Investing in forests: DEFI Forest tax credit

The DEFI Forêt is an income tax credit for forestry investments (Article 200 quindecies of the French General Tax Code). Its rate is 25%. It applies to the purchase of wooded or afforested land, shares in forestry groups or forestry savings companies, and to forestry work. Acquisition expenses are eligible up to a limit of €6,250 for a single person and €12,500 for a couple. The conservation commitment is 15 years for a direct investment.

This page describes the tax credit according to the BOFiP (Official Bulletin of Public Finances) and the simulator on the impots.gouv.fr website. It does not cover the IFI (French wealth tax) on woods and forests, the choice of a forest or a group of forests, or the combination with other tax advantages, which the consulted sources do not address.

The device in a table

Source: BOFiP, BOI-IR-RICI-60-20-20 (version of 12/06/2024), § 90, § 130, § 140, § 145 and § 175; rates of 76 % and 25 % confirmed by the simulator on the impots.gouv.fr website. The ceilings apply per category of expenses; how they interact with each other is not discussed here.

The tax credit is not a reduction: if the credit exceeds the tax due, the BOFiP states that "the excess is refunded".

What has changed since 2023

The 2023 Finance Act codified the scheme in Article 200 quindecies, effective January 1, 2023, and repealed Article 199 decies H. The Acquisition and Insurance components became tax credits. The Law of July 10, 2023 (Law No. 2023-580, Article 34) subsequently eliminated the maximum size of the management unit for acquisitions made since July 12, 2023. It also extended the presumption of sustainable management guarantee under Article L. 124-2 of the Forestry Code to works, for expenses incurred since that date.

Who can benefit from it?

The BOFiP (Official Bulletin of Public Finances) targets individuals "whose tax domicile, as defined in Article 4 B of the French General Tax Code (CGI)," is located in metropolitan France or the French overseas departments and regions (DOM). Non-residents are excluded, except for "Schumacker non-residents." Members of a forestry group or a SEF (Forestry and Forestry Company) cannot claim the tax credit for acquisitions made by the group, but they can claim it for work carried out and insurance premiums, in proportion to their ownership interests.

Conditions by type of operation

• Acquisition of land. Since July 12, 2023, only a minimum threshold of 4 hectares applies to the management unit after acquisition. For acquisitions made between January 1 and July 11, 2023, the unit had to be between 4 and 25 hectares.
• Shares in forestry groups or SEFs. The group or SEF must implement an approved simple management plan or standard management regulations. For SEF shares, the base is limited to 60 % of the amount.
• Works. The plots must present a guarantee of sustainable management, or benefit from the presumption of article L. 124-2 of the forestry code when the owner has had a program of cutting and works approved by the CNPF.
• Public aid. The BOFiP (Official Bulletin of Public Finances) states that "the deduction of public aid takes place before the spending cap is applied." Therefore, it reduces the expenditure before the cap is applied.

The conservation commitment

In the event of non-compliance, an additional tax assessment will be levied for the year of the termination. The BOFiP (Official Bulletin of Public Finances) specifies that the reassessment occurs "within the normal reassessment period, i.e., within three years of the event that triggered it." It provides for cases where the tax credit is not reassessed, notably dismissal, death, disability (2nd or 3rd category), gift (the donees must assume the commitments undertaken by the donor for the remaining holding period), expropriation, marriage, divorce, civil partnership (PACS), or separation. These cases are subject to conditions: read paragraphs 250 and 310 before making any decision to transfer the tax credit.

Credit is also subject to compliance with Regulation (EU) No 1407/2013 (de minimis rule).

The timetable

• The year of credit. For a purchase, only sums paid by December 31st of the year qualify for the tax credit. For work carried out in installments, the tax credit is linked to the year of the last payment; for insurance, to the year of payment.
• The end date. A BOFiP (Official Bulletin of Public Finances) update dated June 12, 2024 (Law No. 2023-580) states: "This provision applies to forestry operations carried out until December 31, 2027." An earlier update (June 14, 2023) mentioned December 31, 2025: the latter extends the former. This page does not include any measures from the 2026 Finance Law on this point: please check the date in the updated version of Article 200 quindecies.

The overall cap

The tax credit for forestry investments is included in the table of the €10,000 ceiling of the BOFiP (BOI-IR-LIQ-20-20-10-10, version of 27/08/2026): it is included in the overall cap on tax benefits and is not among the exclusions.

How to declare

For amounts paid in 2025, the simulator on the impots.gouv.fr website cites line 7UN of form 2042-RICI for land acquisition, 7UL for insurance premiums, 7UP for work carried out, and 7UT for work following a disaster. Box 7UC concerns a different scheme: forest fire prevention. Refer to the numbers on the form for that year.

Investment in forests and DEFI Forêt: a numerical example (fictitious profile)

Situation. A hypothetical married couple, filing jointly and residing in France, is considering two transactions, calculated separately and carried out in different years. The first transaction involves acquiring a wooded plot of land for €40,000, within a management unit of at least 4 hectares, without receiving any public assistance. The second transaction involves paying €20,000 for forestry work on plots covered by a sustainable management guarantee, also without receiving any public assistance. These are hypothetical scenarios.

Issue. What tax credit is calculated for the acquisition and for the work, and what happens to the portion that exceeds the ceiling?

Strategy. Deduct the expense up to a limit of €12,500 (couple), then apply 25 %. For the work, carry forward the excess up to the same limit to the following years (up to four years).

Result.

For a single person, the same €40,000 purchase is reduced to €6,250, resulting in a tax credit of €1,562.50. The calculation considers each transaction individually; it does not take into account the overall limit or how the limits per category combine if they occur in the same year. The profile is hypothetical, and the result is not indicative of your specific situation.

Forest investment and DEFI Forêt: what changes depending on your situation

• Your family situation. The ceilings are €6,250 for a single person and €12,500 for a couple subject to joint taxation.
• The type of operation. Acquisition, shares in a group or SEF, works and insurance do not have the same ceilings or the same commitments.
• The surface. A management unit of at least 4 hectares is required for an acquisition made since July 12, 2023.
• The detention horizon. 15 years live, until December 31 of the 8th year for shares.
• Your tax residence. He must be in France, except in the case of non-resident Schumacker.
• Your other tax advantages. The credit is included in the overall limit.

The rule depends on your situation. No results are guaranteed.