{"id":1664,"date":"2026-01-20T16:08:46","date_gmt":"2026-01-20T15:08:46","guid":{"rendered":"https:\/\/www.alkeom.law\/?p=1664"},"modified":"2026-01-28T23:14:25","modified_gmt":"2026-01-28T22:14:25","slug":"passing-on-a-family-owned-business-in-france-under-the-dutreil-scheme-practical-qa","status":"publish","type":"post","link":"https:\/\/www.alkeom.law\/en\/passing-on-a-family-owned-business-in-france-under-the-dutreil-scheme-practical-qa\/","title":{"rendered":"Passing on a Family-Owned Business in France Under the Dutreil Scheme \u2013 Practical Q&A"},"content":{"rendered":"\n
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Often regarded as a key mechanism for preserving France\u2019s SME sector, the so-called Dutreil Scheme (Pacte Dutreil<\/em>) provides for a significant reduction in transfer taxes when a business is passed on to the next generation by way of inheritance or gift.<\/p>\n\n\n\n

The application of this regime is, however, subject to strict conditions set out in Articles 787 B<\/a><\/strong> (in respect of transfers of shares in companies) and 787 C<\/a><\/strong> (in respect of transfers of sole proprietorships) of the French General Tax Code (Code g\u00e9n\u00e9ral des imp\u00f4ts<\/em>). Compliance with these conditions by both the transferor and the beneficiaries, together with a clear understanding of the undertakings they entail, is essential to ensure the proper application of the regime at the time the transfer occurs and to avoid any tax reassessments.<\/p>\n\n\n\n

It should also be noted that the Dutreil Scheme is frequently challenged. In this respect, the forthcoming Finance Act will need to be monitored closely.<\/p>\n\n\n\n

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Our Law Firm advises entrepreneurs and shareholders on investment structuring and business transfers.<\/h3>\n\n\n\n

Let\u2019s discuss your project and advisory needs\u2014we\u2019re here to guide you.<\/h3>\n\n\n
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Exemption from Transfer Taxes under the Dutreil Scheme: Conditions Applicable to All Transfers<\/h2>\n\n\n\n

Which Transfers May Benefit from the Dutreil Scheme?<\/h3>\n\n\n\n

The partial exemption from transfer taxes provided for under the Dutreil Scheme applies both to the transfer of shares or equity interests in companies (Article 787 B of the French General Tax Code<\/a><\/strong>) and to the transfer of sole proprietorships (Article 787 C of the French General Tax Code<\/strong><\/a>).<\/p>\n\n\n\n

The transfer may occur either upon the decease of the original owner (inheritance) or by way of a lifetime gift.<\/p>\n\n\n\n

What Conditions Apply to the Transferred Businesses or Companies?<\/h3>\n\n\n\n

Whether the transfer concerns a sole proprietorship or a company, the business activity carried on as a principal activity must be industrial, commercial, artisanal, agricultural or professional in nature.<\/p>\n\n\n\n

Businesses or companies whose activity is predominantly civil\u2014such as the management of private assets\u2014are therefore excluded from the scope of the regime.<\/p>\n\n\n\n

Can the Transfer of a Holding Company Benefit from the Dutreil Regime?<\/h3>\n\n\n\n

As a matter of principle, pure holding companies are excluded from the scope of the Dutreil Regime. However, pursuant to Article 787 B of the French General Tax Code<\/a><\/strong>, holding companies that act as active holding companies (holdings animatrices<\/em>) are deemed to carry on a commercial activity.<\/p>\n\n\n\n

This includes holding companies whose main activity, in addition to managing a portfolio of shareholdings, consists in actively participating in the management and strategic direction of the group they head, composed of companies that are directly or indirectly controlled and that carry on an industrial, commercial, artisanal, agricultural or professional activity.<\/p>\n\n\n\n

> Also read on business transfers under Dutreil Scheme: \u00ab<\/em> Transfer of French Company Shares by Inheritance: The Dutreil Scheme Requirements Are Assessed as of the Date of Decease<\/a><\/mark><\/em> \u00bb<\/h5>\n\n\n\n

Eligibility Conditions Specific to the Transfer of Company Shares or Equity Interests<\/h2>\n\n\n\n

The benefit of the Dutreil Scheme, in the context of the transfer of shares or equity interests in a family-owned company, is subject to a double commitment requirement:<\/p>\n\n\n\n