TRANSFER YOUR BUSINESS TO YOUR HEIRS WITH COMPLETE PEACE OF MIND HURRY, HURRY, HURRY!
The Dutreil Pact: a powerful and tax-efficient transfer tool
The Dutreil Pact is a preferential tax regime provided under Article 787 B of the French Tax Code (CGI).
It is a powerful estate-planning mechanism allowing, under certain conditions, a 75% exemption on inheritance or gift taxes (transfer duties) based on the value of the shares or the business transferred.
How transfer duties work
Transfer duties (the taxes due on a gift or inheritance) range from 5% to 45%, depending on the value of the assets transferred, according to Articles 777 to 778 bis of the CGI.
In other words, if you transfer your company under the Dutreil Pact, you will only pay taxes on 25% of the company’s value, rather than on the full amount.
Example:
If you transfer a company valued at €5,000,000 to your children, the taxable base will be reduced by 75%, i.e. €3,750,000.
The taxable amount for calculating transfer duties will therefore be €1,250,000.
Conditions for the 75% exemption under the Dutreil Pact
The nature and activity of the transferred company are key eligibility criteria.
Only the following activities qualify (to the exclusion of all others):
- industrial, commercial, craft, agricultural, or liberal (professional) activities;
- active holding companies, provided they can demonstrate active involvement
in the management and strategic direction of their subsidiaries engaged in qualifying activities.
The status of an active holding company is often a source of litigation with the French tax authorities.
This “active management” role is assessed at the time of the transfer, meaning that the company must already be actively managing its subsidiaries.
Therefore, a holding company created solely for the purpose of a transfer cannot benefit from the Dutreil Pact.
It is essential to be advised by an experienced lawyer to properly document the company’s “active holding” status — this involves setting up management agreements, adjusting governance structures, formalizing group-level decision-making, and allocating staff to group functions.
Activities excluded from the Dutreil Pact
- Businesses primarily engaged in real estate activities, including furnished rentals;
- Passive holding companies.
The commitments required under the Dutreil Pact
To benefit from the 75% exemption, the parties to the Pact must make several binding commitments:
1. Collective holding commitment
The transfer must cover at least 17% of financial rights and 34% of voting rights of the shares or the company transferred.
The transferor (business owner) must agree to hold the shares for at least two years.
2. Individual holding commitment
The beneficiary (heir) must commit to holding the shares for at least four years following the end of the collective commitment.
Possible tightening of the Dutreil Pact regime
The 2025 Finance Bill initially proposed tightening the Dutreil regime by limiting it to assets directly tied to the company’s operational activity.
However, this restriction was ultimately not retained in the final 2025 Finance Act, leaving some breathing room — but for how long?
The tax authorities closely monitor compliance with all the conditions and timelines. Any breach could void the exemption, leading to severe financial consequences (payment of full transfer duties, penalties, etc.).
Don’t wait — act now
There is no guarantee that this favorable tax regime will be maintained in the coming years.
It is therefore urgent to implement it as soon as possible, with the support of a competent and experienced tax lawyer.
TF Associés can assist you
TF Associés assists and advises you in setting up your Dutreil Pact anywhere in France, ensuring full compliance and optimal tax efficiency.
.png)
