France Constitutional Court Clarifies Constitutionality of New Tax on Capital Reductions From Share Buybacks

The French Constitutional Council March 28 issued Decision No. 2026-1189 QPC, clarifying the constitutionality of the new tax on capital reductions resulting from share buybacks. The taxpayers, multiple large companies, challenged administrative tax guidance interpreting the 2025 share buyback tax and raised priority constitutional questions. The taxpayers argued that the new tax violated constitutional equality guarantees by creating unjustified differences between companies based on capital premiums. Upon review, the Council found that: 1) the legislature aimed to raise revenue by taxing large companies’ share-buyback capital reductions; 2) the tax base relies on objective and rational criteria and reflects the scale ...