Contribution-disposal after the 2027 Finance Bill: the article 150-0 B ter deferral
Contributing your shares to a holding company you control before it sells them remains a lawful scheme: the capital gain on the contribution is placed under a tax deferral, provided the control test, the three-year period and the reinvestment of at least 70% of the sale proceeds are met. What the 2027 Finance Bill changes is the fate of that deferral when the holding company shares are gifted or passed on death. The firm quantifies the stakes, secures the reinvestment and defends reassessments.
Contribution-disposal: what does the 2027 Finance Bill change?
Under current law, the capital gain realised on a contribution of shares to a holding company subject to corporate income tax and controlled by the contributor is placed under a tax deferral (article 150-0 B ter of the French Tax Code). If the holding company sells the contributed shares within three years, the deferral is maintained only if it reinvests at least 70% of the proceeds in eligible business activities within three years and holds those assets for five years.
Today, a gift of the holding company shares definitively exempts the donor from that gain, the donee taking over the deferral if the donee controls the holding company; on death, the gain is exempt. Article 5 of the 2027 Finance Bill, tabled on 1 October 2026, removes this mechanism: any transfer, by gift or on death, would make the deferred gain taxable, for transfers made from 1 October 2026, with the income tax payable over five years against security. The bill has not been passed.
French Tax Code art. 150-0 B ter (Légifrance); 2027 Finance Bill, no. 3210, article 5 (National Assembly); BOI-RPPM-PVBMI-30-10-60-30. Checked on 5 October 2026.
- Mechanism
- Tax deferral of the gain on a contribution to a company subject to corporate income tax and controlled by the contributor (French Tax Code art. 150-0 B ter)
- Reinvestment
- Sale of the contributed shares within 3 years: reinvestment of at least 70% of the proceeds within 3 years, assets held for 5 years
- Rates
- Those of the year of the contribution: as a rule 12.8% income tax and 17.2% social levies for a contribution made from 2018 to 2025
- Gift
- Today, donor exempt; a donee who controls the holding company is bound for 6 years (11 years where reinvested in funds)
- 2027 Bill
- Article 5, not passed: gift or inheritance of the shares = taxable gain, transfers from 1 October 2026
- Payment
- Income tax payable over 5 years, on request and against security, under the bill
The tax deferral and its conditions
The contribution-disposal scheme consists of contributing one’s shares to a company one controls, subject to corporate income tax, before that company sells them. The gain arising on the contribution is not taxed immediately: it is computed, reported for the year of the contribution and then placed under a tax deferral (French Tax Code art. 150-0 B ter, I). A cash adjustment is allowed if it does not exceed 10% of the nominal value of the shares received; the gain is then taxed immediately up to that amount.
The deferral is subject to two conditions (III): the contribution is made in France, in the European Union or in a State that has concluded an administrative assistance agreement with France, and the receiving company is controlled by the contributor, at the date of the contribution and taking the shares received into account. Control results from a majority of the voting or financial rights, held alone or with the family circle (spouse, ascendants, descendants, brothers and sisters), from an agreement with other shareholders, or from de facto decision-making power, presumed from 33.33% where no other shareholder holds more.
- The deferral ends, in particular, on a sale for consideration, buy-back, redemption or cancellation of the shares received in exchange for the contribution (I, 1°);
- It also ends if the holding company sells the contributed shares within three years of the contribution, unless at least 70% of the proceeds are reinvested (I, 2°, see below);
- A sale of the shares of an interposed company (I, 3°) and a transfer of tax residence outside France (I, 4°, exit tax regime of article 167 bis) also end it;
- A further contribution of the shares received to another company, under articles 150-0 B or 150-0 B ter, maintains the deferral (IV).
When the deferral ends, the gain is taxed under the rules and rates of the year of the contribution (article 200 A, 2 ter): for a contribution made since 2018, 12.8% income tax, unless the option for the progressive scale was exercised for the year of the contribution, and social levies at that same year’s rate, i.e. 17.2% for a contribution made from 2018 to 2025 (BOI-RPPM-PVBMI-30-10-60-20).
Reinvesting 70% of the sale proceeds
Where the holding company sells the contributed shares within three years of the contribution, the deferral is maintained only if it undertakes to reinvest at least 70% of the sale proceeds within three years of the sale (I, 2°). These rules, introduced by article 11 of the 2026 Finance Act, apply to sales of contributed shares made from 21 February 2026; for earlier sales, the threshold was 60% and the reinvestment period two years.
- Financing permanent operating assets used in an industrial, commercial, craft, agricultural or professional activity within the meaning of article 199 terdecies-0 A, I, C, 3°: financial activities, management of one’s own securities portfolio, construction of buildings for sale or letting, real estate activities and activities yielding guaranteed income (regulated energy buy-back tariffs, additional remuneration contracts) are excluded, and article 150-0 B ter also expressly excludes management of one’s own real estate;
- Acquiring part of the share capital of companies carrying on such an activity, provided control is obtained;
- Cash subscription to the initial capital or a capital increase of operating companies, or of holding companies whose sole purpose is to hold interests in such companies;
- Subscribing units in private equity funds (FCPR, FPCI, SLP, SCR or similar European vehicles), called within five years and at least 75% invested in eligible companies;
- Assets or shares acquired by way of reinvestment are held for at least five years from their entry in the balance sheet; where an earn-out is received, the holding company has a new three-year period to reinvest the balance needed to keep to the 70% threshold.
An insufficient, late or ineligible reinvestment ends the deferral for the year in which the period expires, with late-payment interest under article 1727 running from the date of the contribution. It is the first point checked in a tax audit.
Gifting the holding company shares under current law
Today, a gratuitous transfer of the shares received in exchange for the contribution is a neutral event for the contributor: on a gift, the donor is definitively exempt from income tax and social levies on the deferred gain attached to the shares given; on death, the gain is also exempt (BOI-RPPM-PVBMI-30-10-60-30, § 120). Practitioners call this the « purge ».
If the donee controls the holding company, assessed after the gift, the donee takes over the deferral (II):
- The gain becomes taxable in the donee’s name if the donee sells, contributes, has redeemed or cancels the shares within six years of acquiring them, extended to eleven years where the reinvestment took the form of fund subscriptions; this period does not apply in the event of category 2 or 3 invalidity, dismissal or death of the donee or of the donee’s spouse or civil partner;
- It is also taxable if the holding company fails the reinvestment condition, late-payment interest then running from the contribution made by the donor; the personal exceptions above do not apply to this case.
These periods, previously five and ten years, were extended by one year by the 2026 Finance Act. It is precisely this regime that the 2027 Finance Bill proposes to abolish.
What the 2027 Finance Bill changes
Article 5 of the 2027 Finance Bill (no. 3210) replaces, among the events that end the deferral, the words « sale for consideration » with the word « transfer », for the shares received in exchange for the contribution, the shares of interposed companies and chains of successive contributions, and repeals paragraph II of article 150-0 B ter, which organised the donee’s takeover of the deferral.
Consequence: a gift or an inheritance of the holding company shares would make the deferred gain payable, income tax and social levies, instead of wiping it out. On a gift, the tax would be due from the donor; on death, the practical payment arrangements remain to be clarified. The bill applies the same logic to taxpayers who have left France: a gratuitous transfer of the shares would end the exit tax payment deferral attached to those gains.
In return, a new article 1681 G of the French Tax Code would allow, on a request made no later than the payment deadline, the income tax on that gain, and that tax alone, to be paid under an instalment plan over the five years following the year of taxation, provided the taxpayer is up to date with tax obligations and provides security. The 10% late-payment surcharge (article 1730) would then be capped, for each instalment, at the statutory interest rate.
The deferral itself is not called into question: the contribution to a controlled holding company, the sale by the holding company and the 70% reinvestment would work as they do today. Only the fate of the gain on a transfer changes. The Dutreil pact is not amended by the bill; it reduces gift duties, with no effect on the tax due on the contribution gain.
A worked example: gifting the holding company shares in 2027
Assumptions. In 2024, an executive contributes the shares of her operating company, valued at €8,000,000 with a tax base of €1,000,000, to her holding company, which is subject to corporate income tax and which she controls. The contribution gain of €7,000,000 is deferred; she did not opt for the progressive scale. In April 2026, the holding company sells those shares for €8,000,000: it must reinvest at least €5,600,000 (70%) in eligible assets before April 2029 and hold them for five years. In 2027, the executive gives all the holding company shares to her two children.
| Deferred contribution gain: €7,000,000 | Current law | 2027 Bill, if passed as drafted |
|---|---|---|
| Income tax (12.8%, rate of the year of contribution) | €0 for the donor | €896,000 |
| Social levies (17.2%, 2024 rate) | €0 for the donor | €1,204,000 |
| Total due on the gift | €0 | €2,100,000 |
| Taxpayer | None on the gift; the children, who control the holding company, take over the deferral | The donor |
| Afterwards | Taxation in the children’s names if they sell the shares within six years (eleven where reinvested in funds) or if the 70% reinvestment is not met | Deferral extinguished; €896,000 payable over five years, on request and against security; social levies due under ordinary rules |
Gift duties are payable in both cases; they may be reduced by a Dutreil pact if the holding company meets its conditions, in particular as an active holding company. Amounts exclude any exceptional contribution on high incomes and any offset of capital losses. The firm’s Dutreil simulator (in French) computes, in a single calculation, gift duties with and without a pact and the tax on the deferred contribution gain, under current law and under the 2027 Finance Bill.
Timing does not solve the issue: a gift made before 31 December 2026 would be caught, as the bill targets transfers made from 1 October 2026. The decision turns on the merits: amount deferred, rate of the year of contribution, status of the reinvestment, ability to fund or secure the tax.
When the tax authorities invoke abuse of law
Beyond the mechanics of the deferral, the tax authorities may invoke abuse of tax law (LPF art. L. 64) in the case of sham transactions or transactions seeking the benefit of a literal application of the law contrary to the objectives of its authors, for the sole purpose of avoiding or reducing tax. In a contribution-disposal, the usual indicators are a holding company without substance, cash in reality appropriated by the executive or a reinvestment that is merely a facade. A finding of abuse carries an 80% surcharge, reduced to 40% where it is not established that the taxpayer was the main instigator or the main beneficiary of the arrangement (French Tax Code art. 1729, b), in addition to the reassessed tax. The dividing line turns on the economic reality of the scheme and the intention pursued.
A gift of holding company shares shortly before a sale calls for the same caution: the authorities examine whether the donor genuinely divested and whether the sequence reflects a genuine transfer. See our page on abuse of tax law.
Securing and defending
Upstream, the firm structures the transaction and documents the reinvestment (eligibility of activities, 70% threshold, three-year period, five-year holding, control of acquired companies, substance of the holding company). For a transfer, it identifies the deferred gains attached to the shares, retrieves their amount and rate from the returns for the year of contribution and quantifies the tax under the current text and under the bill, including the instalment plan and the security to be provided.
In a tax audit, the defence focuses on compliance with the conditions of the deferral, the economic nature of the reinvestment and challenging the characterisation of abuse of tax law and the surcharges, the burden of proof for which lies with the tax authorities. Where appropriate, an advance tax ruling secures a future transaction.
Contribution-disposal 150-0 B ter and the 2027 Finance Bill: your questions
Is contribution-disposal still possible after the 2027 Finance Bill?
Yes. The 2027 Finance Bill abolishes neither the tax deferral nor the reinvestment condition: the contribution to a controlled holding company, the sale by the holding company and the reinvestment of at least 70% of the proceeds within three years would work as they do today. Only the fate of the deferred gain on a gift or inheritance of the holding company shares changes, and the bill has not yet been passed.
What share of the proceeds must be reinvested, and within what period?
For sales of contributed shares made from 21 February 2026 within three years of the contribution, at least 70% of the proceeds, within three years of the sale, in industrial, commercial, craft, agricultural or professional activities, by financing operating assets, acquiring control, subscribing to share capital or subscribing to eligible fund units. Reinvested assets are held for at least five years. For earlier sales, the threshold was 60% and the period two years.
What happens to the deferred gain if I give my holding company shares?
Today, the donor is definitively exempt on the shares given; if the donee controls the holding company, the donee takes over the deferral and must hold the shares for six years, eleven where reinvested in funds. Under article 5 of the 2027 Finance Bill, the gift would end the deferral and make the gain taxable in the donor’s name, for gifts made from 1 October 2026, if the text is adopted as drafted.
And on death?
Under current law, the deferred gain is exempt on the contributor’s death. The 2027 Finance Bill targets any transfer, including on death: the gain would become taxable on death, the practical payment arrangements remaining to be clarified. It is a point to follow during the debates.
Should I make a gift before 31 December 2026?
No, not to escape the measure: the bill targets transfers made from 1 October 2026. A gift made before the end of the year would therefore be caught if the text is adopted with that date. Timing is decided on the merits of the case.
How do I run a contribution-disposal simulation?
Start from the gain reported for the year of the contribution, pro rata to the shares transferred, and apply that year’s rates: as a rule 12.8% income tax and 17.2% social levies for a contribution made from 2018 to 2025. The firm’s Dutreil simulator (in French) performs this calculation, together with gift duties with and without a pact, under current law and under the 2027 Finance Bill. For a contribution made before 2018, the tax follows rules specific to the year of contribution (progressive scale, possible allowances, special regime for contributions made at the end of 2012) and requires a case-by-case analysis.
When should I involve a contribution-disposal lawyer?
Before the contribution, to check control, the cash adjustment and the substance of the holding company; before the sale by the holding company, to build an eligible reinvestment plan; before any gift or reorganisation of the holding company shares, to quantify the tax under the current text and under the bill; and as soon as a reassessment notice is received. The firm acts at these four stages, in advisory and litigation work.
When is abuse of law established?
Where the interposition of the holding company is artificial and aims solely at avoiding tax, with no substance or genuine reinvestment, the executive in practice appropriating the cash. More broadly, abuse of law covers sham transactions and transactions that turn the letter of a provision against its purpose for exclusively tax reasons. The surcharge is then 80%, reduced to 40% where it is not established that the taxpayer was the main instigator or the main beneficiary of the arrangement.
Contribution-disposal, transfers and tax litigation
Contribution-disposal and transfers: quantify before signing
An initial confidential discussion to verify the conditions of the deferral, secure the reinvestment and measure the effect of the 2027 Finance Bill on your transfer.
Sources
- Article 150-0 B ter of the French Tax Code, version in force since 21 February 2026 (Légifrance, consulted on 5 October 2026)
- Article 11 of Law no. 2026-103 of 19 February 2026 (2026 Finance Act): reinvestment raised from 60% to 70%, reinvestment period from two to three years, holding of reinvested assets to five years, donee periods to six and eleven years; sales of contributed shares made from 21 February 2026
- Article 199 terdecies-0 A, I, C, 3° of the French Tax Code (eligible activities)
- BOI-RPPM-PVBMI-30-10-60-20 (27 August 2026) and BOI-RPPM-PVBMI-30-10-60-30 (10 August 2026)
- 2027 Finance Bill, no. 3210, tabled at the National Assembly on 1 October 2026, article 5 and explanatory statement (not passed)
- Article L. 64 of the Book of Tax Procedures and article 1729 of the French Tax Code (abuse of law and surcharges)
Cette note présente l'état du droit à sa date de publication et ne constitue pas un avis juridique. Chaque situation appelle un examen particulier.
This page presents the contribution-disposal regime for information purposes; every case calls for a specific analysis. Law in force at 5 October 2026; the developments on the 2027 Finance Bill concern a text that has not been passed and may be amended before adoption.