Intergenerational transfer of (family) companies via the French preferential “Pacte Dutreil” tax regime

Abstract

Abstract Transferring shares in a commercially operating company via donation or inheritance can lead to a significant tax burden, which in turn sometimes forces the beneficiaries to sell some of the shares received to pay their taxes. France thus has a preferential tax regime, allowing such donations or inheritances to be tax exempt at 75% of the transferred value. This preferential tax regime is often sought in family-owned companies, where the control of the business is thus better retained for the following generations, which generally leads to a greater stability of the company and hence to greater job security for its employees over time.