Pacte Dutreil: how to optimise the transfer of your business in 2026

The pacte Dutreil (Dutreil agreement), set out in articles 787 B and 787 C of the Code général des impôts (French General Tax Code), is a tax scheme granting a 75% exemption on the value of shares transferred by gift or inheritance, excluding assets not used for the business activity (so-called luxury or non-operating assets, excluded since the loi de finances pour 2026 (2026 Finance Act)). In practice, only 25% of the eligible value of the business is subject to transfer duties, which considerably reduces the tax cost of the transfer.

This mechanism is designed for business owners who wish to pass their company on to their heirs or donees while preserving the continuity of the business. It applies both to companies (article 787 B) and to sole proprietorships (article 787 C).

To qualify for the exemption, three cumulative conditions must be met. First, a collective holding undertaking of at least two years must be signed by at least two shareholders, covering at least 17% of the financial rights and 34% of the voting rights for unlisted companies.

Second, each beneficiary of the transfer must give an individual undertaking to hold the shares for six years from the expiry of the collective undertaking (a period extended from four to six years by the loi de finances pour 2026, for transfers carried out from February 21, 2026).

Third, one of the signatories of the collective undertaking or one of the beneficiaries must hold an effective management position in the company throughout the duration of the collective undertaking and for the three years following the transfer.

Failure to comply with any of the conditions results in the forfeiture of the exemption for the beneficiary concerned and the recovery of all the duties relating to that beneficiary, plus late-payment interest. The most frequent forfeiture situations involve the sale of shares during the undertaking period, the absence of effective management or a change in the company's activity.

Another common pitfall lies in the drafting of the collective undertaking. The clauses must be precise as to the shares concerned, the signatory shareholders and the duration of the undertaking. Ambiguous drafting can lead the tax authorities to challenge the benefit of the exemption.

Finally, restructuring operations (merger, partial asset contribution, demerger) carried out during the undertaking period must be anticipated and properly structured from a legal standpoint so as not to jeopardise the scheme.

Combining the pacte Dutreil with a gift involving a split of legal ownership (démembrement de propriété, the French separation of bare ownership and usufruct) is one of the most effective strategies. By transferring the bare ownership of the shares, the business owner retains the usufruct and the associated income, while reducing the taxable base through the scale set out in article 669 of the CGI.

Using a family holding company can also make it easier to structure the agreement by consolidating shareholdings and simplifying the management of the holding undertakings.

For early transfers, the donation-partage (French inter vivos distribution among heirs) has the advantage of fixing the value of the transferred assets at the date of the gift, thereby avoiding revaluations when the estate is settled.

Setting up a pacte Dutreil requires close coordination between the tax lawyer, the notary and the accountant. The lawyer is involved in drafting the undertakings, analysing the capital structure, verifying the eligibility conditions and anticipating the risks of the scheme being challenged.

Our Wealth and estate planning and Corporate law teams in Lyon assist business owners in structuring and implementing their transfer, taking into account the tax, legal and family dimensions of the project.