In summary…
The Dutreil pact (Article 787 B of the French Tax Code) exempts 75% of the value of shares in an operating company passed on by gift or inheritance, subject to a 2-year collective retention commitment and a 6-year individual commitment (4 years for transfers before 21 February 2026), and to one of the signatories holding a management role for 3 years after the transfer.
Eligibility for the Dutreil Pact is contingent upon the company's industrial, commercial, artisanal, agricultural, or professional activity. Active holding companies (as defined in Article 787 B of the French General Tax Code, as established by Article 23 of Law No. 2023-1322 on the 2024 Finance Act) are eligible subject to operational substance requirements. The expatriation of the donor, the deceased, or the heirs does not invalidate eligibility for the Pact if the conditions of commitment and management are met. Policy programs published in 2024-2025 anticipate, in certain post-2027 scenarios, the capping or elimination of the scheme. The applicable rule is that in effect on the date of transfer: a six-year individual commitment for any transfer occurring on or after February 21, 2026.
The Dutreil Pact Mechanism
The Dutreil Pact is a mechanism for optimizing the transfer of family businesses. It transforms inheritance tax, which can reach 45% in direct line (marginal rate above €1,805,677 per beneficiary), into tax calculated on only 25% of the share value. This results in an exemption of 75% combined with an additional allowance of 50% in the case of a gift of full ownership by a donor under 70 years of age (Article 790 of the French General Tax Code). The 50% reduction under Article 790 is applied last, on taxes already calculated on 25% of the value, for a gift of full ownership by a donor under 70 years of age.
Three cumulative conditions of Dutreil pact and expatriation
Collective conservation commitment (article 787 Ba CGI).
At the time of transfer, the shares must be subject to a collective holding commitment of at least two years, signed by the deceased or the donor with other shareholders. The commitment must cover at least 17 % of the financial rights and 34 % of the voting rights for unlisted companies (10 % and 20 % for listed companies). A deemed commitment (without prior formalization) is permitted in certain circumstances.
Individual conservation commitment.
Each heir or donee must make an individual commitment to retain the securities received for a period of six years (four years for transfers prior to February 21, 2026) from the expiry of the collective commitment. Breach of the individual commitment will result in the additional transfer tax being payable by the beneficiary concerned, with late payment interest as provided for in Article 1727 of the French General Tax Code (CGI).
Exercise of a direction function.
One of the signatories of the collective undertaking or one of the heirs/donees must effectively hold a management position during the collective undertaking period and then for three years following the transfer of shares in the company whose shares are being transferred. This condition is essential and determines the continued eligibility for the exemption.
The specific case of active holding companies
Active holding companies, meaning those that, in addition to managing their investments, actively manage the controlled companies (strategic direction, internal services, service contracts), are eligible for the Dutreil Pact. The 2024 Finance Law clarified the criteria for qualifying as an active holding company, defining it as a company whose primary activity is actively participating in the management of its group's policy (BOFiP, BOI-ENR-DMTG-10-20-40-10, § 55).
For a manager who has structured their assets through a asset holding company, The classification of a holding company as an active holding company is a critical condition for the Dutreil tax benefit. A holding company without real operational substance is reclassified as a pure holding company and excluded from the scheme.
The interplay between the Dutreil Pact and expatriation
Donor or deceased expatriate.
The benefits of the Dutreil Pact remain valid if the transferred company meets the conditions of the scheme (a foreign company can benefit under the same conditions) and if the conditions for signing the collective agreement and for management are met. The expatriation of the donor or the deceased is not in itself grounds for forfeiture.
Expatriate heirs or donees.
Heirs residing abroad can benefit from the Dutreil Pact on inherited French securities, provided they sign the individual holding commitment. Maintaining the exemption requires one of them, or another heir, to hold a management position.
Article 750 ter CGI: potential double inheritance tax.
If the heir resides in France or if the inherited assets are located in France, French inheritance tax applies. The country of residence of the deceased or the heir may also impose its own tax. Bilateral inheritance tax treaties (where they exist) resolve these conflicts; otherwise, Article 784 A of the French General Tax Code (CGI) provides for a tax credit on foreign taxes paid on foreign assets.
Risk of post-2027 reform
The Dutreil Pact is regularly cited as a potential target in radical left-wing political programs. Reform options mentioned in public documents for 2024-2025 include: total abolition of the scheme, capping the exemption at a certain threshold (for example, 5 million euros per beneficiary), stricter commitment conditions, and abolishing the regime for active holding companies.
The retroactive application of a reform to existing agreements (retrospection on commitments not yet expired) is legally possible but constitutionally restricted. Existing commitments would likely benefit from a grandfathering clause, but this protection is never guaranteed in advance.
Strategy 2026: Secure the transmission before uncertainty
Action 1 — Sign the collective commitment in 2026.
The collective commitment can be signed in advance of a planned transfer, without needing to know the exact date of the transfer. The applicable regime is that in force on the date of the transfer (gift or death), and not on the date the commitment is signed: six years of individual commitment for any transfer from February 21, 2026.
Action 2 — Activate a gift in full ownership or divided ownership before the end of 2026.
For a donor under 70 years of age, a gift of full ownership combines the Dutreil exemption (75 %) and the tax reduction of 50 % (Article 790 of the French General Tax Code). For a donor over 70 years of age, the split of ownership (gift of bare ownership) remains very advantageous and preserves the usufruct (and therefore the income) for the donor.
Action 3 — Rigorously document the qualification of active holding company.
If the transfer involves the shares of a family holding company, a convincing record of the management (annual minutes of the strategic committee, service agreements, invoices, presence of an operational manager) must be compiled before the end of 2026. A post-transfer tax audit that reclassifies the holding company as a pure management company would retroactively invalidate the Dutreil advantage.
Balmont Reading
The Dutreil Pact is a major lever in French law for passing on wealth. It is also the most politically exposed. The prudent rule in 2026 is to prioritise Dutreil transfers for major family estates, without waiting for a transfer on death that might coincide with a tougher tax framework. On the firm’s cases, we systematically accelerate the collective commitment and the gift in full ownership for family estates exceeding €10 million — the tax difference between a Dutreil transfer in 2026 and a Dutreil transfer in 2028 under a tougher regime can reach 20% to 30% of the value transferred.
Sources & references
Dutreil Pact Mechanism and 75% Exemption
- Legifrance — Article 787 B of the French General Tax Code
- BOFiP — Partial exemption and reassessment (BOI-ENR-DMTG-10-20-40-20)
- Notaries of France — Dutreil Pact and the transfer of family businesses
Engagement thresholds and management function
50% reduction for % gifts in full ownership (donor < 70 years old)
- Legifrance — Article 790 of the French General Tax Code
- BOFiP — Reduction of duties (BOI-ENR-DMTG-20-30-20-50)
Scale of rights in direct line (5 % to 45 %)
Active holding company — definition codified by the 2024 Finance Law
- Village of Justice — Clarifications of the 2024 Finance Law on the Dutreil Pact
- Deloitte Law Firm — Update of the BOFiP on the Dutreil Pact
