Family business succession in France : Pacte DUTREUIL

Pacte Dutreil : a favorable tax regime

The Pacte Dutreil offers a favorable tax regime for the transfer of family businesses. Under certain conditions, it allows for the exemption of registration duties for the free transfer of company shares. This exemption reaches 75% of the value of the shares, which is a preferential regime for donations and successions of family businesses. The Pacte Dutreil thus encourages family business transfer by significantly reducing tax costs and ensuring the continuity of the company.

Conditions for benefiting from the Pacte Dutreil

The Pacte Dutreil is intended for companies that meet certain conditions. Firstly, they must be commercial companies or individual companies carrying out commercial, industrial, artisanal, liberal or agricultural activities. Secondly, they must be mostly held by one or several people from the same family. To benefit from the Pacte Dutreil, family members who hold the company must commit to retaining the shares for a minimum of 2 years after the transfer. This condition ensures that the company will not be sold or liquidated immediately after the transfer. Finally, the company must be evaluated by an auditor or accountant to determine its value and ensure that it meets the eligibility criteria for the Pacte Dutreil.

Advantages of the Pacte Dutreil

The Pacte Dutreil has many advantages for families who wish to transfer their business. Firstly, it significantly reduces the tax costs associated with the transfer of the company by limiting the impact of inheritance and gift taxes. This reduction can represent a significant saving for families, particularly in the case of high-value business transfers. Secondly, the Pacte Dutreil ensures the continuity of the company by avoiding its sale or liquidation. Transferring a company can be complex and difficult to manage, especially in the case of a family business where family members may have different interests and expectations. The Pacte Dutreil thus encourages family business transfer by facilitating negotiations and reducing tax costs. Finally, the Pacte Dutreil ensures job sustainability in the company. A successful business transfer ensures the continuity of its activity and therefore the sustainability of the jobs it generates. This is particularly important in the current economic context, where job preservation is a priority.

Setting up the Pacte Dutreil

The Pacte Dutreil is a relatively simple procedure to set up. Firstly, family members who hold the company must sign a collective commitment to retain the company shares for a minimum of 2 years. This commitment must be registered with the tax authorities within 6 months of its signing. Secondly, the company must be evaluated by an auditor or accountant within 24 months before the transfer of the company. Finally, at the time of the company transfer, heirs or donees must declare the application of the Pacte Dutreil in their inheritance or gift declaration.

Limits of the Pacte Dutreil

Although the Pacte Dutreil has many advantages for families wishing to transfer their business, it also has certain limits. Firstly, it is intended for family businesses that meet certain conditions. Companies that do not meet these conditions cannot benefit from the Pacte Dutreil. Secondly, the Pacte Dutreil imposes a minimum period of 2 years during which family members who hold the company must retain the shares. This condition can be binding for families who wish to sell the company quickly after the transfer. Finally, the Pacte Dutreil does not exempt heirs or donees from paying inheritance or gift taxes. It simply reduces the amount of these taxes.

The Pacte Dutreil is a legal regime created to encourage family business transfer in France. It reduces the tax costs associated with the transfer of the company by limiting the impact of inheritance and gift taxes. The Pacte Dutreil also has other advantages, such as ensuring the continuity of the company, job sustainability, and facilitating negotiations between family members. Although the Pacte Dutreil has certain limits, it remains a favorable legal regime for families wishing to transfer their business. It ensures the continuity of the company, job sustainability, and reduces the tax costs associated with the transfer of the business.