Donating a business to a relative: forms, steps, gift tax and donor obligations

Gifting your business to a relative means transferring ownership without requesting any financial compensation. A written agreement is mandatory, it must be registered, and gift tax is payable by the recipient, after the allowance based on the relationship: €100,000 between parent and child, renewable every 15 years for the same donor and recipient. According to the tax authorities' guidelines, the sale of a sole proprietorship or its assets is considered a cessation of business activity, triggering declarations within short timeframes.

The rules cited here apply to a fund operated as a sole proprietorship or micro-enterprise, which is the scope of the administration's guidelines. Funds operated by a company are not covered.

This page covers the forms of gift, what the fund includes, the steps involved, the calculation of taxes, and the Dutreil agreement. It does not cover capital gains tax for the donor, tax brackets for spouses and civil partners, the situation of non-residents, or the details of the formalities for publicity and creditor objections, which should be confirmed with the notary (see below).

Three forms of gift

The government information sheet (service-public, verified on 21/02/2026) distinguishes:

• The simple gift, which it presents in the case of a single child: ownership of the land passes to the heir.
• The gift-partition, This process distributes assets among family members. If the estate represents the majority of the assets, the recipient may have to compensate the other heirs with a sum of money, known as equalization payment. According to economie.gouv.fr, a gift-partition is a notarial act; the value of the assets is generally fixed on the day of the gift (with some exceptions), and a forced heir cannot be excluded.
• The gift of the bare ownership only The business owner retains the usufruct. The value of the bare ownership is a fraction of the full ownership, determined by the scale in Article 669 of the French General Tax Code (CGI) according to the usufructuary's age. The practical consequences for the operation of the business are not addressed here.

What the gift of the fund includes

According to the information sheet, the transfer can also include debts and the premises (if he/she owns them), by agreement between the parties.

The steps

The guide uses the vocabulary of transfer (deed of transfer, change of ownership, sale) to describe these formalities. Their application to a gift is confirmed with the notary before a timetable is established.

Declarations must be submitted electronically (EFI via online entry, EDI via software). The information sheet mentions an additional 15 calendar days: please check the information sheet to see what this additional period applies to.

The publication of the transfer notice and the creditors' right to object are obligations described in the information sheet, without going into detail here. Its terminology conflates the business assets and the transfer of the sole proprietor's professional assets. Therefore, we will not repeat these deadlines: their application to a specific business must be confirmed with the notary before a schedule is established.

Gift taxes

The calculation involves three steps: the value of the gift, deduction of allowances, and application of the tax brackets. The taxes are payable by the beneficiary. The deed may stipulate that the donor will bear these costs.

These allowances apply to gifts from the same donor to the same recipient over a 15-year period. Any unused balance remains available during this period. Gifts made less than 15 years prior are included in the calculation, and any taxes already paid are deducted.

Direct line tax scale, applied in brackets to the taxable portion:

Between siblings, the rate is 35% of the taxable income up to €24,430, then 45%. Between relatives up to and including the fourth degree, it is 55%. Between relatives beyond the fourth degree and non-relatives, it is 60%. The rates between spouses and civil partners are not detailed here.

The example given in the administration's guide applies 20 % to the entire taxable portion. Since the tax scale is progressive in brackets, the example below follows these brackets.

The Dutreil pact: what the fact sheet and the BOFiP say

The document mentions a partial exemption of 75 % of the value, under the Dutreil agreement (article 787 C of the CGI), subject to four conditions:

1. The length of time the donor has held the company, the wording of which varies depending on the source: the BOFiP (French Official Tax Bulletin) states "for more than two years," while the information sheet indicates that the donor has held the company for at least two years. This should be verified with the source and the notary. The information sheet excludes this length of time if the donor created the company or acquired it free of charge. ;
2. an individual conservation commitment of 6 years; ;
3. the effective continuation of operations for 3 years following the transfer; ;
4. a commercial, craft, industrial, agricultural or professional activity, excluding the management of one's own assets.

Two key points to remember. The individual commitment period is 6 years for transfers starting from February 21, 2026; it was 4 years before that date. And the BOFiP (Official Bulletin of Public Finances) states that the partial exemption does not apply to a business leased to an operating company.

If the donee then gives back the property during the commitment period, the exemption for the first transfer is not called into question provided that the new donees are descendants of the donor and continue the commitment until its end (BOFiP, § 80).

The guide "Succeeding in the takeover and transfer: the complete guide", published by the Ministry of Economy in April 2026, presents the Dutreil as a tool to be prepared several years in advance.

The 50% reduction before age 70

The information sheet indicates that a 50% reduction applies to the gift tax when the donor is under 70 years old. The BOFiP (BOI-ENR-DMTG-20-30-20-50) provides for this reduction for gifts of full ownership of all, or an undivided share, of assets used in the operation of a sole proprietorship, subject to certain conditions. It excludes gifts of bare ownership and gifts of usufruct. It specifies that this reduction is cumulative with allowances and other reductions and is applied last, to the tax due by each donee.

This discount is not included in any calculations on this page, and no savings are shown. Its applicability to your specific situation will be confirmed with the notary.

Numerical example (fictitious profile)

Situation. Isabelle, 62, runs a sole proprietorship with a business valued at €450,000. She plans to gift it to her daughter, the sole beneficiary. Assumptions: the daughter has not received any other gifts from her, except in the second case below, where she gave her €100,000 six years earlier, an amount fully covered by the allowance (no tax paid). Isabelle is under 70; the 50% tax reduction is not applied to the figures.

Issue. How much gift tax is there, and how do full ownership and bare ownership compare? For a 62-year-old usufructuary, bare ownership is worth 60 % of full ownership (line "under 71 years of age" of the scale in article 669).

Strategy. Compare four cases with the €100,000 allowance and the direct line scale, and measure the effect of the prior gift.

Result.

The inclusion of the prior gift adds €20,000 in taxes, representing 20% of the €100,000 taxable amount. Without the prior gift, the bare ownership reduces the taxable portion from €350,000 to €170,000. This comparison only considers the date of the gift and does not take into account the 50% reduction described above, which excludes bare ownership. It also says nothing about the operation of the business or the cessation of activity when the donor retains the usufruct.

This profile is fictitious. The figures assume an unchanged tax bracket, a direct descendant, a donor under 70 years of age, no other gifts, and no reductions or exemptions. They do not predict any results for your family.

What changes depending on your situation

• The family relationship : abatement and scale vary.
• Gifts already made over 15 years to the same beneficiary.
• The chosen form : simple, gift-partition with equalization payment or bare ownership.
• The exploitation of the fund : the lease-management to an operating company is excluded from the partial exemption by the BOFiP, which also deals with specific cases to be read before any decision.
• The timetable : cessation of activity, result and VAT are calculated from the date of publication.
• Your age, for the value of the bare ownership and for the 50 % reduction before age 70.

The rule depends on your situation. No results are guaranteed.