The transfer of a business is a particularly sensitive stage. Between the often high value of goodwill, the weight of taxation, and the challenges of operational continuity, the process can quickly become a true challenge for successors.
Indeed, the transfer of a family business remains heavily taxed: in the event of a donation or inheritance, taxes are calculated on the total value of the company, which can weaken or even jeopardize the takeover if no planning has been done beforehand.
• What does the Pacte Dutreil allow?
In the context of business succession, the Pacte Dutreil is a major fiscal instrument. It applies exclusively to companies engaged in an actual economic activity. Subject to certain conditions, this mechanism allows for a 75% exemption on the value of the transferred business, whether it involves business assets or company shares.
For illustration, a company valued at 1,200,000€ would only be taxed on 300,000€, facilitating the transfer to heirs or buyers without forcing them to sell the business to pay the tax bill.
The new 2026 Finance Act does not abolish this scheme but extends its duration and refocuses it on strictly professional activities.
Therefore, the Pacte Dutreil still remains a mandatory tool for business succession yet its good use will now require heightened vigilance and a rigorous assessment in advance
• What are the conditions to be met?
– Commitment to retain shares
Benefiting from the Pacte Dutreil is subject to a dual commitment to retain shares, following a logic of operational continuity.
- Collective Commitment: Before the transfer, partners must commit to holding the shares for a minimum of two years. It is a prerequisite.
- Individual Commitment: Following this, the shares can be transferred to the beneficiary (heir or donee), who is then required to hold them. Since the 2026 Finance Act, the duration of this individual commitment has been increased from four to six years. Consequently, the scheme now imposes a total minimum retention period of eight years.
The purpose of this prolonged duration is to ensure a real continuity and not only an immediate resale based only on opportunistic ends.
– Effective operation
The second condition would be that one of the heirs or donees must exercise a management function within the transferred company (manager, corporate officer, or operator). The purpose is to promote the continuity of a working tool rather than passive asset ownership.
In other term, the fiscal advantage is correlated to an actual exploitation which provides the continuity of the activity
• Who can benefit from the Pacte Dutreil?
The Pacte only applies for the industrial, commercial, artisanal, agricultural, or professional services sectors provided that their activity is real and dominant.
The 2026 Finance Act reinforced this by expressly excluding entities whose purpose is limited to managing their own wealth (financial or real estate assets).
In cases of mixed activity, the operational activity must prevail. To evaluate this, authorities look at the share of turnover, the nature of assets, and the material/human resources used.
Case law confirms this demanding approach. In a decision of 14 October 2020 (No. 18-17.955), the Court of Cassation held that the Dutreil tax exemption applies to companies whose professional activity is their principal activity. This assessment must be based on a set of concrete factors, such as the nature of the activity carried out, the organization of the company, and the means implemented, and cannot be limited to a purely accounting analysis.
In this case, a holding company carrying out both a civil activity (shareholding management) and an economic activity (group management and coordination) had been transferred by way of donation. The Cour d’Appel had granted the exemption primarily on the basis of accounting data. However, the Court of Cassation set aside this decision, criticizing the lower court for failing to verify the company’s actual activity in concrete terms. The Court thus reiterated that it is necessary to go beyond the figures and assess the overall situation.
• Changes from the 2026 Finance Act
Prior to 2026, the Dutreil scheme already allowed for a 75% exemption of the company’s value, subject in particular to the obligation to retain the shares for a specified period. The regime remained relatively flexible, especially regarding the assets taken into account.
The 2026 Finance Law introduces several adjustments to the Dutreil scheme, without calling its principle into question, but rather by making it more stringent. On the one hand, the 75% exemption now applies only to assets effectively used in the company’s business activity. Non-operational assets are excluded, which may reduce the tax advantage where the company holds assets that are not directly related to its operations.
On the other hand, the duration of the individual shareholding commitment is extended from four to six years. This development reinforces the requirement of stability and reflects the legislator’s intention to encourage long-term transfer arrangements.
In practice, the reform calls for particular attention to the company’s structure and organisation prior to any transfer.
• What are the risks of non-compliance?
In the event of non-compliance, the penalty is immediate: the 75% exemption is lost, the transfer taxes initially saved are payable, and late payment interest is applied.
Unlike other schemes, there is no partial penalty: the reassessment is total and retroactive. In other words, an error can lead to the loss of the entire tax advantage, even several years after the transfer.
Risk situations include: the sale of shares before the end of the holding period commitments, the absence or interruption of the required management function, and poor implementation or a lack of formalization of the scheme.
Consequently, this means that the Dutreil agreement leaves very little room for improvisation. A poorly prepared transfer or an unforeseen change in the company’s management can be enough to jeopardize the entire scheme.