Selling Company Shares in France: Tax, Formalities and Seller Strategy

Selling a French company by way of a cession de titres (share sale) means transferring the legal entity itself — not simply its trading assets or goodwill. The buyer acquires shares (actions in a SAS or SA) or partnership interests (parts sociales in a SARL), together with everything the company holds: assets, liabilities, contracts, history, and contingent risks. This has a direct bearing on price, warranties, and — critically for the seller — the net amount actually retained after tax.

In 2026, the tax choices available to a French-resident seller are more nuanced than a flat headline rate suggests. The default PFU flat tax (prélèvement forfaitaire unique) applies at 31.4%, but a retiring director may reduce the taxable base by a fixed 500,000 € relief under article 150-0 D ter of the French Tax Code (CGI). A seller who structures the transaction through a holding company may defer the liability altogether under article 150-0 B ter. Each route carries its own conditions, and choosing the wrong one — or missing a deadline — can cost tens of thousands of euros.

In brief: a cession de titres transfers shares directly. Capital gains are taxed at the PFU of 31.4% (12.8% income tax + 18.6% social levies) or, on election, at the progressive income tax scale. A retiring SME director may benefit from a fixed 500,000 € abatement on the income-tax base only (not on social levies). A pre-sale contribution to a controlled holding can defer the tax, subject to reinvestment rules if the holding sells within three years.

A cession de titres differs fundamentally from a cession de fonds de commerce (sale of the business as a going concern). In a business asset sale, the buyer acquires specified assets — clientele, trading name, equipment, lease — but does not take on the company's historical liabilities. In a share sale, the buyer takes the company as it stands, including unknown or contingent liabilities. The seller's advantage is operational simplicity and, in many cases, a lighter tax charge. The buyer's exposure is broader, which is why sellers are routinely asked to provide substantial warranties.

For a broader comparison of transfer methods, see our analysis Choosing the Right Transfer Method.

The legal form of the company being sold affects formalities, approval requirements, and — most tangibly — the registration duties (droits d'enregistrement) paid by the buyer.

Sources: articles 726 and 728 of the CGI, BOFiP, entreprendre.service-public.fr.

On a transaction of 1,000,000 €, the difference in registration duties between shares and partnership interests is material: approximately 1,000 € for shares versus roughly 29,310 € for partnership interests (3% on 977,000 € after the pro-rated abatement). This gap is typically factored into price negotiations.

French capital gains on the sale of securities by an individual are subject by default to the PFU at 31.4%: 12.8% income tax (IR) and 18.6% social levies (prélèvements sociaux, including 9.2% CSG). The seller may instead elect the progressive income tax scale (barème), but this election is global — it applies to all capital income for the year, not just the share sale gain.

Rates as at May 2026. Confirm current social levy rate and any LFI 2026 amendments at BOFiP.

The election between PFU and the progressive scale depends on the seller's marginal tax rate in the year of the sale. Where the seller's other income is limited — for example, because they have stopped drawing a salary before the sale — the progressive scale can produce a lower overall charge, particularly on modest gains. The calculation must cover the full household income picture for the year.

Article 150-0 D ter of the CGI provides a fixed abatement of 500,000 € on the capital gain for SME directors who sell their shares in connection with their retirement. The relief has been extended to 31 December 2031. It is one of the most significant tax reliefs available in a French share sale — and one of the most frequently misunderstood.

The main eligibility conditions (not exhaustive — verify at BOFiP, BOI-RPPM-PVBMI-20-30):

• The company must qualify as an SME under the EU definition;
• The seller must have held a management role in the company for at least five years;
• The cessation of management functions and the retirement date must both fall within two years either side of the sale date;
• The shares must generally be held directly (not through an intermediate holding in certain configurations);
• The seller must not retain any rights in the acquiring company after the sale.

The point most often missed in practice: the 500,000 € abatement reduces the income-tax base only. It does not reduce the base for social levies (18.6% in 2026). Social levies apply to the full capital gain before the abatement. The relief is also not cumulative with duration-based abatements. Eligibility must be confirmed on the specific facts before the sale is structured.

Consider a SARL director selling partnership interests with a capital gain of 600,000 € (sale price minus fiscal cost base). He meets the conditions for the 500,000 € abatement. His marginal income-tax rate is 30%.

The difference is 46,800 € in favour of the retiring director regime in this scenario. This is illustrative only: it excludes the partial deductibility of CSG, any social contributions due on the director's remuneration, and other income of the year. A full simulation on actual figures is essential before deciding.

Under article 150-0 B ter of the CGI, a seller who contributes their shares to a holding company they control before the sale can place the resulting capital gain in suspended tax (report d'imposition). No tax is due at the time of the contribution. The deferred liability remains in suspense until a triggering event occurs.

Two scenarios govern what happens next:

1. The holding retains the shares for more than three years: the deferral continues. The tax only crystallises when the holding subsequently sells the shares or when another triggering event occurs.
2. The holding sells the shares within three years of the contribution: to maintain the deferral, the holding must reinvest at least 60% of the sale proceeds in an eligible economic activity within two years. If it does not, the deferred tax falls due immediately.

Apport-cession is a reinvestment tool, not a permanent exemption. Its value lies in allowing the seller to redeploy capital — into a new business acquisition, for instance — without an immediate tax charge eroding the investable sum. It requires a holding company to be in place and controlled by the seller before the contribution, and a careful analysis of the sale timeline.

For context on holding company structures, see Creating a Holding Company After an Acquisition.

In a SARL, any sale to a third party triggers a mandatory approval (agrément) process under article L. 223-14 of the Commercial Code. The partners must be informed and have a statutory period in which to respond. If they refuse, they must arrange for the interests to be purchased by the existing partners or a third party acceptable to them at the agreed price — failing which, the approval is deemed granted. This process can take several weeks and must be factored into the deal timeline.

In a SAS, no statutory approval right exists unless the articles or a shareholders' agreement create one. Where an approval clause exists, its wording matters: some require majority approval by the partners collectively; others delegate the decision to a specific corporate body. Pre-emption rights, tag-along, drag-along, and anti-dilution clauses embedded in shareholders' agreements can also significantly affect how — or whether — a sale proceeds.

The pacte Dutreil (article 787 B of the CGI) is a distinct mechanism for gratuitous transfers — gifts or inheritances — rather than sales. It provides an exemption of 75% of the share value from inheritance and gift tax, subject to collective and individual holding commitments. The Finance Act for 2026 amended certain conditions, including extending the individual holding commitment period and excluding certain non-operating assets — the precise conditions are to be verified at BOFiP and in the Finance Act 2026.

If your planning involves a family transfer rather than a commercial sale, this regime warrants separate analysis. It does not apply to arm's-length share sales.

A professionally managed share transfer proceeds through the following stages:

1. Review all transfer restrictions: articles of association, shareholders' agreement, pre-emption rights, and any approval requirements. Identifying a block at this stage prevents costly delays later.
2. Calculate the fiscal capital gain: sale price minus fiscal cost base, including acquisition costs. Note that the fiscal cost base may differ from book value, particularly after past restructurings or contributions.
3. Model the tax scenarios: PFU versus progressive scale; eligibility for the 500,000 € abatement; feasibility of an apport-cession structure. The simulation must cover the household's full income for the year.
4. Conduct a buy-side audit: accounts, key contracts, disputes, client concentration, employment situation. A clean file accelerates the negotiation.
5. Draft and sign the transfer deed: covering price, conditions, warranty provisions (cap, duration, scope), any earn-out mechanics, and payment terms.
6. File the registration formalities: for share transfers not recorded in a deed, file form 2759 within one month via impots.gouv.fr. For partnership interests, register the deed within the statutory period.
7. Update the company's share registers: register of share movements, list of partners, and any required public filing at the commercial court (greffe) for a SARL.
8. Report the gain in the annual tax return: using form 2074 or 2042 C as applicable, with the elected tax treatment stated clearly.

The French tax authority (Direction générale des finances publiques) pays particular attention to several aspects of share sale files:

• Consistency between the declared price and the economic value of the company. A price that is manifestly below market value — particularly in sales between related parties — may be challenged.
• Eligibility for reliefs claimed: the conditions under articles 150-0 D ter and 150-0 B ter are scrutinised, including the timing of retirement and cessation of functions, and the nature of the reinvestment made by the holding.
• Compliance with filing deadlines: late or omitted declarations attract penalties.
• Valuation in real-estate-heavy companies, where the 5% registration duty rate applies and where the tax authority may review whether the property assets have been correctly valued.

Three situations recur in the share sale files we work on.

A director approaching retirement had not planned the two-year window required for the 500,000 € abatement. The planned sale date fell before the formal cessation of his management functions, making the relief unavailable as structured. Adjusting the timetable — combined with a formal resignation from the management role — secured eligibility. This kind of adjustment is impossible after the sale has completed.

A SARL transfer was negotiated without the articles of association having been reviewed. An approval clause gave the existing partners three months to respond. The buyer, who had expected a quick closing, threatened to withdraw. Reading the articles at the outset would have prevented this friction entirely.

On the PFU versus progressive scale question, we regularly find that sellers default to PFU without running a simulation. For directors whose other income is limited in the year of the sale — particularly if they stopped taking a salary before the transaction — the progressive scale can produce a materially lower total charge on modest gains. The calculation costs little to run and is always worth doing.

The tax position on a share sale cannot be corrected after signing. It is built into the structure of the transaction — the price, the chosen regime, the warranties, and the timeline — from the outset. We work with directors at the planning stage, from business valuation through to post-sale wealth structuring. Where a sale is likely within the next two to three years, early analysis of retirement timelines, holding structures, and fiscal cost bases is where the most value is created.

For directors managing their professional and personal wealth together, our director wealth management service provides the framework for this planning.

Limitation note. This article sets out general principles as at May 2026. It does not replace analysis of your specific facts and the legislation applicable at the date of your transaction. Eligibility conditions for reliefs under articles 150-0 D ter, 150-0 B ter, and 787 B of the CGI must be verified at BOFiP and with a qualified adviser. Rates and thresholds may change. Consult your accountant and, for the legal drafting, a qualified lawyer before acting.