In summary…
Transferring a €4 million company to two children, without prior preparation, costs each of them €617,394 in inheritance tax. With a Dutreil agreement and a gift of full ownership before age 70, the cost drops to €39,097 per child, representing a reduction of €94,130 in taxes. The 2026 Finance Act tightened the conditions: the holding period is now extended to a total of 8 years, and luxury assets are no longer exempt from tax.
1. The exemption of 75 % under article 787 B
Article 787 B of the French General Tax Code (CGI) exempts 75% of the value of shares in an operating company transferred by gift or inheritance from transfer tax. Only 25% of the value remains taxable, after the usual allowances.
Two commitments are required to qualify for the benefit: a collective commitment to retain the assets for at least two years, followed by an individual commitment from each heir or donee. One of the signatories or beneficiaries must hold a management position within the company.
2. The 50% reduction in Article 790
When the transfer takes the form of a gift of full ownership made by a donor under 70 years of age, Article 790 further reduces the taxes by half. This reduction applies after the Dutreil exemption, on taxes already calculated on 25% of the value.
On a company worth €4 million transferred to two children: €2,000,000 per child, €500,000 taxable after the Dutreil scheme, €400,000 after the €100,000 allowance under Article 779. Tax due at the standard rate: €78,194. After the 50% reduction (%): €39,097.
3. Concrete example
Situation. A 64-year-old executive owns 100 shares of an industrial company valued at €4 million. He has two children, one of whom works in the company.
Issue. Without any preparation, each child receives €2 million in shares and pays €617,394 in inheritance tax. The family would have to pay €1,234,788 to retain ownership of the company.
Strategy. Signing of a collective commitment to preserve, then gift in full ownership at age 66, under the regime of article 787 B. The two children take the individual commitment of 6 years; the one who works in the company takes the management.
Result. €39,097 in benefits per child instead of €617,394. €1,156,594 saved for the family, i.e., 94,% less in benefits.
4. What the 2026 Finance Law has changed
For transfers occurring since February 21, 2026, the individual commitment period is extended from 4 to 6 years. With the collective commitment of at least 2 years, the shares are locked in for a total of at least 8 years. A sale before the end of this period jeopardizes the tax exemption.
Luxury assets held by the company are excluded from the tax-exempt base: yachts, airplanes, jewelry, works of art, racehorses, wines, residences, and hunting and fishing rights. The only exception is assets used for business purposes for at least three years. A company that owns a residence or a collection will see its tax-exempt value reduced.
5. The calendar that makes the difference
The agreement is signed before the transfer. The collective commitment, of at least two years, must be in effect on the date of the gift; it can be signed shortly beforehand. The timing is primarily based on the donor's age: giving before age 70 retains the 50% tax reduction.
Before signing: adjust the value of the company for luxury goods, verify the active nature of any holding company, and decide between full ownership and split of ownership, which does not benefit from the 50 % reduction.
Frequently asked questions
Does the Dutreil agreement apply to the shares of a holding company?
Yes, for an active holding company that participates in guiding its group's policy. A passive holding company is subject to significantly more restrictive rules.
How long should securities be held for?
For transmissions since February 21, 2026: collective commitment of at least 2 years, then individual commitment of 6 years, i.e. 8 years minimum.
Does the 50% % reduction apply after age 70?
No. It is reserved for outright gifts made by a donor under 70 years of age. Beyond that age, only the 75% % exemption remains.
Are you planning to transfer your company? Book a wealth management consultation: we will finalize the agreement, the timeline and the cost estimate before the gift.
