis can be found here.
English version by Michael Streeter