24 August 2026.

The French Pacte Dutreil regime may, subject to detailed conditions, exempt 75% of the value of qualifying company shares or business assets from French gift and inheritance tax.

France’s 2026 Finance Act and the tax authority guidance updated on 10 August 2026 have strengthened some of those conditions. Two changes are particularly important when preparing a lifetime gift or an inheritance: the longer individual holding period and the exclusion of certain assets described by the legislation as luxury assets.

The individual holding period is now six years

For transfers occurring on or after 21 February 2026, each heir, beneficiary or donee must retain the transferred shares for six years, rather than four years under the former rules.

The applicable period is determined by the date of the gift or death. Accordingly, a collective or unilateral undertaking signed before 21 February 2026 does not preserve the former four-year period where the taxable transfer occurs after that date.

This longer commitment should be considered at the planning stage. Depending on the circumstances and the statutory safeguards available, a sale, further gift or corporate reorganisation during the holding period may result in all or part of the exemption being withdrawn.

Certain assets are excluded from the exempt value

The Dutreil regime is intended to facilitate the transfer of an operating business. The exempt basis now excludes the proportion of value attributable to certain assets where they are not used exclusively for the company’s qualifying business activity.

Subject to the detailed statutory and administrative rules, the affected categories include:

certain assets used for hunting or fishing;
passenger vehicles, yachts, pleasure boats and aircraft;
jewellery and works of art;
racehorses and competition horses;
wines and spirits; and
certain houses and residential property.

An asset is not necessarily excluded merely because it falls within one of these categories. Its actual use must be reviewed to establish whether it is exclusively and necessarily connected with the qualifying business activity.

The review may extend through subsidiaries

Where the transferred company owns subsidiaries or sub-subsidiaries, the calculation may require a look-through analysis of the relevant assets held within the corporate chain. The excluded proportion must then reflect the value represented by those assets in the companies concerned.

A reliable assessment therefore requires a sufficiently detailed inventory of the assets, their value and their actual use. Reviewing the transferred company’s balance sheet alone may not be enough.

Administrative guidance provides examples, but the test remains factual

The updated French tax guidance provides some helpful examples. A vehicle made available to an employee or director for both business and private use may remain eligible where the private use is taxed as a benefit in kind. Subject to the applicable conditions, accommodation provided to employees of an operating establishment may also remain within the eligible basis.

These examples do not create a general safe harbour. The role of each asset within the business and the necessity of its use should be documented.

What happens if the use of an asset changes after the transfer?

If an asset ceases to meet the required business-use condition after the transfer, the exemption may be partially withdrawn. According to the administrative guidance, the withdrawal is limited to the proportion of the share value attributable to the assets that no longer satisfy the qualifying-use requirement.

Compliance therefore continues after execution of the deed. The holding undertakings and any changes in the use of relevant assets should be monitored throughout the applicable period.

Points to review before a transfer

Before entering into a Dutreil arrangement or completing a transfer under the regime, the parties should in particular review:

the proposed transfer date and the applicable holding period;
whether the company carries on a qualifying operating activity;
the assets held by the company and its subsidiaries;
the actual use of vehicles, residential property, works of art and other potentially excluded assets;
the consequences of any planned reorganisation or subsequent disposal; and
the evidence needed to demonstrate continuing compliance.

Early analysis makes it possible to assess the proportion that is genuinely eligible for the exemption and to prevent an ancillary asset from weakening the overall arrangement. Our notarial office can assist with the planning of the transfer, the preparation of the relevant undertakings and the subsequent monitoring of the regime.

Official sources

The content of this article is provided for general information purposes, reflects the legal materials known as of its publication date, and may become outdated following legislative, regulatory or case-law developments. It does not constitute legal advice tailored to any particular situation or any contractual undertaking by the notarial office. For advice concerning your circumstances, please consult a notary at our office.