150-0 B ter tax deferral: Mechanism and conditions of application
Tax deferral is a strategic tax mechanism that allows the deferral of capital gains taxation in certain asset transactions. Article 150-0 B ter of the French General Tax Code provides taxpayers with a particularly advantageousasset optimization mechanism for corporate restructuring. This temporary tax-neutral mechanism facilitates transfers and reorganizations, particularly when holding companies are set up .
Understanding the subtleties of the 150-0 B ter tax deferral requires an in-depth analysis of the eligibility conditions and operating mechanisms. You need to master the tax implications to secure your wealth management operations and avoid any subsequent challenges.
What is the 150-0 B ter tax deferral?
The tax deferral provided for under the 150-0 B ter system temporarily suspends the taxation of a capital gain realized on the contribution of securities to a company. This tax mechanism is designed to facilitate restructuring operations without penalizing taxpayers fiscally at the time of the operation, thus offering valuable flexibility in wealth management.
In practical terms, when you contribute equity securities to a company and receive shares in that company in return, the capital gain is not immediately taxed. Taxation is deferred until the occurrence of a specific triggering event provided for by law. This mechanism is particularly useful in the context ofcorporate reorganizations or shareholding consolidations.
The scheme applies exclusively to individuals acting in the management of their private assets. It constitutes an exception to the general principle of immediate taxation of capital gains on the sale of securities.Article 150-0 B ter of the French General Tax Code precisely defines the scope and terms of this deferral, strictly framing the conditions of eligibility to ensure the legal certainty of transactions.
Conditions for application of the tax deferral
To benefit from the 150-0 B ter tax deferral, several cumulative conditions must be met. The first concerns the nature of the transaction: it must be a contribution of securities to a company subject to corporate income tax.
The securities contributed must be company shares. In return for your contribution, you must receive only shares in the beneficiary company. Any cash payment in excess of 10% of the nominal value of the securities received will result in immediate taxation of the capital gain up to the amount of this payment.
The transaction must be part of a contribution-assignment or a simple asset restructuring. The transferee must be a company controlled by the contributor, or a holding company.
You must also comply with specific tax reporting requirements. The option to defer taxation must be expressly stated on the tax return for the year of the contribution. Failure to comply with these formalities may result in the loss of the deferral.
How the deferral mechanism works
The 150-0 B ter tax deferral mechanism suspends the tax liability on the capital gain recognized at the time of the contribution. This suspension is not definitive but temporary, as the capital gain remains latent and potentially taxable at a later date.
The deferral period is not limited in time, as long as no triggering event occurs. You retain the shares received as consideration for the contribution without triggering taxation. This temporary tax neutrality means you can significantly defer the tax burden.
The deferral applies to both income tax and social security contributions. The deferred capital gain retains its original tax status and will be taxed in accordance with the rules applicable at the time of the triggering event. Deductions for length of ownership acquired prior to the transfer are retained.
You need to keep precise track of the capital gains carried forward in your asset accounting. This traceability is essential to correctly calculate the tax liability when the deferral is called into question. The shares received as consideration for the contribution have a tax value corresponding to the acquisition price of the contributed shares.
Tax benefits of the 150-0 B ter scheme
The 150-0 B ter tax deferral system offers considerable tax advantages for wealth management strategies. It makes it possible to carry out restructuring operations without immediately disbursing cash to pay capital gains tax.
This scheme facilitates business transfers by enabling you to group holdings within a holding company at no immediate tax cost. In this way, you can optimize the holding structure of your business assets. Combined with other schemes, such as the Dutreil pact, it enhances the effectiveness of your wealth management strategy.
The absence of immediate tax disbursements improves cash flow and allows you to reinvest the full value of the shares. This preserved liquidity represents a significant economic advantage for developing your assets or your professional activity.
Tax deferral can also be combined with a pre-sale donation strategy to optimize the transfer to heirs. In this way, estate taxation offers a number of optimization levers that complement tax deferral.
End of deferral and taxation of capital gains
The deferral of taxation ceases on the occurrence of certain triggering events expressly provided for by law. The main event triggering deferred taxation is the sale for valuable consideration of the securities received as consideration for the contribution.
Other situations also result in the end of the deferral: the repurchase of the shares by the issuing company, the cancellation of the shares, or the transfer of the shares free of charge. In the event of the contributor’s death, the deferred capital gain is definitively exempt, constituting a major inheritance advantage.
When the deferral is called into question, the capital gain initially recognized at the time of the contribution becomes taxable. You must calculate the tax according to the rules in force at the time of the triggering event. Deductions for length of ownership continue to apply during the deferral period.
The taxable amount corresponds to the capital gain recognized at the time of the initial contribution, plus any capital gain realized on the securities received in return. You must declare this tax in the year in which the triggering event occurs. Failure to comply with these obligations may result in penalties and interest.
In the event of a partial sale of the shares received, only the portion of the capital gain corresponding to the shares sold becomes taxable. This proportional rule makes it possible to gradually manage the exit from the deferral system.
Securing your tax deferral strategy
The complexity of the 150-0 B ter system requires specialized legal and tax support to ensure the security of your operations. The conditions of application are strict, and failure to comply with them will result in the deferral being called into question, with significant tax consequences.
A tax lawyer analyzes your asset situation to determine whether tax deferral is appropriate and compatible with your objectives. Our legal expertise will help you anticipate the risks of requalification and optimize the structuring of the transaction.
The drafting of legal documents must accurately reflect the conditions of tax deferral. You must document the operation to justify your eligibility in the event of a tax audit. A subsequent tax audit may call into question the benefit of the deferral if the conditions are not rigorously respected.
Our support also includes monitoring tax deferral over time and anticipating triggering events. You benefit from a global vision of your wealth and tax strategy. Ensuring the legal security of your transaction is an essential investment in preserving the tax benefits of the 150-0 B ter scheme.
Frequently asked questions
The 150-0 B ter tax deferral raises many questions among taxpayers and wealth management professionals. This section answers the most frequently asked questions about this essential tax mechanism for wealth optimization.
What is the 150-0 B ter tax deferral?
The 150-0 B ter tax deferral is a tax mechanism provided for in the French General Tax Code, enabling the deferral of taxation on the capital gain realized on an exchange of shares. This mechanism mainly applies to corporate restructuring operations such as mergers, demergers or contributions of shares to a controlled company. Taxation of the capital gain is deferred until the actual sale of the securities received in exchange, thus avoiding immediate taxation at the time of the exchange transaction.
What are the eligibility conditions for the 150-0 B ter tax deferral?
To benefit from the 150-0 B ter tax deferral, several conditions must be met. The transaction must constitute an exchange of securities for tax purposes, generally involving a merger, demerger, partial asset contribution or contribution of securities to a controlled company. The securities transferred must be held in the taxpayer’s private assets. The transaction must be carried out for a valid economic reason, and its main purpose must not be tax evasion or avoidance. The taxpayer must also comply with specific reporting requirements.
How does the 150-0 B ter tax deferral mechanism work in practice?
The mechanism works in two stages. When the shares are exchanged, the unrealized capital gain is recognized, but taxation is deferred. The securities received in exchange are recorded at their original value, thus retaining the unrealized capital gain. The taxpayer must keep track of this deferred capital gain in his annual tax returns. When an event puts an end to the deferral (sale of the securities, gift, transfer), the capital gain initially deferred becomes taxable according to the system in force at the time of this event.
When does the 150-0 B ter tax deferral expire?
The tax deferral is terminated by a number of events. The sale for valuable consideration of the securities received in exchange triggers taxation of the deferred capital gain. The transfer of the tax residence outside France also terminates the deferral, unless a specific deferral is applied. If the shares are gifted, the deferred capital gain is taxed immediately. On the other hand, if the shares are transferred by inheritance, the deferred capital gain can generally be purged without taxation, thanks to the market value mechanism on the day of death.
What are the advantages of the 150-0 B ter tax deferral for wealth optimization?
This system offers several major advantages in terms of wealth optimization. It allows the tax burden to be deferred, thus preserving cash during restructuring operations. The taxpayer can reinvest the full value of the shares without immediate tax loss. Deferral offers flexibility in asset management, by enabling the taxpayer to wait for the most opportune moment for the final sale. In the event of inheritance, the capital gain can be definitively wiped out, making it a powerful asset transfer tool, particularly attractive for taxpayers liable for wealth tax.
What administrative procedures are required to benefit from the 150-0 B ter tax deferral?
The administrative formalities require particular attention. The taxpayer must mention the deferred capital gains in his tax return (form 2074) in the year of the exchange. A detailed statement of deferred capital gains must be attached to each annual tax return. It is advisable to keep all documentation relating to the exchange transaction, in particular legal documents, valuation reports and proof of the values retained. The assistance of a specialized tax advisor is strongly recommended to secure the application of the system and comply with all reporting obligations.