Goodwill Amortization in France 2026: Tax Rules, Accounting and Practical Cases

Updated 15 May 2026.

Goodwill amortization in France sits at a crossroads between accounting rules and tax law — and the two have not always agreed. A temporary reform introduced by the Finance Act 2022 (LFI 2022, art. 23) created a narrow window of tax deductibility for business goodwill acquired between 1 January 2022 and 31 December 2025. Understanding what changed, what remains unchanged, and what to expect for acquisitions made in 2026 is essential before signing any business transfer agreement.

In brief: Before LFI 2022, accounting amortization of goodwill was permitted under PCG rules but was never tax-deductible. LFI 2022 opened a temporary deduction window for qualifying SME acquisitions from 2022 to 2025. For 2026 acquisitions, the default rule — accounting amortization with no tax deduction — should apply again, unless an extension is confirmed (unconfirmed as of the date of this article).

Following the 2015 reform of the French Chart of Accounts (Plan Comptable General, PCG), goodwill may be amortized over its useful life if that life can be reliably estimated. Where no reliable estimate is possible, the PCG requires straight-line amortization over ten years.

However, the General Tax Code (CGI art. 39-1-2) has long excluded the tax deductibility of such amortization. The practical result was a recurring accounting charge that had to be added back in the tax return each year — a compliance burden with no immediate tax benefit.

The Finance Act for 2022 introduced an exceptional derogation: for goodwill acquired (not created) between 1 January 2022 and 31 December 2025, the annual accounting amortization becomes tax-deductible, provided the acquiring company qualifies as an SME under EU criteria (fewer than 250 employees, annual turnover below EUR 50 million or balance sheet total below EUR 43 million).

This temporary measure aimed to support business succession in the post-Covid environment by improving cash flow for acquirers during the holding period.

Key conditions of the temporary regime:

• Only acquired goodwill qualifies — not internally generated goodwill
• The acquisition date is determinative: a signing on 2 January 2026 would fall outside the window
• The deductible amount is capped at the accounting amortization charge for the year
• Amortization must be calculated over the useful life, or over ten years on a straight-line basis if no reliable useful life can be established
• Annual impairment testing remains mandatory regardless of amortization method

The useful life of goodwill is not an arbitrary parameter. It must be supported by a documented economic analysis covering:

• Customer retention: historical loyalty rates, purchase frequency, competitive intensity
• Geographic anchoring: is the goodwill tied to a physical location (bakery, artisan) or transferable regardless of location?
• Market durability: growing, stable, or declining sector?
• Key-person dependency: does the value depend heavily on the seller remaining involved?
• Brand transferability: can the goodwill and its reputation travel with the business without the seller?

A period of five to ten years is typically retained for standard commercial goodwill. Shorter durations of three to five years may be justified for highly competitive sectors or activities strongly linked to the seller.

At acquisition:

Goodwill is recorded at cost (agreed price plus directly attributable acquisition costs: notary fees, registration duties, advisory fees) in account 207 — Fonds commercial.

Each financial year — amortization:

• Debit: 68111 — Dotations aux amortissements des immobilisations incorporelles
• Credit: 2807 — Amortissement du fonds commercial

Annual impairment test (PCG art. 214-15):

At each year-end, the recoverable amount of the goodwill must be compared with its net book value (NBV). Where recoverable amount is below NBV, an impairment loss must be recognized:

• Debit: 68162 — Dotations aux depreciations des immobilisations incorporelles
• Credit: 29071 — Depreciation du fonds commercial

For goodwill within the LFI 2022 window:

• The annual amortization charge is tax-deductible: no add-back is required on Form 2058-A
• The tax authorities may challenge the useful life if not supported by documented economic analysis

For goodwill outside the window (pre-2022 or post-2025 acquisitions):

• The annual accounting charge must be added back on Form 2058-A (permanent difference)
• Impairment losses remain deductible under CGI art. 39-1-5 if conditions are met
• Systematic tracking is required in the reconciliation table between accounting profit and taxable income

PCG art. 214-15 requires an annual impairment test for all intangible assets, whether amortized or not. The test compares:

• Recoverable amount (RA): the higher of fair value less costs to sell and value in use
• Net book value (NBV): gross cost minus cumulative amortization and prior impairment

Where RA < NBV: an impairment loss must be recognized.

The underestimated risk: a business owner who acquires goodwill in a competitive sector and skips the annual impairment test is taking an accounting presentation risk. Deteriorating conditions — loss of key customers, closure of a commercial location, unfavorable market shift — that are not reflected in the accounts may be flagged during a tax compliance review (ECF) or an audit as an irregular understatement of results.

The gain on disposal of goodwill is calculated as (PCG art. 322-9, CGI art. 39 duodecies):

Gain = Sale price minus Net book value (NBV)

NBV decreases as amortization accumulates. For EUR 300,000 of goodwill amortized at EUR 30,000 per year, the NBV after five years is EUR 150,000. If the goodwill is sold for EUR 350,000, the taxable gain is EUR 200,000 — not EUR 50,000 as it would have been without amortization.

The temporary tax deduction during the holding period creates a short-term cash flow benefit, but it inflates the taxable gain on exit. The overall assessment depends on the holding period, the applicable corporate tax rate, and whether the gain qualifies as short-term or long-term under French rules.

Tax Trade-Off: Holding Period and Corporate Tax Rate#

The treatment decision should never be made without modelling the disposal and its tax consequences.

A limited company (45 employees, EUR 3.2 million turnover) acquires a traditional bakery business in the 12th arrondissement of Paris in March 2024 for EUR 300,000.

Eligibility for LFI 2022:

• Acquisition between 2022 and 2025: yes (March 2024)
• EU SME criteria: yes

Useful life retained: 10 years straight-line — stable local customer base, solid commercial location

Annual amortization: EUR 300,000 / 10 = EUR 30,000 per year

Tax deductibility: yes, under the LFI 2022 regime. Annual corporate tax saving at 25%: EUR 7,500 per year, giving EUR 75,000 in cumulative savings over 10 years.

On disposal — assumption: sale for EUR 320,000 in 2031, after 7 years:

• NBV in 2031: EUR 300,000 - (7 x EUR 30,000) = EUR 90,000
• Taxable gain: EUR 320,000 - EUR 90,000 = EUR 230,000

A partner lawyer acquires a colleague's client base in January 2026 for EUR 1,500,000.

Eligibility for LFI 2022:

• Acquisition in 2026: outside the window (the regime covered acquisitions up to 31 December 2025)
• No confirmed extension in LFI 2026 as of this article's date

Applicable regime: default rule (CGI art. 39-1-2)

• Accounting amortization possible over useful life — e.g., 5 years for a client portfolio closely linked to the seller
• Annual charge: EUR 1,500,000 / 5 = EUR 300,000 per year — accounting charge only
• Mandatory add-back each year: no reduction of corporate income tax
• Impairment deductible if conditions met

Our view: for goodwill acquired in 2026 outside the LFI 2022 window, the analysis shifts to the initial purchase price allocation across separately identifiable assets. A portion of the price may be attributable to separable intangibles — identified customer relationships, brand, specific contracts — that qualify for different treatment. This allocation should be documented and reviewed with a chartered accountant and, where appropriate, a tax lawyer, before the transaction closes.

1. Amortizing without completing the annual impairment test

Recording amortization without performing the PCG art. 214-15 test is a presentation error. During an ECF or audit, the absence of the test can be flagged even if no impairment loss was actually due.

2. Misclassification: goodwill vs. brand vs. customer relationships vs. patents

A single acquisition price may bundle several distinct intangible assets. A brand can be separable and amortized differently. Customer relationships may qualify as a distinct asset depending on their contractual nature. The initial allocation determines all subsequent accounting and tax treatment.

3. Useful life not supported by documented analysis

Defaulting to 10 years without economic analysis leaves the file exposed during an ECF. The tax authorities routinely scrutinize the basis for the useful life chosen.

4. Confusing the annual tax saving with the overall economic advantage

The deductions accumulated during the holding period may be partially or fully offset by the increased gain on disposal. A full simulation covering all years of ownership and the exit scenario is essential.

5. Forgetting the add-back for out-of-window acquisitions

For goodwill acquired before 2022 or after 2025, failing to add back the accounting charge in the tax return constitutes a filing error that may trigger interest and potentially penalties.

The Examen de Conformite Fiscale (CGI art. 1739 A) covers the conformity of amortization and impairment charges. For goodwill, the key points reviewed include:

• Existence and conformity of the amortization schedule
• Consistency between the useful life retained and the economic reality
• Performance and documentation of the annual impairment test
• Correct tax add-back or deduction depending on the applicable regime
• Consistency between the accounting treatment and Form 2058-A

Subscribing to an ECF in the acquisition year and the first amortization years provides documented assurance and protection against penalties on this specific point.

Discover our ECF advisory service

• LFI 2022 extension: verify in the final LFI 2026 text and BOFiP documentation. No confirmation available as of the date of this article.
• Acquisitions currently under negotiation: the signing date of the deed of transfer determines eligibility — plan ahead before the negotiation closes.
• Restructurings and contributions: the LFI 2022 regime applies only to acquisitions for value. Contributions in kind, mergers, and partial asset contributions may follow different rules.
• Change of method: switching from a non-amortized to an amortized treatment requires justification and must be handled as a change in accounting method.

Goodwill amortization is never a standalone decision. It fits within a broader framework: acquisition price, financing structure, intended holding period, exit strategy, legal structure of the owner (sole trader or corporate entity subject to corporate tax), and future exposure to capital gains taxation.

This article reflects the rules in force as of 15 May 2026 and provides general information only. It does not replace a review of your specific transaction documents, acquisition structure, and applicable law at the date of your operation. Sources: Legifrance (PCG art. 214-3, 214-15, 322-9; CGI art. 39-1-2, 39-1-5, 39 duodecies), LFI 2022 art. 23, BOFiP BOI-BIC-AMT-10. Reviewed by Samuel Hayot, chartered accountant (expert-comptable), Paris.