In the case of a collective commitment deemed to have been acquired, only one of the heirs, donees or legatees may exercise the management function of the business

As a reminder, the Dutreil Pact is an arrangement giving entitlement to partial exemption from donation duties, amounting to 75% of the value of the securities transmitted.

In the case before the Court, a taxpayer had made a donation of part of the shares in his business to his children. The tax authorities ruled that this donation could not benefit from the partial exemption of transfer duties (Pact Dutreil) because only the donor had performed one of the management functions during the 3 years following the donation. The taxpayer goes to court and asks to be able to benefit from the Dutreil Pact.

The Court of Appeal rejected that application on the ground that the signed collective conservation undertaking precluded the donor from exercising the management function of the business. Indeed, only parties that have signed with the donor can perform this function. The applicant appeals on a point of law.

The Cour de cassation dismisses the appeal, in its view, in the case of a collective commitment deemed to have been acquired, the Covenant Dutreil is applicable where, during the three years following the date of the transfer, one of the heirs, donees or legatees exercises in the business a managerial function. In the present case, however, only the donor exercised that function.