French Finance Act 2026: what changes for expatriates and why Paraguay is becoming even more attractive

Each year, the French finance law brings surprises for taxpayers—and 2026 is no exception. For French expatriates in Paraguay and those considering moving, the 2026 finance law confirms a major trend: French tax pressure continues to increase, loopholes are closing, and rules are tightening for non-residents. This guide analyzes the key measures of the 2026 finance law that directly impact expatriates and aspiring expatriates—and why each new finance law strengthens the case for Paraguay.

Note: This guide focuses on measures directly impacting expatriates, non-residents, and those considering leaving. For an exhaustive analysis of the entire finance law, consult specialized publications (BF Lefebvre, Droit fiscal, Revue fiduciaire).

The French budget context in 2026

France under budgetary strain

France approaches 2026 with a deteriorating budgetary situation:

• Public deficit: The deficit remains above 4-5% of GDP despite promises of reduction. France is under pressure from the European Commission to return below 3% (Maastricht criterion).
• Public debt: ~112-115% of GDP. The cost of debt (interest) exceeds €50 billion/year—the state's largest budget item, ahead of education. Each ECB rate hike increases this burden.
• Insufficient tax revenues: Despite one of the highest compulsory levies in the world (~45% of GDP), revenues do not cover expenses. Result: each finance law seeks new revenues—and affluent taxpayers are the preferred target.
• Political pressure: Successive governments are caught between social demand (public spending, public services, social protection) and budgetary constraints (deficit, debt, interest rates). The easiest political solution: increase taxes on the "rich" and "tax evaders"—categories increasingly broadened by media and politicians.

The 2026 tax philosophy: more revenue, fewer loopholes

The 2026 finance law is part of a fundamental trend initiated several years ago:

• Broadening the tax base: fewer loopholes, fewer exemptions, fewer special regimes. Every euro of tax loophole eliminated is an euro of additional revenue for the state.
• Strengthening control: more resources for the tax administration (AI, data mining, automatic information exchange), targeting non-residents and expatriates.
• European harmonization: transposition of EU directives (DAC8 on crypto-assets, DAC9 on administrative cooperation, BEPS 2.0 on global minimum taxation). Less room for intra-European tax optimization.
• Political signal: tax measures are as much budgetary tools as political signals. "The rich must pay their fair share" is the bipartisan mantra in France in 2026.

Key measures of the 2026 finance law for expatriates

Measure 1: Exceptional high-income contribution (CEHR) — made permanent

The exceptional high-income contribution (3% above €250,000 of RFR for a single person, 4% above €500,000) is made permanent. Created in 2012 as a "temporary" measure, it is now a permanent feature of the French tax landscape:

• Impact for expatriates: If you are still a French tax resident and your income exceeds €250,000/year, the CEHR is added to the progressive scale (up to 45%) + social contributions (17.2%). Effective marginal rate for an income of €500,000: ~49-52% (scale + CEHR + partial social contributions).
• For those considering leaving: Another reason to leave. The French marginal rate exceeds 50% for high incomes. In Paraguay: 0% on foreign income.
• For non-residents: The CEHR does not apply to non-residents (only to French tax residents). But it applies in the year of your departure (prorata temporis on your resident income).

Measure 2: Tightening of exit tax (article 167 bis CGI)

The 2026 finance law strengthens the conditions of the exit tax:

• Reminder: The exit tax taxes latent capital gains on significant holdings (> €800,000 or > 50% of a company) at the time of transfer of tax domicile outside France. A deferral of taxation is granted (the tax is calculated but not paid) if you do not sell the securities.
• Change 2026: The period to obtain definitive relief (cancellation of latent tax debt) is extended. Previously, relief was acquired after 5 years of holding after departure for departures to non-EU countries. The 2026 law discusses an extension to 7 or 8 years for departures to non-treaty countries (Paraguay, due to lack of a tax treaty, would be concerned if this measure is adopted).
• Strengthened reporting obligation: Form 2074-ETD (annual declaration of exit tax deferral) must be filed annually during the deferral period. Failure to file can lead to forfeiture of the deferral = immediate taxation of latent capital gains + penalties.
• Impact: Holders of significant holdings who have left France for Paraguay will have to wait longer to be definitively released from the exit tax. But the principle remains the same: as long as you do not sell the securities, the deferral applies. And after the deadline (5, 7, or 8 years depending on the final version), the debt is canceled.
• Recommendation: If you are subject to exit tax, scrupulously comply with the annual reporting obligation (2074-ETD). An oversight = forfeiture of deferral = immediate taxation. Your French accountant or tax lawyer must manage this declaration each year.

Measure 3: LMNP reform — reincorporation of depreciation confirmed

This is the most impactful measure for real estate investors (see our LMNP guide):

• Measure: Depreciation accounted for under LMNP is now reincorporated into the calculation of capital gains on sale for furnished tourist accommodation (after the Le Meur law 2024) and discussions are extending to long-term furnished rentals.
• Consequence: If you sell an LMNP property after depreciating €150,000 over 15 years, your capital gain will be calculated on the net book value (net book value = purchase price - cumulative depreciation) and not on the purchase price. Broader base = higher tax. Potential additional cost: +€40,000-120,000 in tax on a typical LMNP portfolio.
• Impact for expatriates: If you have an LMNP portfolio in France and plan to sell before moving to Paraguay, the window is closing. Each additional month of depreciation adds to the potential trap.
• Recommendation: Sell your LMNP properties BEFORE the reform comes into effect if it extends to long-term furnished rentals. The tax cost of selling today (current regime) is significantly lower than the future cost (reformed regime). See our detailed guide.

Measure 4: Strengthening control of non-residents

The 2026 finance law grants additional resources to the DGFiP for the control of non-residents:

• Strengthened budget: Increase in staff for the DNVSF (National Directorate for the Verification of Tax Situations) and the BNRDF (National Brigade for the Repression of Tax Fraud). More inspectors = more controls.
• Artificial intelligence: Expanded deployment of algorithms for detecting fictitious expatriations (cross-referencing tax, banking, migration data, social networks). The tax authorities are increasingly aware of who is leaving, where, and why.
• Automatic exchange of information: Extension of CRS (Common Reporting Standard) to new countries and new categories of assets (crypto via DAC8). Paraguay participates in CRS—information on your Paraguayan accounts is transmitted to France if you are identified as a French taxpayer.
• Impact: Control of non-residents will intensify. This is NOT a reason not to expatriate—it is a reason to do it CORRECTLY. An irreproachable dossier of proof of Paraguayan residency (see our tax control guide) is your best protection.

Measure 5: Increase in flat tax on dividends and movable capital gains

The 2026 finance law raises the PFU (Prélèvement Forfaitaire Unique - flat-rate withholding tax):

• Old rate: PFU 30% (12.8% income tax + 17.2% social contributions) on dividends, interest, and movable capital gains.
• New rate 2026: Discussions on an increase to 33-35% (increase in the income tax component to 15-17.8%). Not yet definitively voted at the time of writing this guide—but the trend is clear.
• Impact for residents: Any dividend, any interest, any capital gain from the sale of securities is taxed at 33-35% (vs 30% previously). On €100,000 of dividends: +€3,000-5,000 in tax per year.
• Impact for non-residents: Non-residents receiving dividends from French sources (French shares, SCI à l'IS) are subject to withholding tax. The withholding tax rate for non-residents outside treaties is 30% (internal rate). This rate could be adjusted if the PFU increases. Check with your accountant.
• Impact for those considering leaving: Each increase in the PFU reinforces Paraguay's attractiveness (0% on foreign income, including dividends from US LLCs = 0% vs 33-35% in France).

Measure 6: Crypto — DAC8 transposition and strengthened reporting

The European DAC8 directive on the transparency of crypto-assets is transposed into French law in 2026:

• Expanded reporting: Crypto platforms operating in the EU must automatically communicate to the tax administration the transactions of their users (purchases, sales, transfers, balances). Kraken EU, Coinbase EU, Binance EU = all your transactions are now transmitted to the French tax authorities if you are identified as a French taxpayer.
• Strengthened Form 3916-bis: The obligation to declare foreign crypto accounts is extended (more platforms concerned, heavier penalties for non-declaration).
• Impact for crypto expatriates: If you have crypto accounts opened when you were a French resident, make sure they were correctly declared (3916-bis) for all years of French residency. Failure to declare can result in fines of €750-1,500 per account per year (increased to €10,000 if the account is in a non-cooperative country).
• For PY residents: Once a Paraguayan tax resident, your crypto accounts are no longer declarable in France (you are no longer a French taxpayer). But they may be subject to Resolution 47/2026 DNIT (Paraguay) reporting if > USD 5,000/year. No new tax—just reporting.

Measure 7: Real estate — increase in transfer duties and property tax

• Transfer duties: Some departments are increasing transfer duties (commonly called "notary fees"—in reality departmental taxes) from 4.5% to 5%. On a property at €300,000: +€1,500 in acquisition costs. The total acquisition cost in France (notary fees + tax + various fees) reaches 8-10% of the price—vs 2-4% in Paraguay.
• Property tax: Ongoing reevaluation of cadastral bases (draft revision of rental values). When the revision is completed, property taxes will automatically increase for the majority of owners. Landlords (including non-residents with properties in France) will be impacted.
• Impact for non-residents with real estate in France: Your French property costs more to hold (higher property tax) and more to sell (higher transfer duties for the buyer = pressure on prices). Another reason to sell and reinvest in Paraguay where property taxes are negligible (very low cadastral value).

The cumulative impact: the case of an entrepreneur with €200,000 in income

French tax resident scenario 2026

Item	Amount
Gross income (consulting, EURL/SASU)	€200,000
Corporate tax + social contributions + income tax + CEHR	~€95,000-110,000
Flat tax on dividends (if distributed) ~33-35%	(included above if SASU)
Property tax (if homeowner)	~€2,000-5,000
Net available	~€85,000-103,000
Cost of living in France (couple, big city)	~€45,000-60,000
Annual savings	~€25,000-58,000

Paraguayan tax resident scenario 2026

Item	Amount
Gross income (consulting, US LLC)	€200,000
Taxes + charges	~€0 (foreign income, US LLC, PY territoriality)
Structure fees (US LLC + PY accountant + Mercury)	~€5,000
Net available	~€195,000
Cost of living in Paraguay (couple, premium neighborhood)	~€20,000-25,000
Annual savings	~€170,000-175,000

Annual savings differential: +€112,000-150,000/year in favor of Paraguay. Over 5 years: +€560,000-750,000 in additional wealth. And each new French finance law that increases taxation widens this differential.

The 2020-2026 trend: the French fiscal steamroller

History of recent tightening measures

Year	Measure	Impact
2018	PFU 30% (flat tax) — "relief" but real increase for small dividends via PEA	Simplification but high rate for large movable assets
2019	Pacte Law — exit tax "eased" (deferral instead of guarantee)	Relative improvement but exit tax maintained
2020	Increase in social contributions (17.2%) confirmed for non-residents outside EEA	PY non-residents pay social contributions on FR source income
2023	Temporary high-income contribution de facto made permanent	+3-4% tax for incomes > €250,000
2024	Le Meur Law — LMNP allowance reduced from 71% to 50%, mandatory DPE Airbnb	Airbnb landlords heavily penalized
2025	Reincorporation of LMNP tourism depreciation into capital gains, discussions on long-term extension	Tax trap closing on LMNP
2026	CEHR made permanent, exit tax tightened, PFU increased, LMNP reform extended, NR controls strengthened	Maximum pressure on affluent taxpayers and expatriates

The trend is unambiguous: each year, French tax pressure increases for affluent taxpayers, real estate investors, capital holders, and expatriates. No finance law since 2017 has reduced the net tax burden for these profiles. The direction is clear—and irreversible as long as the budget deficit is not resolved (which does not seem planned before 2030 at the earliest).

What expatriates in Paraguay must do in 2026

If you are already a Paraguayan resident

• Check your exit tax: If you are subject to exit tax deferral, file your annual declaration 2074-ETD within the deadline. The potential tightening of the relief period (5 → 7-8 years) may concern you.
• Sell your French LMNP property: If you still own LMNP properties in France, the window for selling under the current regime (capital gains calculated on purchase price, not net book value) is closing. Evaluate the cost of selling now versus the future cost with the reintegration of depreciation.
• Update your non-residency file: Increased controls mean your evidence file must be impeccable. PY lease, invoices, bank statements, DNIT tax residence certificate, attendance log. Update it annually.
• Check your 3916-bis declarations: Crypto accounts opened while you were a French resident must have been declared. With DAC8, the tax authorities will have access to the history. If you've forgotten anything, regularize it before it becomes a dispute.
• Anticipate the PFU increase: If you receive French-sourced dividends (SCI subject to corporate tax, French shares), the withholding tax may increase. Evaluate whether holding these assets in France is still relevant versus transferring them to Paraguayan or Luxembourg structures (0% in PY).

If you are considering leaving in 2026-2027

• Accelerate: Each finance law that passes increases the cost of leaving (tightened exit tax, reformed LMNP, reinforced controls) and the cost of staying (rising PFU, perpetuated CEHR, rising property tax). The cost of waiting increases every year.
• Structure your departure: pre-expatriation audit (assets, exit tax, LMNP, SCI, PEA), tax lawyer consultation (€1,000-€5,000), Paraguayan residence (from €1,400), US LLC creation, proper transfer of residence.
• Sell what needs to be sold BEFORE leaving: LMNP (current regime more favorable than future), rental property in France (high withholding tax + social contributions for non-residents), assets that create recurring French reporting obligations for you.
• Document your departure: notification to the tax center, last 2042 declaration, Social Security/URSSAF deregistration, closure of unnecessary accounts, rental of French housing (or sale). The departure file is as important as the arrival file.

The 2027-2030 Outlook: What to Expect

Probable measures in the upcoming finance laws

• Expanded IFI: The Real Estate Wealth Tax could be extended to movable assets (a return to an ISF) if political pressure increases. Several French political parties have it in their program.
• Increase in social contributions: Social contributions (17.2% in 2026) could be raised to finance the Social Security deficit. Each percentage point increase = 1% more on capital and real estate income.
• Tax on superprofits: After discussions on corporate superprofits, a tax on "super-incomes" of individuals (> €500,000/year) is regularly mentioned.
• Tightening of tax treaties: France is renegotiating its tax treaties to reduce optimization possibilities. Countries with advantageous tax systems (including Paraguay, even without a treaty) are in its sights.
• Global minimum tax: Pillar 2 of BEPS 2.0 (minimum tax rate of 15% for multinationals) could eventually be extended to individuals. This is a 5-10 year perspective, not immediate — but the direction is clear.

What this means for Paraguay

Every tightening of French taxation strengthens Paraguay's attractiveness. The France-Paraguay tax differential only widens: France is rising (45% → 50%+ effective), Paraguay remains at 0% (stable territoriality, no OECD pressure for now). As long as Paraguay maintains its territoriality — which is likely in the medium term (5-10 years) given the Paraguayan political culture and the absence of significant international pressure — the deal is increasingly favorable for expatriates.

But beware: nothing is eternal. Paraguay could one day change its territoriality (under international pressure or by internal political decision). This is a long-term risk (> 10 years) to integrate into your wealth strategy. The best protection: diversify your assets (not everything in Paraguay), obtain Paraguayan nationality (3 years of residence = dual nationality = maximum flexibility), and build your wealth quickly while the window is open.

The Ecosystem for Optimizing Your Departure from France

• Paraguayan tax residence (from €1,400) — the foundation of your new tax life
• US LLC — 0% international invoicing structure
• Paraguayan dual-currency bank account
• Paraguayan accounting (€30/month) — DNIT compliance
• French tax lawyer: pre-expatriation audit, departure structuring, exit tax coordination. Budget: €1,000-€5,000.
• French accountant: last tax return, departure 2042 declaration, cessation of BIC/BNC activity if applicable.
• French notary: if real estate sale before departure.

Conclusion

The French Finance Law 2026 confirms the underlying trend: increasing tax pressure, closing loopholes, reinforced controls, and rising compliance costs for wealthy taxpayers and expatriates. Perpetuated CEHR, tightened exit tax, reformed LMNP, probable PFU increase, reinforced non-resident controls by AI — the message is clear: France is looking for revenue, and it will find it among those who can pay.

For the expatriate in Paraguay, each measure of the 2026 Finance Law widens the savings differential: an entrepreneur with €200,000 in income saves €170,000/year in Paraguay vs. €25,000-€58,000 in France. The differential is €112,000-€150,000/year — and it increases every year with each new finance law.

For the candidate for departure, the message is: leave now. The cost of waiting increases every year (rising French taxation + reformed LMNP + tightened exit tax). The cost of transition remains stable (PY residence from €1,400, US LLC €700, 3 months process). The ROI of expatriation improves every year thanks to French tax policies themselves. Ironically, Bercy is the best sales argument for Paraguay.

Do you want to leave France before the next finance law? Contact our team for a structured departure plan: Paraguayan residence, US LLC, asset audit, coordination with your tax lawyer and French accountant. Every month counts — and every finance law gives you one more reason not to wait.