When company shares are sold, the capital gain realized is, in principle, immediately taxable. However,article 150-0 B ter of the CGI offers a particularly advantageous tax deferral mechanism. This system enables taxpayers to defer taxation of their capital gains under strictly defined conditions. It is part of a strategy ofwealth optimization and facilitates the restructuring of family businesses.

What is article 150-0 B ter of the CGI?

Article 150-0 B ter of the French General Tax Code is a preferential tax regime. It allows the deferral of taxation on capital gains realized on the transfer of shares to a company controlled by the transferor. Without this system, capital gains would be immediately taxed at the flat rate of 30% (flat tax) or at the progressive income tax scale, plus 17.2% social security contributions. Capital gains are calculated, but taxation is deferred until a specific triggering event occurs.

The aim of this scheme is to encourage asset restructuring without penalizing taxpayers who do not receive cash flow. In concrete terms, on a capital gain of €100,000, deferral enables immediate tax savings of at least €30,000. This deferral can be maintained for several decades, offering considerable flexibility. In particular, the mechanism facilitates the transfer of family businesses, for example when a manager transfers shares in his operating company to a holding company to prepare the transfer to his children, while retaining control.

The mechanism applies to individuals resident in France for tax purposes. It concerns contributions of shares in companies subject to corporate income tax. The company receiving the contribution must be controlled by the contributor, alone or jointly with his family group.

Conditions for application of the 150-0 B ter scheme

Application of the tax deferral is subject to compliance with strict conditions. These conditions apply both to the securities transferred and to the transferee company. Certain conditions are assessed at the level of the tax household, in particular to determine the shareholding threshold or the level of control exercised jointly with members of the family group.

Conditions relating to the securities contributed

The securities contributed must represent a substantial interest in the company. The contributor must hold at least 10% of the voting rights or rights in the company’s profits. This threshold is assessed at the level of the tax household: the holdings of the spouse or PACS partner and those of minor children are added to those of the contributor. For example, if the contributor holds 7% of the shares, his/her spouse 2% and their minor children 1.5%, the 10% threshold is reached (7% + 2% + 1.5% = 10.5%). Eligible securities may be shares or investment certificates. If the holding is less than 10%, the taxpayer may be able to benefit from the provisions of article 150-0 B, which offers tax deferral subject to other conditions.

The contribution must be pure and simple. A balancing payment may be made to the contributor, but only up to a strict limit of 10% of the nominal value of the securities received as consideration for the contribution. In concrete terms, if the contribution is remunerated by shares with a par value of €100,000, the maximum balancing payment authorized is €10,000. Beyond this ceiling, the transaction loses its character as an outright contribution and constitutes a disguised transfer. This limitation ensures that the transaction does not generate substantial cash for the contributor. Failure to comply with this rule will result in immediate taxation of the capital gain realized.

Conditions relating to the beneficiary company

The transferee company must be controlled by the contributor. This control is assessed within the meaning of Article 150-0 B ter, i.e. the holding of more than 50% of voting rights or rights in profits. Control may be exercised alone or jointly with the contributor’s spouse, PACS partner, ascendants or descendants.

The beneficiary company must have its registered office in France or in a member state of the European Union. It must also be subject to corporate income tax. These conditions are designed to keep the shares within a tax framework that can be controlled by the French tax authorities.

A common variant of this arrangement is thecontribution-assignment transaction. It allows the sale proceeds to be reinvested while benefiting from tax deferral.

How tax deferral works

The 150-0 B ter tax deferral suspends the liability forcapital gains tax. The capital gain is calculated at the time of the contribution, but taxation is deferred. The taxpayer must declare this deferred capital gain each year on his or her tax return, using form 2074-CMV (declaration of capital gains on the sale of securities). This annual declaration enables the tax authorities to keep track of the deferral.

The deferral can be maintained for many years, sometimes 10, 20 or more, depending on the wealth management strategy implemented. This length of time is a major advantage of the system, offering great flexibility in asset management. It should be noted that when the deferral is unwound, deductions for holding periods are calculated from the initial acquisition date of the contributed securities, and not from the date of the contribution.

The deferral expires upon the occurrence of certain triggering events. The sale, repurchase, cancellation or redemption of the shares received as consideration for the contribution terminates the deferral. The loss of control of the beneficiary company also constitutes a triggering event. In these situations, the capital gain initially deferred becomes immediately taxable according to the tax regime in force at the time of the triggering event, and not according to that applicable at the time of the initial contribution.

If you transfer your tax residence outside France, the capital gain will also be taxed. However, specific deferral mechanisms exist for transfers within the European Union. These rules are designed to respect freedom of movement while preserving the rights of the French Treasury.

If tax instalments were wrongly paid before the deferral was implemented, the taxpayer may have a restitutable tax claim. The management of such receivables requires special attention as part of an overall wealth strategy.

Wealth optimization and tax strategies

The 150-0 B ter scheme can be integrated into broader wealth management strategies. It can be combined with other tax mechanisms to optimize business transfers. Pre-sale donations are a particularly effective complementary technique.

Combined with the Dutreil pact, the result is an exemption of 75% of the taxable base for gratuitous transfer duties. This combination offers a highly favorable tax framework for passing on a family business. It does, however, require careful planning and compliance with strict conditions of commitment, notably the maintenance of an operational business for several years.

Let’s take the concrete example of a business owner holding shares valued at €1 million, wishing to gradually transfer his company to his two children. The optimal sequence would be to first transfer the shares to an asset holding company, benefiting from the 150-0 B ter tax deferral. This holding company then facilitates the centralized management of the holdings and optimizes the tax treatment of the dividends received. The entrepreneur can then sign a Dutreil pact on the holding company’s shares, and make a dismembered gift to his children. Thanks to the deductions of €100,000 per child, renewable every 15 years, and the 75% reduction offered by the Dutreil pact, the transfer is made at a considerably lower tax rate. Deductible expenses at holding company level also contribute to overall tax optimization.

Tax deferral can be maintained for several years, offering valuable temporal flexibility. The taxpayer can thus defer taxation until a fiscally opportune moment: a year of exceptionally low income, retirement, or reinvestment via acontribution-sale mechanism. The latter technique enables the contributed securities to be sold and the proceeds reinvested in diversified assets, while retaining the benefit of the deferral. This flexibility is a major advantage of the scheme, enabling you to build a wealth strategy tailored to your long-term objectives.

Vigilance and legal support

Failure to comply with the conditions of 150-0 B ter leads to immediate taxation of the capital gain, with heavy financial penalties. The tax authorities keep a close watch on such transactions, and can reclassify a contribution as a disposal if the conditions are not met. In the event of deliberate non-compliance, the taxpayer is liable to a surcharge of 40% of the amount due, plus late payment interest of 0.20% per month. The risk ofabuse of tax law must be anticipated and avoided, particularly in transfer-assignment schemes, where Conseil d’Etat case law regularly punishes artificial arrangements devoid of economic substance.

A number of common errors compromise the benefits of the scheme. The most frequent pitfall is the loss of control of the beneficiary company through unanticipated dilution during capital increases. Premature disposal of the shares received as consideration for the contribution, before consolidation of the structure, triggers deferred taxation. Failure to declare the deferred capital gain on the tax return each year means that the tax return is subject to a 10-year recovery period, compared with 3 years if the tax return is filed correctly. For example, on an undeclared capital gain of €100,000, the total tax risk could reach €44,000, including €30,000 in tax, €12,000 in surcharges and €2,000 in late payment interest.

Documentation of the transaction requires careful retention of all supporting documents. The minutes of the shareholders’ meeting approving the contribution, the contribution agreement detailing the terms and conditions of the transaction, the contribution auditor’s report valuing the shares, the updated articles of association of the beneficiary company and all related tax returns must be archived for at least 6 years. These documents constitute essential evidence in the event of a tax audit. Continued control of the investee company must be verified at each annual general meeting, by means of an updated shareholding monitoring table. Any change in capital structure requires a prior tax analysis to anticipate the consequences on tax deferral.

The support of a specialized tax lawyer is essential to ensure the legal security of the operation from the outset. This professional structures the operation in compliance with legal requirements, drafts the appropriate legal documents and anticipates the risks of litigation. He or she also ensures long-term follow-up, adapts the strategy to changes in legislation and case law, and intervenes in the event of a tax audit. Our expertise guarantees the long-term viability of the scheme, maximizing its tax benefits for your assets while minimizing the risk of the authorities challenging it.

Practical example of the application of 150-0 B ter

To better understand the benefits of this system, let’s consider a concrete case. Mr. Dupont owns 25% of a SAS valued at €2 million. His stake is therefore worth €500,000 on the basis of an initial acquisition value of €50,000, generating a substantial unrealised capital gain of €450,000.

As part of an asset restructuring, Mr. Dupont decides to transfer his shares to his personal holding company, which he controls 100%. Without the mechanism of article 150-0 B ter, he would immediately be liable for a tax of €135,000 (€450,000 × 30% under the single-rate withholding tax), which would represent a considerable tax burden with no corresponding cash inflow.

Thanks to the tax deferral system, this tax burden is deferred. Mr. Dupont can therefore :

• Reinvest in new opportunities via its holding company
• Gradually organize the transfer of your estate to your children
• Structure your asset portfolio more efficiently

The deferral will only come to an end when the securities contributed by the holding company are sold in the future, potentially several years later, at a time that is more advantageous for the taxpayer in tax terms. This temporal flexibility is one of the main advantages of the 150-0 B ter scheme as part of an overall wealth strategy.