French 2027 budget: the Dutreil pact is kept, the contribution-disposal purge ends

What exactly does article 5 of the finance bill provide?

Contribution-disposal means contributing one's shares to a holding company one controls: the capital gain arising on the contribution is not taxed at once but placed under a tax deferral (article 150-0 B ter CGI). Today, the deferral ends when the holding's shares are sold for consideration, or when the holding sells the contributed shares within three years without sufficient reinvestment.

Transfers for no consideration currently enjoy a favourable regime. On a gift, the donor is permanently exempt from the deferred gain on the shares given. If the recipient does not control the holding, that is the end of it. If they do, they take over the deferral in their own name: the gain becomes taxable if they sell the shares within six years (eleven years where funds were used for reinvestment), or if another terminating event occurs, such as a breach of the reinvestment condition or a move abroad. On death, the gain is also exempt. Practitioners call this the "purge" (BOI-RPPM-PVBMI-30-10-60-30).

Article 5 of the bill abolishes this regime. The words "sale for consideration" are replaced by the word "transfer" among the events that end the deferral, including for shares in interposed companies and chains of successive contributions, and paragraph II of article 150-0 B ter, which organised the takeover by the recipient, is repealed. Any transfer of the shares received for the contribution, by gift or on death, would therefore make the deferred gain payable, income tax and social charges. For a contribution made since 2018, income tax is in principle 12.8% (article 200 A, 2 ter, CGI), unless the progressive scale was elected in the year of the contribution. On a gift, the tax is owed by the donor; on death, the payment arrangements remain to be specified.

In return, the bill creates a staggered payment (new article 1681 G CGI): on a request made no later than the payment deadline, the income tax on that gain, and only the income tax (not social charges), may be paid over the following five years, provided the taxpayer is up to date with their tax obligations and provides guarantees. The late-payment surcharge is then capped, for each instalment, at the amount of statutory interest. The plan may be terminated if guarantees become insufficient or an instalment is missed.

The measure would apply to transfers made from 1 October 2026, that is even before the law is passed. The text may still change during the debates, on its scope as on its start date.