Tax Deferral vs Tax Carry-Forward on Share Gains: France's 150-0 B and 150-0 B ter Regimes Explained

When a French business owner sells or contributes shares, the resulting capital gain is in principle taxable in the year of the transaction. Two legal mechanisms allow deferral of that tax charge: the automatic tax deferral (sursis d'imposition) under Article 150-0 B of the French Tax Code (CGI), and the mandatory tax carry-forward (report d'imposition) under Article 150-0 B ter. These two regimes operate on fundamentally different logic, and confusing them — or failing to anticipate the events that end a carry-forward — can trigger tax reassessments with late-payment interest.

The distinction becomes critical in share contribution and sale structures (apport-cession), where the use of a holding company may fall under one regime or the other depending solely on whether the contributor controls the receiving entity at the time of contribution.

Quick answer: the tax deferral (Article 150-0 B) applies automatically when the contributor does not control the receiving company; no reinvestment is required. The tax carry-forward (Article 150-0 B ter) is mandatory when the contributor controls the holding company; the gain is calculated and frozen at the date of contribution, and the holding must reinvest a share of the sale proceeds if it sells the contributed shares within 3 years: at least 70% within three years for disposals carried out on or after 21 February 2026, against 60% within two years previously.

The tax deferral (sursis, Article 150-0 B) works through complete neutralisation: no capital gain is calculated at the time of contribution. The gain only crystallises when the contributor later sells the shares received in exchange, measured as the difference between the eventual sale price and the original cost of the contributed shares — not their value at the time of the exchange. The contribution is, for tax purposes, as though it never happened.

The tax carry-forward (report, Article 150-0 B ter) works differently. The capital gain is calculated and frozen at the date of contribution, but taxation is suspended. The gain remains on the contributor's annual tax return as a latent tax liability until a qualifying end-of-carry-forward event occurs. The holding company then has its own obligations to fulfil.

The deferral covers share exchange transactions where the contributor does not take control of the receiving company. Typical cases include:

• contributing shares to a company subject to corporate tax (IS) where the contributor holds a minority or non-controlling interest;
• mergers and demergers between IS-taxed companies;
• public exchange offers (OPE).

The non-control condition is central. If the contributor holds, directly or indirectly, alone or with their spouse, ascendants, descendants or siblings, more than 50% of voting rights or profit rights in the receiving company, the deferral does not apply. The mandatory carry-forward regime takes over.

A cash consideration (soulte) paid to the contributor at the time of the exchange can also disqualify the operation if it exceeds 10% of the nominal value of the shares received. Above that threshold, the portion of the gain corresponding to the cash becomes immediately taxable.

The carry-forward applies whenever the contributor controls the receiving company within the meaning of Article 150-0 B ter. Control is assessed broadly: it is sufficient for the contributor to hold, alone or with their spouse, ascendants, descendants or siblings, a majority of voting rights or profit rights, or to exercise effective decision-making power.

In practice, this is the standard apport-cession structure: the business owner holds or creates a holding company (IS-taxed), contributes their shares in the operating subsidiary to that holding company, and the holding then sells those shares to an external buyer. This sequence mechanically triggers the mandatory carry-forward.

An annual reporting obligation follows. The gain frozen at contribution must be disclosed on Form 2074-I each year until the carry-forward is fully extinguished — which may span a decade or more. In our experience, the most common trigger for tax audits on these structures is the absence of this annual disclosure, which the administration requests routinely during reviews.

If the holding company sells the contributed shares within three years of the contribution, it must reinvest a share of the sale proceeds into an eligible economic activity: at least 70% within three years for disposals carried out on or after 21 February 2026, against 60% within 24 months previously. The reinvested assets must then be held for five years (Law 2026-103 of 19 February 2026). That 60% threshold, itself raised from 50% for contributions made on or after 1 January 2019, remains applicable to disposals carried out before 21 February 2026.

The conditions for eligible reinvestment are as follows:

1. Direct business activities: the reinvestment must finance a commercial, industrial, craft, professional or agricultural activity carried out by the holding or a subsidiary. For disposals carried out on or after 21 February 2026, the eligible perimeter is narrower: property letting, property development, property dealing, passive wealth management, financial activities and activities with regulated tariffs are excluded, while hotel operations remain eligible.
2. Capital subscriptions: subscription to the initial capital or capital increases of companies carrying out eligible activities — excluding companies with predominantly real estate assets.
3. Private equity vehicles: units in eligible FCPR, FPCI, SLP or SCR funds, subject to a minimum holding period of 5 years.
4. Minimum holding period: 12 months for direct reinvestments and 5 years for private equity vehicles as regards disposals carried out before 21 February 2026; for disposals carried out on or after that date, the reinvested assets must be held for five years.
5. Documentation: the holding must be able to substantiate the nature, amount and date of each reinvestment, with supporting contracts and bank evidence.

Failure to comply triggers the end of the carry-forward for the non-reinvested portion. The frozen gain is brought back into charge at the flat-rate tax (PFU) of 31.4% applicable since 1 January 2026 (12.8% income tax + 18.6% social levies, following the 1.4-point CSG increase under the 2026 Finance Act), or optionally at the progressive income tax scale.

A business owner contributes shares in year N. The company is valued at €2,000,000; the original acquisition cost was €200,000. The frozen capital gain at contribution is €1,800,000.

The holding sells the contributed shares in year N+2 (within 3 years) for €2,000,000. As the disposal takes place after 21 February 2026, it must reinvest at least 70%, i.e. €1,400,000, within three years, and hold the reinvested assets for five years (against 60%, i.e. €1,200,000, within 24 months for an earlier disposal).

This example shows why reinvestment planning must begin at the moment the holding signs the sale agreement, not 18 months later.

Four events bring the tax carry-forward to an end, in whole or in part:

1. Sale, buy-back or cancellation of the shares received by the contributor. If the business owner sells their shares in the holding, the carried-forward gain becomes immediately taxable, regardless of any reinvestment by the holding.

2. Sale of the contributed shares by the holding without reinvestment. As detailed above, if the sale occurs within 3 years and the reinvestment threshold is not met, the non-reinvested fraction is recalled.

3. Transfer of tax residence outside France. Leaving France triggers the exit tax under Article 167 bis of the CGI, which crystallises and makes the carried-forward gain payable. Payment deferrals are available depending on the destination country. Our article on exit tax 2026 and Article 167 bis covers the applicable deferral mechanisms in detail.

4. Gift of shares received, followed by a sale. If the donee sells the shares within 5 years of receiving them as a gift (or 10 years for certain long-term reinvestments), the carried-forward gain is recalled and taxed in the hands of the donor.

In our practice, the fourth trigger is the most consistently underestimated. Business owners who plan family wealth transfers after a contribution often overlook the fact that the donation does not automatically extinguish the carry-forward. Succession planning must account for the timing of the donation and the donee's holding period.

No. The fixed €500,000 exemption under Article 150-0 D ter of the CGI is reserved for direct share disposals by a retiring business owner. It requires the owner to personally sell their shares — not to contribute them to a holding company first.

The apport-cession structure is a disposal through an intermediary entity, not a direct disposal. The €500,000 exemption therefore does not apply to the gain frozen under the carry-forward. Some practitioners explore hybrid structures combining a partial direct sale (benefiting from the exemption) with a contribution of the remainder, but these arrangements require careful analysis of the shareholder's specific situation, timeline and valuations. The exemption is available for disposals made up to 31 December 2031.

The choice between a direct disposal with the retirement exemption and an apport-cession into a holding is one of the most consequential fiscal decisions for a business owner approaching succession. Our guide on share disposals sets out the key decision criteria, and our article on holding company taxation addresses the specific constraints of interposed structures.

The French tax administration (DGFiP) focuses on several points when reviewing apport-cession arrangements:

• Whether the contributor genuinely controlled the holding at the date of contribution, and whether the carry-forward regime therefore applied.
• Whether the three-year window between contribution and disposal of the contributed shares was respected.
• The economic substance of reinvestments — in particular, whether the receiving entity genuinely carries on an eligible activity and whether real estate preponderance rules are breached.
• The continuity of annual carry-forward disclosures.
• Absence of tax abuse (abus de droit): the structure must not have been set up with the sole purpose of deferring tax without genuine economic rationale.

Our dedicated article on securing 150-0 B ter operations in 2026 covers documentation best practices and recent administrative positions.

The deferral versus carry-forward distinction is not usually a choice — it follows from the legal structure selected. What is decidable is the upstream structuring of the operation, particularly the question of control over the holding, and the downstream management of reinvestment obligations.

The most frequent errors we see in client files are: underestimating how long the annual reporting obligation runs (sometimes over a decade), failing to anticipate carry-forward end events when planning family transfers, and not documenting reinvestments rigorously from the moment they are made.