Selling your sole proprietorship to your employees: the steps and rules to know in 2026

Employees do not have priority: their offer must be submitted to the seller without delay, but it does not take precedence over others. In the companies concerned, however, they must be informed of the proposed sale no later than one month before the conclusion of the sales contract, compared to two months before the reform of July 2026. If the buyer is an employee who meets the requirements, a €500,000 reduction can be applied to the value of the business before the calculation of registration fees.

This page describes the procedure for selling a sole proprietorship to employees, based on the official government guide. It does not address the situation of micro-entrepreneurs, non-resident sellers, valuation, or the details of capital gains tax, which are covered on a separate page. The case of a sole proprietorship that has opted for corporate tax is only addressed with regard to registration fees.

The steps described in the official document

What is transmitted, and what is not

The seller transfers the business assets: customer base, brand, trade name, and lease rights. The transfer of a debt requires the creditor's written consent. Social security contributions and other debts are not included in the transfer. A partial transfer is possible, with individual assets being sold separately.

Informing employees: what has changed in 2026

Law No. 2026-403 of May 26, 2026 (Article 22), cited by the administration news of July 23, 2026, has modified the procedure.

The reform applies around July 27, 2026. For a sale concluded during this period, check the applicable rule before committing.

Who to inform

• Companies with fewer than 50 employees inform their employees directly.
• In companies with 50 or more employees that have a works council (CSE), only the works council needs to be informed and consulted. In the absence of a collective agreement, it has one month to issue its opinion.
• For a company with 50 or more employees without a CSE (Works Council), the applicable rule should be checked with the official source.

What the information contains

The seller announces his intention to sell the company and the possibility for employees to submit a takeover bid.

How to distribute it

The document states that the information can be notified by "any means that provides proof of the date of receipt." It specifically mentions: a meeting with an attendance register, a posting with a dated register, an email using a method that reliably certifies the date of receipt, hand delivery with signature, or an act by a bailiff.

Special cases

• The sale can take place before the end of the one-month period if each employee has indicated their decision not to submit an offer.
• If the sale is concluded more than two years after the first notification, the information must be given again.
• The obligation does not apply if the company is subject to conciliation proceedings or collective proceedings, nor if employees have already been informed under the social and solidarity economy scheme in the 12 months preceding the sale.
• Employees who have been informed are bound by an obligation of confidentiality. Failure to comply may justify disciplinary action, up to and including dismissal.

What risks does a seller face if they fail to provide information?

Failure to provide information is penalized. The penalty is capped at 0.5% of the sale amount, compared to 2% before the reform. Its exact nature should be verified with the official source: the document cites Article L141-23 of the French Commercial Code.

Employee buyout

The sale of the entire company may be offered to employees. An employee's offer does not take precedence over other offers.

Employees who lack the necessary funds can create a holding company for the acquisition. According to the information sheet, it can take any legal form. It takes out the loan needed to acquire the business assets, and repayment is based on dividends paid by the acquired company.

The cost of the transaction: registration fees and tax allowance

According to the information sheet, registration fees are calculated on the sale price as follows: 0% up to €23,000, 3% between €23,001 and €200,000, and 5% above €200,000. The minimum fee is €25. When a sole proprietorship is taxed as a single-member limited liability company (EURL) (by opting for corporate tax), the information sheet indicates that a rate of 3% is applied to the sale price. In principle, this fee is payable by the buyer, and the deed may stipulate that the seller pays it or that the parties share it. Sales of new goods are exempt from registration fees.

When the transfer is made to an employee, a €500,000 allowance (Article 732 ter of the French General Tax Code) may be applied to the value of the business before the tax is calculated. The information sheet sets out these conditions.

The information sheet does not specify whether the tax reduction applies when the buyer is a holding company. This point should be verified before choosing the acquisition structure.

Act, publicity and declarations

• The act The agreement is written and mandatory. It specifies the assets transferred, the parties involved, the price, the terms of the commercial lease, and, if the transferor is married under a community property regime, the spouse's consent. Since July 21, 2019, the origin of the business, the status of any liens, and the results of the last three fiscal years are no longer mandatory.
• For commercial buildings of at least 1,000 m², An assessment of compliance with the obligation to reduce energy consumption, based on the latest OPERAT certificate, is attached to the document.
• The creditors They have one month from the date of publication to object to the transfer. The objection does not prevent the transfer.
• The cessation of activity must be declared within 45 days of the publication of the transfer.
• Income statements (No. 2031, 2035 or 2065 as the case may be) must be filed within 60 days.
• VAT Transactions not yet declared must be declared and paid within 60 days under the simplified actual regime, and within 30 days under the normal actual regime.
• The VAT on the transfer itself : the transfer of all the elements of the business is exempt from VAT if the purchaser is himself liable for VAT.

The capital gain of the seller

Selling a business to employees does not change the capital gains tax rules for sole proprietors. Three exemptions exist, depending on the circumstances: based on revenue (€250,000 or €90,000 depending on the business activity), based on the value of the assets transferred (€500,000 to €1,000,000), or based on retirement. These exemptions require the business to have been operating for at least five years. Details are provided on a dedicated page.

Numerical example (fictitious profile)

Situation. Marc, 58, has run a bakery as a sole proprietorship for 15 years. He employs four people and has no works council. Sofia, a full-time employee with a permanent contract for the past six years, wants to take over the business. The estimated value and price of the business is €620,000, excluding any new stock. The company has not opted for corporate tax. The sale agreement is expected to close on January 15, 2027.

Issue. What schedule should be followed, and what registration fees should be expected?

Strategy. Inform the four employees by a means that provides proof of the date of receipt, no later than one month before the conclusion of the sales contract. Calculate the tax due with and without the discount, assuming that all conditions are met and that each rate applies to the portion of the price within its bracket.

Result.

The difference is €23,400. Employees must be informed no later than December 15, 2026. For comparison, the maximum penalty for failure to provide information would be €3,100 (0.5 % of €620,000), compared to €12,400 (2 %) before the reform.

This profile is fictitious. The price, dates, fulfillment of all discount conditions, and the tiered calculation method are assumptions. The figures illustrate the calculation. They do not guarantee your specific situation.

What changes depending on your situation

• The staff and the presence of a Works Council (CSE), which decides who is informed.
• The date of conclusion of the sales contract, in light of the reform of July 2026.
• The buyer's profile : employee on a permanent contract for at least 2 years, apprentice, or takeover holding company.
• The company's tax regime : classic sole proprietorship, or similar to an EURL after opting for corporation tax (rate of 3 % on the price according to the sheet).
• Your VAT regime and the nature of the items transferred.

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