Contribution-disposal after the 2027 Finance Bill: the article 150-0 B ter deferral

Reinvesting the sale proceeds by lending to a company

For sales of contributed shares made before 1 January 2017, article 150-0 B ter allowed, alongside the acquisition of shares conferring control and subscription to share capital, the reinvestment of at least 50% of the proceeds, within two years, « in financing a commercial, industrial, craft, professional, agricultural or financial activity, other than the management of a movable or real estate portfolio » (version in force in 2016; in French). The text did not say whether the holding company could finance that activity by lending to another company.

The Versailles Administrative Court of Appeal accepts that such a loan, granted out of the sale proceeds, may amount to an economic investment, « in light in particular of the borrower’s status, its purpose and its terms ». The court examines the term and the use of the sums lent. The borrower’s genuine business activity is not enough: the money must have been lent to finance the maintenance or development of that activity (CAA Versailles, 1st chamber, 29 September 2026, no. 24VE01998, not published in the Lebon reports; in French).

• The facts. Two holding companies had received shares by way of contribution in 2013 and sold them within the three-year period. The first had received about €2.95M and relied on three loans totalling €1.9M; the second about €1.2M and one loan of €900,000.
• The « cash facility » loans. Two agreements described the funds as a cash facility; with no evidence at all that these loans had enabled an economic investment, they are rejected.
• The loan financing the purchase of a hotel building. It may amount to an economic investment, but it was granted after the two-year period had expired: it does not count.
• The loan financing renovation works. It is accepted only for the works started after the agreement and supported by invoices, €345,000 out of the €750,000 lent; neither works prior to the agreement nor difficulties arising after it are taken into account. The reinvestment accepted remains far below the 50% threshold (€345,000 against proceeds of about €2.95M, i.e. less than 12%; the judgment states 18.15%, a rate that corresponds to €345,000 divided by the €1.9M of loans relied on): the deferral ends and the appeal is dismissed.

Since 1 January 2017. For sales made since that date (article 33 of Act no. 2016-1918 of 29 December 2016), point a of 2° of I refers to financing « permanent operating assets used in its activity », that is, the activity of the reinvesting company; the guidance reads this as the acquisition by that company of permanent assets used in its own business (BOI-RPPM-PVBMI-30-10-60-20, § 120). A loan to a subsidiary finances the borrower’s business, not the holding company’s, and falls neither under b (acquisition of shares conferring control) nor under c (cash subscription to share capital). In the firm’s reading, it therefore does not count towards the reinvestment threshold, whatever its term and use. This conclusion rests on the text and the guidance: the Versailles judgment, delivered on the earlier text, says nothing about the current one, and an appeal to the Conseil d’État cannot be ruled out.

The threshold and the period depend on the date of sale of the contributed shares: 50% within two years until 31 December 2018 (with the « permanent operating assets » wording from 2017), 60% within two years from 1 January 2019 to 20 February 2026, 70% within three years since 21 February 2026. To finance an operating subsidiary, the law provides for a cash subscription to its initial capital or to a capital increase (c), provided the subsidiary meets the activity, tax and seat conditions and the shares subscribed are held for the required period, five years for sales made since 21 February 2026.

For a holding company whose sale predates 2017 and whose reinvestment by loan is challenged, gather for each loan the agreement, its term, the actual use of the funds and the invoices, and check the dates against the two-year period. An undocumented cash facility does not pass.

Do the sale proceeds fall within the real estate wealth tax (IFI)?

The real estate wealth tax (IFI) applies only to real estate assets and rights, held directly or through companies up to the fraction of the value of the shares that represents such assets (French Tax Code, Article 964 and Article 965). The proceeds of a sale, whether received by the seller or by the seller’s holding company, therefore remain outside the tax base as long as they stay in cash or in securities with no underlying real estate.

• In principle, they enter it as soon as they are reinvested in real estate, directly or through units in an SCI or in real-estate-rich companies, taken into account for their real estate fraction (Article 965, 2°);
• Units in the collective investment schemes and funds listed in Article 972 bis are excluded only if the taxpayer holds less than 10% of the rights and taxable real estate makes up less than 20% of the assets; unit-linked units in a surrenderable life insurance policy are taken into account for the fraction representing real estate assets (Article 972);
• In a holding company controlled by the taxpayer, a building bought with the part of the proceeds that is not reinvested enters the taxable value of its shares. A reinvestment that qualifies for the Article 150-0 B ter deferral does not by itself exempt it: a building owned by a company receiving the reinvestment is excluded only if it is used in an industrial, commercial, craft, agricultural or professional activity (Article 965, 2°, a and b) or qualifies for an exemption under Article 975;
• Before the sale, premises held by the executive or the executive’s SCI and let to the operating company may be exempt as business assets, in proportion to the executive’s interest, if the executive performs genuine and normally paid duties there (more than half of professional income) and, as a rule, holds at least 25% of the voting rights (Article 975, III and VI). As the IFI is assessed on 1 January (Article 964), a building kept after the sale returns to the tax base on the 1 January following the end of the duties, unless another exemption applies.

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.

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.

Three 2026 decisions on contributions

Three 2026 decisions concern contributions of shares made in 2012, 2014 and 2016: two of the Conseil d'État, mentioned in the Lebon tables, and an unpublished judgment of an administrative court of appeal. The first was delivered on article 150-0 B ter in its wording before the law of 29 December 2016, the second on the deferral of article 150-0 B, the third on reinvesting the proceeds of a sale: carrying them over to today's contribution-disposal is a matter of reasoning, not a given.

• Several companies contributed with a balancing payment. A taxpayer had contributed to a holding company, on 29 July 2014, the shares of six companies; the deed valued each contribution separately and provided for balancing payments (soultes) for three of them (EUR 18,000, 40,000 and 90,000). The tax authority had refused the deferral for two of these contributions, the payment exceeding in its view 10% of the nominal value of the shares received. The Conseil d'État holds that, the deed individualising the value of each contribution, the 10% threshold is assessed separately for each contribution carrying a balancing payment and not globally; the taxpayer's appeal is dismissed (CE, 12 March 2026, no. 503922; in French). Section I of article 150-0 B ter as now in force keeps the 10% threshold on the nominal value of the shares received, but the decision concerns the wording before the law of 29 December 2016: the reasoning can be carried over, but it has not been tested under the current text. The consequence is not the same either: under the current text, for a payment not exceeding 10%, the gain is taxed in the year of the contribution up to the amount of the payment.
• A manager's gain and tax deferral. An executive had contributed in 2012 to a civil-law company subject to corporate income tax the shares he held (two-thirds of the capital) of the company through which he held his incentive-scheme shares, valued at EUR 58,167,973, with deferral of the contribution gain (article 150-0 B); the civil-law company sold them two days later. The Conseil d'État holds that the contribution gave the taxpayer a gain he had the use of, whether the contribution was paid for in shares or the gain was deferred, and that the court must examine whether the gain is consideration for his duties as an executive, in which case it is taxed as employment income (CE, 7 May 2026, no. 493083; remanded to the Paris Administrative Court of Appeal; in French).
• Reinvestment of 47 % instead of 50 %. A company that had received a contribution of shares in 2016 sold, six days later, 72 of the 172 shares contributed for EUR 600,884; its investments reached EUR 280,203, that is 47 % of the proceeds, at the end of the two years, against a threshold of EUR 300,442. The court holds that the condition of reinvesting 50 % within two years, which is construed strictly, was not met, and that the deferral ends for 2018; that 88 % of the proceeds were reinvested within twenty-six months and that the summer period delayed the investments makes no difference, in the court's view. It also refuses the 65 % holding-period allowance: in its view the 2016 form 2074-1 and the amount carried forward after allowance establish neither the length nor the continuity of the holding, which the taxpayer must be able to show. Finally, while the amount of the gain is computed under the base rules of the year of contribution, its taxation follows the assessment rules of the year in which the deferral ends: social levies at 17.2 % (2018), not 15.5 % (2016) (CAA Lyon, 2nd chamber, 30 June 2026, no. 24LY02184, dismissed, not published in the Lebon reports). The ruling applies the condition of reinvesting at least 50 % of the proceeds within two years; for sales of contributed shares since 21 February 2026 the threshold is 70 % within three years: the regime is more demanding on the amount reinvested and the holding of the assets, but allows one more year to reinvest. On social levies, the holding departs from article 34, II, of Act no. 2016-1918 of 29 December 2016 and from the administrative guidance (BOI-RPPM-PVBMI-30-10-60-20, § 360), which apply the rules and rate of the year in which the gain is realised: it should not be generalised.

The third is decided after the sale: track the reinvestment in figures against the exact deadline, and keep the evidence of the length and continuity of the holding of the shares.

Both points are checked before the contribution: individualise each contribution and each balancing payment in the agreement, then test the payment contribution by contribution; and, for shares arising from a management package, do not treat the deferral as protection against reclassification as employment income (see management packages and BSPCE). As a reminder of the text, transferring one's tax residence out of France ends the deferral of article 150-0 B ter (I, 4°); the gain then becomes taxable within the framework of article 167 bis, which provides for a possible payment deferral. What becomes of this deferral after departure, and what brings it to an end, is explained on our page contribution-sale and leaving France.