In summary…
Since 2012, a business owner who contributes shares of their company to a holding company they control does not immediately pay capital gains tax: it is deferred. Currently, this deferral is never claimed upon death, and a gift of the shares can eliminate it, under certain conditions. Article 5 of the draft budget law for 2027, presented on October 1, 2026, proposes to end this: gifting or transferring the shares would make the deferred tax immediately payable. The text has not been passed. However, it would apply to transfers made since October 1, 2026.
1. Contribution-sale in two sentences
You contribute your company's shares to a holding company that you control. The capital gain realized on this occasion is not taxed immediately: the tax is deferred, this is article 150-0 B ter of the CGI.
It becomes due if you sell the holding company's shares or have them bought back, or if the holding company sells the contributed shares within three years without reinvesting at least 70% of the price in an economic activity.
2. What happens today upon death or in the event of a gift
Upon death. The death of the contributor is not among the events that terminate the deferral. In practice, the deferred tax is never claimed, neither from the deceased nor from their heirs.
In the case of a gift. If you gift the holding company's shares, the tax deferral can be transferred to the recipient, under certain conditions. If they retain the shares for the period stipulated by law, the tax is eliminated.
This is why the contribution-sale, followed by a gift of the holding company's shares, has become a common tool for business transfer.
3. What Article 5 of the draft provides for
- One word changes. The text replaces "transfer for consideration" with "transfer". A gift, a manual gift, or an inheritance would terminate the deferral.
- The tax would become payable in the name of the contributor. It would be paid by him in the event of a gift, and owed by his estate in the event of death, in addition to gift or inheritance taxes calculated on the value of the securities.
- The deferral would no longer be passed on to the donee. The system that allowed the recipient of the securities to eliminate the tax would be abolished.
- Payment in installments is possible. A new article 1681 G of the French General Tax Code (CGI) would allow for payment in installments over five years. Its conditions remain to be defined.
- The effective date is October 1, 2026. The text refers to transfers made from that date onwards, including for old contributions whose deferral is still ongoing.
4. An example to establish orders of magnitude
Situation. In 2019, a manager contributed his company's shares to his holding company. The capital gain on the contribution, €2 million, was deferred. For a contribution made since 2018, the corresponding tax is approximately 30% of the capital gain, or around €600,000.
Issue. Currently, upon his death, this €600,000 is never claimed. Under the proposed legislation, it would become due upon inheritance, whether by gift or death, in addition to the taxes calculated on the value of the transferred securities.
Strategy. He doesn't sign anything in haste. He has both scenarios, adopted text and rejected text, costed before any gift of his holding company's shares.
Result. He makes his decision knowing the true cost of each option, instead of discovering it at the time of the act.
5. What changes if you have made a contribution-sale
- Donating the holding company's shares would no longer eliminate the deferred tax: it would trigger it.
- A gift signed since October 1, 2026 would be affected if the text is adopted as is.
- The contribution regime itself remains unchanged: the deferral of the contribution and the 70% reinvestment rule in the event of a sale by the holding company remain the same. Details of the mechanism are available in our article on Article 150-0 B ter.
- Leaving the country is already subject to exit tax, which also applies to deferred capital gains: see our exit tax guide.
6. What can still change
Parliament is examining the draft budget law until the end of the year. The text can be amended, and its application to transmissions prior to its vote can be challenged before the Constitutional Council. We explain the legal limitations on these effective dates in our article on the retroactive taxation.
We will update this article at each stage of the debate.
Frequently asked questions
Has the text been voted on?
No. It's a bill, introduced on October 1, 2026. It will be debated by Parliament until the end of the year and can be amended.
Is a gift made before October 1, 2026 affected?
According to the text, no: it targets transmissions made from October 1, 2026 onwards.
I have never made a contribution-sale. Am I affected?
Not through this measure. It only affects capital gains deferred when securities are contributed to a holding company.
Will it be possible to pay in installments?
The plan provides for payment in installments over five years. Its terms will be set out in the final text.
Have you made a contribution-sale? Book an appointment : we quantify your situation, whether the text is adopted or not.
