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What is the Dutreil pact for the transfer of a family business?

Having spent a lifetime creating and developing your business, you're now thinking about how to pass it on. It's normal and very good to anticipate the transfer of a family business, to avoid exorbitant costs. The most cost-effective solution for passing on your company is surely the Dutreil scheme, often referred to as the Pacte Dutreil, Dutreil agreement, which allows you to benefit from a substantial exemption from gift or inheritance tax. Follow Cabinet Sion Avocat's guide to this subject

What is the Dutrueil Pact? Transferring a family business

What is the "Pacte Dutreil"?

After giving you a detailed explanation of the TUP ("transmission universelle de patrimoine"), Cabinet Sion Avocat takes a closer look at another business transfer method, the Dutreil scheme!

The Pacte Dutreil, sometimes referred to as the Loi Dutreil, was created to facilitate business transfers by considerably reducing the tax burden on gifts and inheritances.

If you meet the conditions, the Dutreil scheme enables you to benefit from an allowance of 75% of the value of the shares, or of the value of the sole proprietorship being transferred, in accordance with Articles 787 B and C of the French General Tax Code.

In practical terms, the Dutreil scheme involves signing a commitment to retain the shares of several partners in the company.

Interestingly, if you are under 70 years of age before the gift, and you make the gift in full ownership, you can combine the Dutreil allowance with the 50% reduction in gift tax.

And if you want to pass on your business to your children, this will be in addition to the €100,000 direct line allowance in the event of donation or death...

What are the conditions of the Pacte Dutreil?

First of all, it's worth pointing out that only a tax lawyer, or a notary, will be able to tell you precisely whether or not you are eligible to sign a Pacte Dutreil. But to give you an idea, here are the general conditions.

Dutreil exemption conditions for companies

To begin with, the Dutreil system applies to shares in French and foreign companies, regardless of their tax status. Whether the company is subject to corporation tax or income tax, you can register this Dutreil pact, but it is important to note that the business must be one of the following:

  • commercial
  • industrial
  • craft
  • liberal
  • agricultural

As you can see, one of the conditions is that the company must have an operational aspect, so we can ask ourselves the question of setting up the Dutreil scheme for a holding company.

To be eligible for the Pacte Dutreil, the holding company must participate in the group's policy and control its subsidiaries, while not being newly created.

Note also that if you acquired your company for valuable consideration, you must have held it for more than two years to be eligible for a Dutreil agreement.

In addition, a collective undertaking to retain the shares after the transfer must have been made :

  • either by the deceased or by the donor, on behalf of himself and his beneficiaries free of charge, with other partners, or by a single person on behalf of himself and his beneficiaries free of charge
  • for a minimum period of two years, and must already be active on the day of the transfer
  • the commitment must cover at least 17% of the financial rights and 34% of the voting rights in the case of unlisted companies (and at least 10% of the financial rights and 20% of the voting rights in the case of listed companies).

It should be noted that an individual undertaking to retain shares must follow the collective undertaking when the shares are transferred. In other words, each heir, donee or legatee must make an individual undertaking in the declaration of inheritance or deed of gift, on behalf of himself and his successors free of charge, to retain the shares transferred for a minimum of four years after the end of the collective undertaking.


But there are two special cases.

Collective commitment deemed acquired

The collective undertaking is deemed to have been entered into when two conditions are met:

  • ownership by the deceased alone (or by the donor), or with his or her spouse for at least two years, of shares representing the above-mentioned thresholds in terms of financial and voting rights
  • the deceased, the donor or his or her spouse has been carrying on business in the company for more than two years at the date of the transfer:
    • his or her main professional activity if the company is subject to income tax,
    • a management position if the company is subject to corporate income tax.

This special arrangement is of particular interest if the company director dies before being able to sign a collective undertaking to retain shares. If all the conditions are met, his heirs will benefit from a 75% allowance on the value of the company shares transferred, in line with the Dutreil tax advantage.

Entering into a collective retention agreement after death

Where the shares transferred by death have not been the subject of a collective undertaking to retain, and the conditions for a collective undertaking deemed acquired cannot be met (see above), the heirs or legatees may enter into a collective undertaking to retain the shares within six months of the transfer.

This is referred to as a post-mortem undertaking, and all the conditions mentioned above and set out in article 787 B of the CGI must still be met.

Dutreil exemption conditions for sole proprietorships

The Dutreil tax advantage is also available to sole proprietorships. The conditions governing the business's field of activity, the length of time it has been held before the transfer and the undertaking to retain it are similar to those for partnerships.

At the same time, however, one of the heirs or donees must continue to run the business for at least three years after the transfer, and the business must be transferred in its entirety.
Finally, single-shareholder companies (EURL, SASU, EARL...) benefit from a partial exemption...

Let's take a look at how to "make" a Pacte Dutreil


The chronology of a Dutreil scheme

Now that you have all the information you need to ensure that your company is eligible for the Dutreil scheme, here's how it's organized.

There are 4 stages to a Pacte Dutreil, which we have already described in detail above.

So, to sum up, and to serve as a reminder if you're wondering how to set up a Pacte Dutreil, here are the 4 steps.


  1. Signing of a collective undertaking by the partners to hold the shares for 2 years.
  2. Transfer of company shares (by gift or inheritance in the event of death)
  3. Signature of a 4-year individual undertaking to retain shares by the person(s) taking over the company.
  4. The management function must be exercised by one of the persons receiving the shares by gift or inheritance.


So, as you can see, the 75% exemption on shares offered by the Dutreil scheme applies to all gratuitous transfers, whether gifts or inheritances.

If you want to pass on your company while you're still alive, setting up a Dutreil scheme is a legal and very attractive way of drastically reducing the tax payable on your death. The only "constraint" is that one of your heirs must undertake to take on a management role in the company.

This is a minor constraint in view of the preferential tax regime applicable to both gifts and inheritances, but it must be accompanied by a thorough understanding of the scheme, and good foresight, if you are to pass on your family business under the best possible conditions.


In conclusion, you now know more about the Dutreil scheme for transferring a family business, a perfectly legal and highly advantageous method of tax optimization... If you have any further questions, or if you would like assistance with your business transfer, please do not hesitate to contact Cabinet Sion Avocat!

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