Contributing a sole proprietorship to a company constitutes a cessation of business for tax purposes: the capital gains realized upon the contribution must be taxed. The provisions of Article 151 octies of the French General Tax Code (CGI) allow, by option, the deferral of capital gains tax on non-depreciable assets. Capital gains tax on depreciable assets is levied in the company's name, with the tax liability being reintegrated over time, according to the French Tax Administration's official guidelines (BOFiP). This deferral is not an exemption: it ends upon a specific event, such as the sale of the shares received in exchange for the contribution.
This page addresses the scope of the deferral and its effects. It does not cover social security contributions on capital gains, tax calculation, transfer upon death, or the detailed procedure for making a contribution. It also does not address micro-entrepreneurs: the public service information sheet on contributions clearly states that it does not apply to them.
What the intake triggers
According to the government information sheet on capital contributions, the transaction "is considered a business cessation that must be declared." Upon cessation, the company's unrealized capital gains are recognized. Tax deferral is the mechanism that avoids taxing them all at that time.
The conditions of the postponement
The BOFiP (BOI-BIC-PVMV-40-20-30-10, version of 03/03/2014) classifies the scope of application into three criteria.
| Criteria | What the BOFiP says |
|---|---|
| The contributor | He usually carries out transactions on his own behalf and for profit. Non-professional landlords of furnished properties are excluded. He is not required to be subject to a standard tax regime. Contributions made by legal entities are not included. |
| The content of the contribution | A sole proprietorship or a complete branch of activity, generally including all assets and liabilities. As an exception, current assets, debts, and bank loans may be excluded from the contribution if the business continues. If a current asset is not contributed, the directly related liability must also be excluded. |
| The beneficiary company | It can take any form of company authorized by law. It must be subject to a standard tax regime. An economic interest group is excluded. |
The approval of the administration, formerly required, is abolished for contributions from 1 January 1988. The deferral applies by option.
The option is exercised in the contribution agreement, jointly by the contributor and the company (BOI-BIC-PVMV-40-20-30-30).
What is postponed, what is not
The BOI-BIC-PVMV-40-20-30-20 (version of 22/06/2022) distinguishes the elements of the contribution.
| Item | Treatment according to BOFiP |
|---|---|
| Non-depreciable assets (goodwill, for example) | «"The taxation of capital gains on non-depreciable assets is deferred"; the deferral runs until the sale for consideration. |
| Depreciable assets | The net capital gain is taxed in the name of the company receiving the contribution. The reinstatement is made in equal installments over a period of five years, and fifteen years for buildings (BOI 4607, § 270). |
| Short-term capital gains | When the deferral ends, these amounts are added to the income for the year in which the event occurs. The BOFiP (Official Bulletin of Public Finances) details specific cases: these should be examined in your file. |
Capital gains are not included on income tax return form no. 2042. They appear on the declaration of professional profits for the financial year in which the company contributes its activity.
When the postponement ends
The deferral ends upon the sale, repurchase, or cancellation of the shares received in exchange for the contribution. If the company sells a contributed asset beforehand, this sale terminates the deferral for the corresponding capital gains. The BOFiP (French Official Tax Bulletin) specifies that "sale for consideration" includes sales, contributions to a company, and exchanges.
Tax is then levied for the year in which the event occurs. For long-term capital gains, the rate in effect for that year applies.
If the deferral is maintained through a gratuitous transfer, the beneficiary must formally commit to paying the capital gains tax. This page does not provide further details on this scenario.
When the postponement does not apply
The BOFiP (Official Bulletin of Public Finances) states that the regime "does not apply when capital gains are eligible for an exemption." It cites Article 151 septies of the French General Tax Code (CGI). The conditions for this exemption are not addressed here; they must be verified before signing the contribution agreement.
The sole proprietorship that opted for corporate income tax
The public service information sheet on contributions (verified on 21/02/2026) indicates that, since January 1, 2026, a sole proprietorship that has opted for corporate income tax and contributes all of its assets can benefit, by joint election with the company, from a tax neutrality scheme. The information sheet cites Article 210 E bis of the French General Tax Code (CGI). The BOFiP (Official Bulletin of Public Finances) mentioned above does not refer to it. This page does not detail this scheme: if you have opted for corporate income tax, the rule depends on your specific situation and should be verified before making a decision.
The cost of registering the contribution
The government website indicates that registration is free when the company receiving the contribution is subject to income tax. It is also free if the contributor commits to holding the shares for three years. For a company subject to income tax without this commitment, the website presents the following tax rates: 0% up to €23,000, 3% from €23,001 to €200,000, 5% above €200,000, and 5% for real estate. The website does not specify how these rates are applied: the page does not provide figures for these fees.
What changes depending on your situation
- The nature of what you bring : depreciable or non-depreciable assets, buildings, current assets, debts.
- The contribution of the entire company or only part of it: the deferral assumes a complete company or branch of activity.
- The company's tax regime who receives the contribution.
- Your tax status before the contribution : IR, or IS after option.
- An exemption scheme which could apply and rule out the postponement.
- Your matrimonial property regime : married under the community property regime, you must obtain your spouse's agreement to contribute the business or premises.
- The fate you envision for the securities received : their transfer puts an end to the deferral.
The rule depends on your situation. No results are guaranteed.
Numerical example (fictitious profile)
Situation. Nadia operates a retail business under her own name, subject to income tax before the contribution. She contributes the entire business, including all its assets and liabilities, to a simplified joint-stock company (SAS) subject to the standard tax regime. Assumptions in this hypothetical scenario: the capital gain on the business is €220,000; the net capital gain on depreciable equipment is €25,000; the equipment is not a building; there are no short-term capital gains; no exemption scheme (Article 151 septies) applies.
Issue. What portion of the capital gain is deferred, and what happens to it?
Strategy. Nadia and the company jointly exercise the option in the contribution agreement. The business assets are non-depreciable; the equipment is depreciable.
Result. The total capital gain is €245,000. The €220,000 for the business assets, representing 89.8 %, has its taxation deferred. The €25,000 for the equipment, representing 10.2 %, is taxed in the company's name, with a reinstatement in equal installments over five years, i.e., €5,000 per year (BOI 4607, § 270). The €220,000 is not eliminated: it is taxed in the year the deferral ends, for example, the year of the sale of Nadia's shares, at the rate in effect that year.
Fictitious profile, hypothetical values. The calculation does not quantify tax: it only illustrates the distribution and does not predict your situation.
Frequently asked questions
Is the contribution from my sole proprietorship taxable?
It constitutes a cessation of business. Capital gains are recognized; a portion can be deferred by option if the conditions of the BOFiP are met.
Does deferring taxation eliminate capital gains tax?
No. For non-depreciable assets, taxation is deferred until an event that terminates the deferral, in particular the sale of the equity interests received.
Do I need my spouse's agreement?
Married under the community of acquired property regime, yes, to contribute the business assets or the premises, according to the public service information sheet.
Who exercises the option for deferral?
The contributor and the company, jointly, in the contribution agreement.
My company has opted for corporate income tax: is the tax regime the same?
The public service information sheet mentions a tax neutrality mechanism specific to this case since January 1, 2026. It is not described here: to be checked before the contribution.
Take stock before the contribution
The contribution amount is determined based on the figures in your file: what you are contributing, the company receiving it, and the planned fate of your shares. Schedule an appointment with Balmont Conseil, a Lyon-based firm established for nearly 14 years, to discuss your situation.
Alexis SagnierFinancial and real estate investment advisor, insurance broker, AMF certified
Founder of Balmont Conseil, Lyon (ORIAS 13003497)
Read also
- Transitioning from a micro-enterprise to a company: when to consider it
- Sole proprietor: switching from personal income tax to corporate income tax
- Transfer of securities: flat tax rate or tax brackets, how to choose
- Retirement: €500,000 allowance on the sale of securities
- Sole proprietor: separate business and personal assets
- Social protection for the self-employed (2026)
Official sources
- service-public.gouv.fr (entrepreneurship), fact sheet on the transformation of a sole proprietorship by contribution into a company (verified on 21/02/2026): https://entreprendre.service-public.gouv.fr/vosdroits/F36954
- BOFiP, BOI-BIC-PVMV-40-20-30-10, scope (version of 03/03/2014): https://bofip.impots.gouv.fr/bofip/4604-PGP.html
- BOFiP, BOI-BIC-PVMV-40-20-30-20, taxation of capital gains (version of 22/06/2022): https://bofip.impots.gouv.fr/bofip/4607-PGP.html
- BOFiP, BOI-BIC-PVMV-40-20-30-30, exercise of the option (version of 12/09/2012): https://bofip.impots.gouv.fr/bofip/4609-PGP.html
