If you buy out the business of your employer or a relative, you can now claim a tax allowance of 500,000 euros, compared with 300,000 euros previously. This provision applies from January 1, 2024.
500,000 allowance as of January 2024
The purchase of a business or company shares is subject to transfer duties. However, article 732 ter of the French General Tax Code provides for an allowance for the calculation of transfer duties in the case of a business buyout by an employee or close relative of the seller. Article 22 of the French Finance Act for 2024 raised this allowance from 300,000 euros to 500,000 euros for company buyouts carried out on or after January 1, 2024.
An information report on business transfers published by the French Senate in 2022 indicated that 25% of business owners are over 60, and 11% are over 66. The number of businesses to be sold over the next few years could be between 250,000 and 700,000. The increase in the allowance for donations of business assets, craft businesses, agricultural assets or clienteles of sole proprietorships should help prevent the closure of these establishments.
Good to know: the advantage applies only once between the same seller and the same buyer.
Conditions for applying the allowance
The allowance applies to companies engaged in industrial, commercial, agricultural, craft or liberal activities.Opening a pro account is essential to manage the financial aspects of the takeover.
The purchaser must be a close relative of the seller (spouse, PACS partner, direct ascendant or descendant, brother, sister) or have held a permanent employment contract for 2 years, working full-time, or hold an apprenticeship contract.
To qualify for the allowance, the purchaser must undertake to :
- carry on the business effectively and continuously,
- ensure effective management of the company for the 5 years following the takeover.
Good to know: the opening of a judicial liquidation procedure within 5 years of the purchase does not affect the benefit of the allowance. The same applies to cases of force majeure (death of the purchaser, accident or illness of the purchaser).
The Finance Act for 2024 therefore raises the allowance applied to the calculation of registration duties on company buyouts by employees or members of the family circle. This measure should encourage business transfers and ease the transition to retirement for entrepreneurs. The allowance represents a unique opportunity for business owners to sell their business under advantageous tax conditions.
Increased allowance for company takeovers https://t.co/Xp2SorxOz4
- Cedef documentation (@DocCedef) July 4, 2024