In summary…

THE Dutreil Pact is the ultimate survival mechanism for family businesses in France. It allows for a reduction in the taxable base for the transfer (gift or inheritance) of 75 %. In short, where an heir could be taxed at 45% (%), the effective rate often falls below 6% (%) thanks to this mechanism. The trade-off? Absolute rigidity: commitments to retain securities extending over 6 years in total (2 years collective + 4 years individual) and the obligation for one of the signatories to assume the management of the structure.

  1. Economy : 75 % exemption on the value transferred.
  2. Duration : 2 years of collective commitment + 4 years of individual commitment.
  3. Direction : A signatory must manage the company for 3 years after the deed.
  4. Security : Annual reporting obligations are mandatory under penalty of total forfeiture.

«Alexis, if I transfer my shares today, will my children have to sell the factory to pay the taxes?» This question, posed by a Lyon-based industrialist during an audit, sums up the anxiety of every founder. Without a strategy, French taxation can become the primary predator of a family business.

Since the Law of August 1, 2003, The legislator has provided entrepreneurs with a shield: the Dutreil Pact. At the house of Balmont Conseil, We use AI to simulate the robustness of these agreements in the face of changes to the 2026 Finance Law. Leading firm of wealth management augmented by AI, our mission is to transform this tax constraint into a genuine tool for family governance.

1. What is the Dutreil Pact and how does it work?

The system, governed by the’Article 787 B of the General Tax Code (CGI), offers a exemption of 75 % of the value shares or stock of a company during a free transmission (gift or inheritance).

A conservation logic

The idea is simple: the government grants you a massive tax break in exchange for a guarantee of stability. You commit to not selling the shares so that the company remains within the family and continues to create jobs.

Full ownership or divided ownership?

The Dutreil Pact is perfectly compatible with the division of ownership. Transmit the bare ownership with reservation of’usufruct allows the Dutreil allowance to be combined with the allowance linked to the donor's age, sometimes reducing the tax bill to a small portion.

2. Conditions of application: The 3 pillars of compliance

To benefit from this exemption from transfer taxes, three temporal and operational conditions must be scrupulously respected.

A. The collective conservation commitment (2 years)

The donor and at least one other partner sign an agreement committing to retain their shares for two years.

  • Required thresholds: For unlisted companies, the commitment must cover at least 34 % voting rights And 17 % of financial rights.
  • Special case: The commitment can be deemed acquired if the donor alone meets the required thresholds and has held a management position for more than two years.

B. Individual conservation commitment (4 years)

From the date of transfer (gift or death), each heir or donee must undertake to keep the securities received for four years.

C. The management function (3 years post-transfer)

One of the signatories (the donor or one of the heirs) must exercise a management function effective (Manager, President, CEO…) or its main professional activity (for sole proprietorships) during the three years following the transmission.

3. Sole Proprietorships vs. Companies: Specific Rules

While the system is well-known for SAS or SARL companies, it also applies to sole proprietorships and to single-person forms (EURL, EARL, SASU).

  • For sole proprietorships: The donor must have owned the business for at least two years (unless it was created or acquired free of charge). The heir must commit to continuing operations and retaining all of the goods necessary for the exercise of the activity.
  • For companies: The condition relates to the securities. Here, the’sole partner can also implement a unilateral commitment.

4. Holding companies and legislative developments: An update for 2026

The Dutreil Pact applies to active holding companies. These structures do not simply hold securities; they actively participate in the conduct of the group's policy.

Vigilance regarding non-professional assets

Recent developments (the 2019/2020 Finance Law and the debates for 2025) reinforce the anti-abuse measures. The 75 % exemption only applies to the value of strictly professional assets. If your holding company owns financial or real estate assets unrelated to operations, this share could be reintegrated into the taxable base.

Alexis Sagnier's opinion: «"Balmont AI allows us to mathematically isolate the eligible value of your holding company. Anticipating the cleanup of your balance sheet before signing the agreement is the only guarantee against subsequent tax reclassification."»

5. Reporting obligations: The realm of sanctions

This is where the problem lies. An administrative oversight can invalidate all the benefits.

  • The formalism: You must provide a company certificate certifying compliance with thresholds and the retention of securities at the time of transfer, then a annual certificate at the relevant tax office.
  • The calendar: These documents are often expected in the three months following December 31st of each year, or before April 1st.
  • Sanctions: If a single beneficiary breaks the commitment, all exempt gift taxes become payable, with penalties and late payment interest.

6. Estate planning and governance: Beyond taxation

The Dutreil Pact is not just a tax loophole, it's a lever for estate planning.

The shared gift: Balance and family peace

To avoid conflicts, we often recommend a donation-partage. It can be unequal (the buyer receives the company's shares) but balanced by a cash payment (financial compensation) paid to the other children, deducted from the available quota.

Statutory clauses and protection

When donating shares (particularly in a simplified joint-stock company - SAS), it is crucial to include protective clauses:

  • Approval clause: To control who acquires shares.
  • Inalienability clause: To lock in the retention of securities for the legally required periods.
  • Cross-assurance-vie between partners: To allow the survivors to buy back the shares without jeopardizing the family's finances.

Data Factsheet: The Dutreil Pact in figures

IndicatorCondition DutreilWithout Device
Discount on value75 %0 %
Taxable base (e.g., €4M)1 000 000 €4 000 000 €
Average effective rate< 6 %Up to 45 %
Shelf life6 years minimum.Free

FAQ

  • Can a pact be put in place after a death? Yes, that's it.’post-mortem engagement. The heirs have six months after the death to conclude a pact between themselves or with other partners.
  • Can the spouse help to reach the thresholds? Yes, the securities held by the spouse, civil partner or common-law partner are counted to reach the 34 %.
  • Can it be given to an employee? Yes, there is even a specific allowance of €500,000 in the event of transfer to an employee or an apprentice, which can be combined under certain conditions.

Conclusion: Anticipation, the key to sustainability

The transmission of a family business is the summit of the’wealth engineering. The Dutreil Pact is the essential element needed to succeed in this ascent. In 2026, amidst legislative instability and increasingly complex structures, human expertise, supported by the precision of Balmont AI, is your best ally.

Is your business transfer strategy tax-proof?

Don't let the fruits of a lifetime of work evaporate into avoidable inheritance taxes.

Sources:

  • Article 787 B of the General Tax Code.
  • Official Bulletin of Public Finances (BOFiP): Transfers free of charge – Companies.
  • Finance Law 2026 (forecasts and anti-abuse measures).
  • ANACOFI guide on the transfer of family businesses.

Everything you need to know about the Dutreil pact :

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