France highest court has struck down a top income tax rate of 75%, the centrepiece of Socialist president Francois Hollande's tax reforms.
The rate would have applied to those earning more than €1 million ($NZ1.6 million).
Though it was seen as largely symbolic since it would have only applied to some 1,500 people for a temporary period of two years, the policy has still be the subject of fierce debate, the BBC reports.
French actor Gerard Depardieu recently announced he was moving to Belgium to avoid taxes, sparking a furious reaction from some on the left.
Businesses were also angered at the tax proposal and there was speculation people employed in high-income jobs like banking and finance would move elsewhere.
In its ruling on Saturday, the Constitutional Council said the proposed rate failed to impose the tax equally because, unlike other forms of income tax, it was to be applied to individuals rather than households
For example, that meant a household in which one person earned more than €1 million would pay the tax, but a household in which two people earned €900,000 each would not have to pay.
Despite the court ruling the measure is likely to be back in some form. Prime Minister Jean-Marc Ayrault has said the government would propose a new system.