How to legally reduce capital gains tax when selling a French company

In 2026, the gain on a French share sale bears by default the flat tax of 31.4% (12.8% income tax plus 18.6% social levies). Three legal levers reduce it, each with its own conditions: the fixed 500,000-euro allowance for a manager retiring at the time of the sale (article 150-0 D ter of the French tax code), gifting shares before the sale, which wipes out the gain on the gifted shares, and the contribution-sale structure through a holding company (article 150-0 B ter), which defers the tax if you reinvest. All three are set up before the sale process starts: none of them works when decided at closing.

Since 1 January 2026, social levies on securities gains have risen to 18.6% (2026 social security financing act), bringing the French flat tax to 31.4%. Much online content still shows 30%, or even the pre-2018 social levies of 15.5%: always check the vintage of what you read.

On top of it, above 250,000 euros of reference income for a single person (500,000 euros for a couple), the exceptional contribution on high incomes applies at 3%, then 4%: a significant sale almost always triggers it in the year of the deal.

There remains the option for the progressive scale, global and irrevocable for the year: it only becomes attractive again for shares acquired before 2018, which keep holding-period allowances on option (up to 65%, or 85% under the reinforced regime). For shares acquired since 2018, those allowances no longer exist: the flat tax is almost always the benchmark.

Article 150-0 D ter of the French tax code grants a fixed allowance of 500,000 euros on the gain of an SME manager who sells on the occasion of retirement. In its current version (law 2026-103 of 19 February 2026), the scheme is no longer time-limited.

The conditions come down to four cumulative points: the company is an SME in the EU sense, subject to corporate tax; you held an effective management position, remunerated as your main activity, continuously for the five years before the sale, with a stake of at least 25% over that period; you cease all functions in the company and claim your retirement rights within twenty-four months before or after the sale; and you sell all your shares (or more than 50% of the voting rights).

Two limits sellers discover too late: the allowance applies to income tax only, the 18.6% social levies remain due on the full gain; and it does not combine with the holding-period allowances of pre-2018 shares: you must choose.

On a gain of 1,000,000 euros the effect is clear: 314,000 euros of tax under the flat tax without the allowance; with it, 64,000 euros of income tax (12.8% of 500,000) plus 186,000 euros of social levies, or 250,000 euros. Saving: 64,000 euros, before the high-income contribution.

Gifting shares to your children before the sale erases the latent gain on the gifted shares: a donee who resells at the gift value realises no taxable gain. In its place, the gift bears transfer duties, largely absorbed by the allowance of 100,000 euros per parent and per child, renewable every fifteen years.

Chronology is what keeps the structure alive: the gift must precede the sale and the dispossession must be real. If the sale price comes back to the donor, directly or through a scheme, the tax authority requalifies the operation as an abuse of law, with surcharges. In practice: a notarised gift while the sale is not yet legally concluded, and a price collected and kept by the donees. It is a transmission tool, not a way to recover the price: gift what you intended to pass on anyway.

If family transmission is the real subject, the Dutreil pact deserves a look: it exempts 75% of the transmitted value from transfer duties, with its own holding commitments.

If your plan after the sale is to build or invest again, contributing your shares to a holding company you control, before the sale, places the gain under a tax deferral (article 150-0 B ter). The holding then sells the shares and holds the gross proceeds with no immediate tax friction.

The discipline is strict: if the holding sells within three years of the contribution, the deferral only survives if it reinvests 70% of the proceeds within two years in an economic activity (rate applicable to sales completed since 21 February 2026, law 2026-103). The structure must exist before the sale process starts, and it only makes sense if the reinvestment is real: we covered the conditions and pitfalls in our dedicated article on the 150-0 B ter contribution-sale mechanism.

Moving abroad just before the sale. The French exit tax (article 167 bis) taxes latent gains upon transferring residence out of France above certain ownership thresholds: a rushed departure does not remove the tax, it changes its triggering event.

Structuring at closing. A gift signed after the sale agreement, a holding contribution improvised between the letter of intent and signing: chronology is the first thing the tax authority checks. The levers on this page are put in place months before the sale.

Confusing price and gain. The taxable base is the price minus the acquisition cost and expenses. Rebuilding a complete cost basis (successive contributions, acquisition costs) reduces the base from the first euro: that is file work, not a scheme. And the fate of excess cash is a separate question: we devoted a dedicated analysis to it.

A 62-year-old manager sells his SAS for 1,400,000 euros, cost basis 200,000 euros, a gain of 1,200,000 euros. Unprepared: 376,800 euros under the flat tax. Combining retirement (500,000-euro allowance against income tax) and a prior gift of 20% of the shares to his two children (gain wiped on that fraction, gift duties covered by the allowances): total tax comes out around 237,000 euros, a gap of nearly 140,000 euros, with every building block provided by the tax code. The exact figure depends on chronology, matrimonial regime and the high-income contribution: it is file arithmetic, not a rule of thumb.

The tax on a sale is decided twelve to twenty-four months before signing: checking eligibility for the retirement allowance, deciding what will be gifted, judging whether a holding makes sense, and documenting the cost basis. It is one part of our business sale assignment, together with owner wealth planning and holding structuring.