Selling shares in a French property-rich company: what registration duty applies?

How do you tell whether a company is property-rich?

Under article 726, I, 2° of the CGI, a legal entity is property-rich where, "whatever its nationality", its shares are not traded on a regulated market or a multilateral trading facility and its assets consist, or consisted during the year preceding the transfer, mainly of real estate or real estate rights located in France, or of interests in unlisted legal entities that are themselves property-rich (Légifrance).

• The ratio. The tax authorities place in the numerator the value of real estate and real property rights located in France and of interests in property-rich companies, and in the denominator the value of all gross assets, French and foreign. The company is caught above one half, each item being taken at its actual market value (BOI-ENR-DMTOM-40-10-10, § 110).
• Operating real estate counts. Unlike article 150 UB (capital gains), article 726 does not exclude buildings used in the company's own business: the authorities include them "whether or not it allocates them to its own operations" (same BOI, § 110).
• Fixtures do not count. The text refers only to real estate and real property rights, not to movables that are immovable by destination (Cass. com., 2 December 2020, below).
• Chains of companies. An interest in a company that is itself property-rich goes into the numerator, whatever the number of intermediate levels and the nationality of the intermediate companies (§ 110).
• The preceding year. It is enough that the condition was met at any time during the year before the transfer, unless, according to the authorities, the company lost that status during the year by selling its real estate or its property-rich interests (§ 120).
• Exclusions. Listed companies, social housing bodies (HLM), semi-public social housing companies and certain property companies covered by article 199 terdecies-0 AB are excluded (art. 726, I, 2°).

What is the 5% duty calculated on?

The duty is levied "on the stated price and the capital value of charges that may add to the price, or on an estimate by the parties if the actual value is higher than the price plus charges" (art. 726, II). The authorities may adjust a price below actual market value, under the adversarial reassessment procedure and with the burden of proving the shortfall (art. 666; LPF, art. L. 17).

The company's liabilities are a charge added to the price only where the buyer releases the seller from a personal debt or from a guarantee given for the company (BOI-ENR-DMTOM-40-10-20, § 120). Repayment of the seller's shareholder loan account is treated as an assignment of a receivable, subject to the fixed duty (same BOI, § 200, in respect of construction companies).

No allowance applies. The allowance equal to €23,000 divided by the total number of shares is reserved for transfers of partnership-type shares under 1° bis, "other than those subject to the rate referred to in 2°" (art. 726, I, 1° bis). The exemptions in II (intra-group acquisitions, companies under safeguard or receivership, buy-backs for an employee savings plan) cover only 1° and 1° bis: they do not cover the 5% duty. Transfers resulting from repurchase transactions (pensions) governed by the Monetary and Financial Code, for their part, escape all the charges of article 726.

Lastly, for a company whose capital is not divided into shares of stock and which is not liable to corporate income tax, a transfer of shares within three years of a contribution in kind is treated as a transfer of the contributed assets themselves (art. 727).

What happens when the company or the signing is abroad?

The definition applies "whatever its nationality": a Luxembourg or Swiss company whose assets consist mainly of real estate in France is caught. The registered office is irrelevant.

• Registration within one month. The deed of transfer must be registered within one month of its date, "including where these transfers are carried out abroad and whatever the nationality of the parties" (CGI, art. 635, 2, 7° bis). Registration requires production of the deed required by article 1865-1 of the Civil Code (art. 635-0 A); the return provided for transfers without a deed (art. 639) remains of practical use, for these companies, only in the cases excluded from that article.
• Notarial deed in France. Where the transfer is carried out abroad, it must be recorded within one month in an authentic deed executed before a notary practising in France (art. 726, III, A).
• Tax credit. Registration duty actually paid in the company's State of registration, as part of a mandatory registration formality, is credited against the French duty up to the amount of the latter (CGI, art. 718 bis). Any excess is not refunded (BOI-ENR-DMTOM-40-10-20, § 240).
• Form of the deed. Since 27 June 2026, article 1865-1 of the Civil Code requires, on pain of nullity, an authentic deed or a deed countersigned by a lawyer: see our page SCI share transfers: notarial or lawyer-countersigned deed.
• Non-resident seller. For capital gains tax, article 244 bis A requires in principle an accredited representative established in France, except in particular for a seller established in the European Union or the European Economic Area under the required assistance agreements (IV and IV bis).

Who pays the duty, and what must the deed state?

Unless the deed provides otherwise, the duty on a deed transferring ownership is borne by the new owner, that is the buyer (art. 1712). For private deeds and deeds executed abroad, it is paid by the parties (art. 1705, 5°). Joint liability presupposes being a party to the deed (Cass. com., 16 September 2026, below).

The deed, or failing that the return, must expressly state whether the company is a tax-transparent co-ownership property company (art. 1655 ter), whether the shares give the buyer the enjoyment of real estate within the meaning of article 728, and whether the buyer pays or undertakes to pay debts owed by the company to the seller, with their amount (art. 726, III, B). The absence of a statement is treated as a negative statement, subject to audit (BOI-ENR-DMTOM-40-10-20, § 300).

Four decisions that settle how article 726 is read

• Fixtures excluded. The technical installations of a hydroelectric plant, immovable by destination, do not count: article 726, I, 2° refers only to real estate and real property rights, and the company remained below one half (Cass. com., 2 December 2020, no. 18-25.559, published in the Bulletin and the Report).
• Transfer of usufruct outside the scope. A twenty-year transfer of the usufruct of SCI shares, taxed at 5%, is discharged: the usufructuary is not a member, and the transfer of usufruct does not transfer ownership of the shares (Cass. com., 30 November 2022, no. 20-18.884). The authorities accept registration of the deed at the fixed duty (BOI-ENR-DMTOM-40-10-20, § 140).
• The actual value of the shares. The value of unlisted shares is assessed in the light of all the factors that come closest to the price supply and demand would produce on a real market, the company's net assets being only one of them (Cass. com., 21 October 1997, no. 95-13.769). The ruling, given for a trading company, guides the review of any tax base.
• Buy-back by an OPCI, and joint liability. The buy-back by an SPPICAV of its own shares held by its main shareholder bears 5% (art. 726, 825 and 730 quinquies) where its shareholding falls within one of the situations of article 730 quinquies, as was the case, even where it implements a capital reduction; the minutes of the board did not make the shareholder, not a party, jointly liable for the duty (Cass. com., 16 September 2026, no. 25-13.359, published in the Bulletin).

How does this duty interact with the 3% tax and capital gains tax?

Registration duty is only one of the taxes in the transaction. An entity, French or foreign, that owns real estate in France, directly or through an interposed entity, is also liable, unless exempt, to an annual tax equal to 3% of its market value (art. 990 D). See our page on the French 3% tax.

The seller's capital gain follows a different definition. For companies or groups falling under articles 8 to 8 ter, article 150 UB tests property-richness at the close of the three financial years preceding the transfer and excludes buildings allocated by the company to its own industrial, commercial or agricultural operations or to the exercise of a non-commercial profession. The two classifications may differ (see real estate capital gains).

Where the buyer is a foreign structure, see also foreign companies in France; for wider transactions, see real estate transactions.