French capital gains exemptions on business sales in 2026

Quick answer. In 2026, the French tax code recognises six main exemption or relief mechanisms on capital gains from the sale of a business: turnover-based (Article 151 septies CGI), owner retirement for BIC/BNC sole traders (Article 151 septies A CGI), transfer of a business or complete branch of activity worth up to EUR 1,000,000 (Article 238 quindecies CGI), professional real estate held for more than five years (Article 151 septies B CGI), the EUR 500,000 fixed allowance for an owner-manager selling shares in their corporate company on retirement (Article 150-0 D ter CGI, extended until 31 December 2031), and the partial exemption from transfer duties under the Dutreil pact (Article 787 B CGI). Each one has its own thresholds and cumulative conditions to secure before signing.

Many French business owners are entering their transmission window: the founders who launched in the 1990s and 2000s are reaching retirement age. On the tax side, the Finance Act for 2026 confirmed two structural points. First, the EUR 500,000 fixed allowance of Article 150-0 D ter for retiring PME owners is extended until 31 December 2031. Second, the thresholds of Article 238 quindecies are maintained as set by the 2022 Finance Act: full exemption up to EUR 500,000 of transferred elements, sliding exemption between EUR 500,000 and EUR 1,000,000.

The 2026-2031 window offers visibility, but it does not remove the need for rigorous qualification of each transaction. A finishing-trades PME owner recently asked us to help with a sale planned 18 months ahead. His initial instinct was to sell the shares of his SAS and apply the flat tax. After audit, the most efficient combination involved selling the goodwill from the operating company, followed by a liquidation surplus, because the value sat in the sliding exemption band of Article 238 quindecies. The arbitrage divided total tax by more than two, but it took six months to adjust the legal documentation.

The common mistake is to talk about "the capital gains exemption" in the singular. The French tax code distinguishes several, and their interaction depends on the legal vehicle (sole trader, corporate SARL/SAS taxed at corporate income tax, transparent partnership taxed at personal income tax), the type of asset sold (goodwill, shares, branch, real estate) and the seller's personal situation.

The Dutreil pact is not strictly a capital gains exemption: it concerns gift and inheritance duties. We include it because it almost always appears in family transmission structures combined with a partial sale.

Article 151 septies CGI covers capital gains realised in a commercial, craft, professional or agricultural activity exercised professionally for at least five years. The turnover threshold is assessed on the average of the two financial years before the sale.

For trade, restaurant and accommodation activities, as well as farming, the exemption is full when the average annual turnover (excluding VAT) does not exceed EUR 250,000. It becomes sliding between EUR 250,000 and EUR 350,000. Above that, the relief does not apply. For other activities (services, BNC professionals), the thresholds are EUR 90,000 for full exemption and EUR 126,000 for the upper limit.

A practical caveat: turnover from mixed activities is assessed globally, but must respect each sector-specific threshold when the services share is significant. The relief applies to the professional capital gain (personal income tax plus social charges for BIC/BA, personal income tax only in certain BNC cases). For transparent partnerships, the benefit is assessed at partner level.

Article 151 septies A specifically targets the sole trader or partner of a transparent partnership who sells the business on retirement. The exemption is full for personal income tax, but social charges (17.2%) remain due on the long-term capital gain.

Several cumulative conditions apply. The activity must have been exercised for at least five years. The seller must cease all duties in the sold business and claim pension rights within 24 months of the sale (before or after). The sold business must qualify as a PME under EU rules (less than 250 employees, turnover up to EUR 50 million or balance-sheet total up to EUR 43 million), and must not be owned, directly or indirectly, more than 50% by another company.

Our advice: verify the effective pension liquidation date with the pension fund before signing. An administrative delay of a few weeks can push the operation outside the 24-month window and trigger the loss of the entire exemption.

This is probably the most used mechanism for goodwill and branch transfers in French PMEs. Article 238 quindecies sets two tiers:

• Full exemption when the value of transferred elements is EUR 500,000 or less;
• Sliding exemption between EUR 500,000 and EUR 1,000,000, with the formula: exemption = (1,000,000 minus transferred value) / 500,000.

Above EUR 1,000,000, the relief does not apply. The value is assessed on the transferred assets excluding real estate (inventory, receivables and some liabilities are excluded per BOFiP commentary). The activity must have been exercised for at least five years, and after the sale the seller must have neither legal nor de facto control of the buyer, nor effective management of the transferred entity. This condition of no post-sale link is often the most debated in transactions between relatives.

The combination with Article 151 septies A is possible in some configurations (sale of a BIC sole trader business by a retiring owner), with an express election. The combination is not always the most favourable: both scenarios must be modelled before choosing.

For owner-managers of corporate companies subject to IS (SARL, SAS, SA) who sell their shares on retirement, Article 150-0 D ter provides a EUR 500,000 fixed allowance on the gain, before the flat tax (PFU 12.8%) or, on global election, the progressive personal income tax scale. The 17.2% social charges remain due on the full gain (the allowance does not reduce their base).

The mechanism is extended until 31 December 2031 by the Finance Act for 2026. The main conditions are strict: the sold company must be a PME within the EU definition (less than 250 employees, turnover up to EUR 50 million or balance-sheet total up to EUR 43 million), have carried on a commercial, industrial, craft, professional or agricultural activity for at least five years; the seller must have held the shares for at least eight years, have effectively managed the company for at least five years, cease all duties and claim pension rights within the 24 months following or preceding the sale.

The allowance is capped at EUR 500,000 per selling owner-manager. When a couple sells the shares of a company where both are managers, the allowance can apply to each, provided each individually meets the full set of conditions.

Article 151 septies B provides a 10% allowance per year of ownership beyond the fifth year on the long-term capital gain from selling a building used in the business operation. The exemption is therefore total after 15 years of ownership. The mechanism covers buildings booked as assets of a sole trader business under BIC, BNC or BA.

This mechanism often combines with a dismemberment or transfer into a family SCI several years before the sale, when the owner anticipates a structural change or a transmission. Caution: the exit of the professional asset into an SCI itself triggers a taxable capital gain at the time of transfer, which must be integrated into the overall plan.

Micro-entrepreneur. The micro-BIC or micro-BNC regime does not bar eligibility to the 151 septies and 151 septies A exemptions if the conditions (turnover, activity duration, retirement) are met. However, the capital gain calculation differs: depreciation is not added back (since it was never deducted).

SCI subject to personal income tax. The sale of SCI shares falls under private real-estate capital gains, not professional capital gains. The ownership-duration allowance leads to full personal-income-tax exemption at 22 years and social-charges exemption at 30 years.

SAS subject to corporate income tax. Selling shares falls under the private securities capital gains regime: flat tax at 30% (PFU 12.8% plus social charges 17.2%) or progressive scale on global election. Holding-period allowances (Article 150-0 D, 1 quater) apply only to shares acquired before 1 January 2018 and only when the progressive scale is elected.

Sale to a family member. Article 238 quindecies is compatible with intra-family sales, but the no-control and no-management condition post-sale must be respected strictly. Going through a Dutreil pact (Article 787 B) ahead of a gift-and-sale arrangement is often more efficient for structured family transmissions.

Sale to a holding (apport-cession). The Article 150-0 B ter mechanism allows deferral of the capital gains tax when shares are contributed to a controlled holding, subject to a reinvestment period (60% of the sale proceeds in an eligible activity within 24 months) if the holding itself sells the shares within three years. See our dedicated article on apport-cession and Article 150-0 B ter.

Six recurring mistakes appear in the transactions we audit:

1. Confusing share sales and goodwill sales. The tax regime and exemption options differ radically. Qualification must be set out from the letter of intent.
2. Discovering the 24-month deadline too late. The 151 septies A and 150-0 D ter regimes require cessation of duties and pension liquidation within that window. A one-month administrative delay can lose the exemption.
3. Mismeasuring the value transferred for Article 238 quindecies. The scope of relevant elements (excluding real estate, excluding inventory per BOFiP) must be documented precisely. A small overshoot of the EUR 1,000,000 threshold removes eligibility entirely.
4. Forgetting social charges. Articles 151 septies A and 150-0 D ter only cover personal income tax. The 17.2% social charges remain due, which changes the net cash analysis.
5. Stacking incompatible regimes. Some combinations are expressly excluded by BOFiP. Modelling must test each scenario separately before arbitrating.
6. Underestimating the no-link condition post-sale. For Article 238 quindecies, keeping an active role or a management mandate with the buyer kills the exemption.

At Hayot Expertise, we regularly see cases where the arbitrage between selling shares and selling goodwill is made at the last minute, even though it is precisely this choice that drives the entire tax outcome of the transaction. For a PME valued between EUR 600,000 and EUR 1,200,000, the winning combination is almost never the obvious one. In half the cases, selling the goodwill from the operating company, followed by a liquidation surplus, opens fiscal margins that direct share sales do not allow.

The second observation concerns the role of the calendar. The retirement-linked regimes (151 septies A, 150-0 D ter) impose a 24-month window around the sale. This constraint must be prepared at least 18 months in advance, to synchronise cessation of duties, pension liquidation with the relevant funds and the signing of the deed. Owners who anticipate less than twelve months end up working in a rush and rarely secure all the conditions.

Finally, an independent valuation upstream is a modest investment that sometimes changes the strategy. A valuation at EUR 1,050,000 loses the Article 238 quindecies exemption by a EUR 50,000 gap. A well-conducted discussion with the buyer about the scope (excluding a vehicle, a stock line, a contract) can bring the value back below the threshold and preserve the relief.

Hayot Expertise tip. The right sequence does not start with the buyer's letter of intent: it starts with a seller-side tax audit 18 months before the target signing date. That audit qualifies the operation, tests the applicable regimes, secures the retirement deadlines and quantifies the gap between scenarios. This upstream phase is where 80% of the actual optimisation is won.

• Six main mechanisms structure capital gains exemptions on business sales in 2026: Articles 151 septies, 151 septies A, 151 septies B, 238 quindecies, 150-0 D ter and the Dutreil pact (787 B).
• The EUR 500,000 fixed allowance of Article 150-0 D ter for retiring owners is extended until 31 December 2031.
• Article 238 quindecies covers transfers up to EUR 1,000,000, fully up to EUR 500,000 then on a sliding scale.
• The 17.2% social charges remain due in the retirement-linked regimes: only personal income tax is exempt or reduced.
• The 24-month deadline around the sale for cessation of duties and pension liquidation is the most frequent cause of lost exemption.
• The qualification of the operation (share or goodwill sale) must be set from the letter of intent: it drives the applicable tax regime.

Official sources#

• BOFiP - BOI-BIC-PVMV-40 (overview of professional capital gains reliefs)
• BOFiP - Article 151 septies (turnover-based exemption)
• BOFiP - Article 151 septies A (retirement)
• BOFiP - Article 238 quindecies (business transfer)
• Legifrance - Article 150-0 D ter CGI (fixed allowance for retiring owner)
• Legifrance - Article 787 B CGI (Dutreil pact)
• Service-public.gouv.fr - Professional capital gains and exemptions (French)