Home / Business owners & succession / Disadvantages of the Dutreil pact
Dutreil pact
Dutreil Pact: 75 % exemption, paid freely.
The Dutreil agreement reduces inheritance tax on a business by a factor of four or more. In exchange, the family commits for at least eight years, starting February 21, 2026, and a single procedural error can jeopardize the entire agreement. Here are each requirement and its associated costs.
The six constraints
What you agree to by signing.
During the collective commitment and then during the 6 years The shares of each heir remain within the family. Any proposed sale to a third party within this timeframe is incompatible with the agreement.
17% Financial rights and 34 % of voting rights for a non-listed company, 10 % and 20 % for a listed company. A poorly planned capital increase can cause the company to fall below this threshold.
One of the signatories manages the company during the collective commitment and 3 years after the handover. Without a ready successor, the pact is fragile.
Shares in a holding company are only eligible if it actively manages its group. The tax authorities require evidence : agreements, reports, decisions.
In the case of a gift with divided ownership, the usufructuary's vote must be limited, in the articles of association, to decisions on profits (Article 787 B of the CGI).
Since February 21, 2026, residences, passenger vehicles, boats or works of art owned by the company no longer benefit of the exemption.
If a commitment is broken
What happens, and what it costs.
| Event | Consequence |
|---|---|
| An heir sells his securities during his 6 years | He loses the exemption and pays the duties, plus 0.20 % of interest per month since the transfer (article 1727 of the CGI) |
| No signatory is in charge for the 3 years | Exemption called into question |
| The thresholds of 17 % and 34 % are no longer met during the collective commitment | Exemption called into question |
| The holding company is not recognized as an operating company | Exemption refused on his securities |
The company and the heirs must be able to prove, upon request from the authorities, that each commitment has been fulfilled. A pact remains in effect throughout its duration, not just on the day it is signed.
Worked example
A company worth €4 million: €78,194 in rights instead of €1.23 million.
A 65-year-old executive wants to give away her company, valued €4 million, to her two children, one of whom already runs the company.
Each child receives €2 million. After a deduction of €100,000, €1.9 million is taxed according to the following scale: €617,394 €1,234,789 per child in total.
75 % are exempt: €500,000 per child, €400,000 taxable, €78,194 in duties, reduced by half because the gift is made in full ownership before age 70 (article 790 of the CGI): €39,097 each.
€78,194 instead of €1,234,789. In exchange: 8 years without selling, the child in charge remains in position for at least 3 years, and non-professional assets leave the company before the deed.
Frequently asked questions
What clients ask us.
Can the company be sold under a Dutreil agreement?
Not during the commitment period: 2 years of collective commitment, then 6 years for each heir from February 21, 2026 (Article 787 B of the French General Tax Code). If a sale is likely within eight years, the agreement is not the right tool, or it must be combined with a partial sale planned in advance.
My pact was signed before February 21, 2026: what changes?
For transfers made before this date, the individual commitment remains for 4 years. The new rules—6 years and exclusion of non-business assets—apply to transfers made since then. Now is the time to review the company's balance sheet before transferring assets.
How do I pay the remaining royalties?
For a transfer under a Dutreil agreement, taxes can be deferred for 5 years and then paid over 10 years (Article 397 A of Appendix III to the French General Tax Code). A assurance-vie policy, with a benefit of €152,500 per beneficiary excluding taxes (Article 990 I of the French General Tax Code), also provides liquidity without impacting the company's cash flow.
Can a holding company sign a Dutreil agreement?
Yes, if it is a managing company: it directs the group's policy and controls its subsidiaries. A holding company that merely owns securities or real estate is not entitled to this (article 787 B of the French General Tax Code).
