Transfer of company: transfer of shares to a family member
Verified 01 January 2024 - Directorate for Legal and Administrative Information (Prime Minister)
A social part is a title to part of the capital of the business. This business share gives the partner rights enabling him to participate in the life of the company. Thus, the transfer of shares means for a member (the transferor) to pass on to an acquirer (the transferee) the rights which he holds in the share capital of the company. Regardless of the legal form of the company, this operation must follow a number of steps.
What applies to you ?
SARL
The system of approval depends on the social form company and transferee : spouse (spouse or Civil partnership partner), ascendant or descendant, partner or third party operator.
The shares are freely transferable:
- Between partners
- Between spouses
- And between ascendants anddescendants
In this case, no authorization of the members is required.
However, the articles of association may require that the transfer of shares to the spouse, ascendant or descendant is subject to the approval of the members (majority, or even unanimity).
Where the approval of members is necessary, it must be obtained at a general meeting. It has 3 months to answer. In the absence of a written reply within that period, approval shall be granted.
Please note
if you are married under the legal community or under the division, your spouse's consent to the transfer is required. A transfer of shares effected without his agreement may be canceled within a period of 2 years from the date of transfer.
Where the transfer is for an amount greater than €1,500, this shall be subject to a written :
- either by authentic instrument (by a notary),
- either by private act (between parties only).
Please note
Below €1,500, the assignment may be proven by any means (e.g. email, fax, testimony).
The deed of assignment must count as many copies as parts to the contract. Each copy must be signed by the parties.
The electronic signature is based on a trusted digital certificate that allows for the secure identification of its author and prohibits further modification. The electronic signature is secure until proven otherwise.
Conversely, the scanned signature and affixed to a document does not allow the author to be identified with certainty. This signature is valid but may be challenged before the courts by one of the parties to the contract who would like, for example, to have the assignment annulled.
The deed of assignment must contain certain mandatory particulars :
- Name of parties
- Identity of the business
- Number and designation of the shares transferred (if numbered)
- Sale price of the assignment and payment terms (except in the case of a donation)
- Details of the approval of the partners.
In the absence of a written statement, the assignment shall remain valid. However, the purchaser who is therefore unable to carry out the publication formalities necessary to make the transfer effective may request the termination of assignment.
Purpose of the guarantee
After the sale of shares (and in particular those carrying control of the business), the appearance of unknown debts is a major risk that the buyer must avoid to ensure the sustainability of the company.
By the asset-liability guarantee clause, you guarantee the accuracy of all the information provided to the buyer: company activity, company accounts, customers and suppliers, salary costs, allocation of capital, absence of any disposition affecting the transferability of securities, status of collateral, possible acquisitions of shares in other businesses, ongoing disputes, etc.
This guarantee clause allows the purchaser to protect himself against:
- The Discovery of a Liability which had not been reported at the time of the assignment (it must be a debt prior to the assignment and disclosed after the assignment)
- Incorrect valuation of the asset whose value is ultimately lower than agreed (e.g. too generous stock valuation).
If any of these assumptions is confirmed after the sale of the securities, the buyer may activate the guarantee to obtain a compensation on your part.
Please note
It is also possible to conclude an asset or liability non-guarantee clause when the buyer knows the company well, either for having been a reference partner (e.g. a minority represented on the board) before the sale, or for having been an officer of the target business.
References to the guarantee clause
The guarantee clause must be expressly provided for in the deed of assignment or in a separate document signed by the parties. It must contain the following information :
- Categories of debt which fall within the scope of the guarantee. In the absence of precision, the guarantee covers all debts linked to the business' activity.
- Departure Date of the guarantee: the date from which the earlier or later origin of the debt can be assessed.
- Term of the clause : between 3 and 5 years.
- Calculation of compensation : the percentage of the debt that you commit to pay. This percentage may decrease over time.
- Floor Amount Warranty: The amount from which the warranty can be activated.
- Ceiling Amount of compensation: the maximum amount to which you are committed. You won't have to pay more than that.
- Implementation arrangements : additional information needed to implement the guarantee (justification of the liability, modalities for sending the claim, etc.).
Declaration of assignment
Assignment established by an act
Assignments of social rights established by an act shall be subject to the formality of registration within the period of 1 month from the date of the act.
The deed of assignment must be deposited on the spot or by post, in 2 copies and accompanied by the payment of fees (by check or transfer) to the department in charge of the registration of the domicile of one of the parties or of the residence of the notary if the assignment is made by notarial act.
Who shall I contact
Assignment not established by an act
Assignments of social rights which are not not established by an act must be declared within the 1 month from the date of transfer:
- or by means of the online service available on impots.gouv.fr in your professional area, under Actions > Assignments of social rights
Impots.gouv.fr professional space
- or by means of Form No 2759, to be filed with the registration department on which one of the parties is dependent.
Assignment of social rights not established by an act to be declared obligatorily (form No 2759)
Who shall I contact
Payment of registration fees
The acquisition of shares shall give rise to payment by the purchaser a registration fee.
However, the deed of assignment may provide that the payment of the duties is to be borne by the seller or shared between the two parties.
This duty shall be fixed at 3% and calculated on the transfer price less one abatement equal to €23,000 reduced to percentage of the number of shares transferred in social capital.
Example :
You own 50 shares of a SARL whose capital is divided into 400 shares. You sell your shares to the buyer for a value of €50,000.
The amount of registration fees payable by the purchaser shall be calculated as follows: Transfer price - (23,000 x Number of shares sold ÷ Total shares in the business) x 3%.
Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 400) = 47,125 × 3% = €1,414 registration fees.
The rate is 5% for businesses with a predominance of real estate, i.e. businesses where more than half of the assets are made up of buildings not used for his professional purposes.
Registration fee cannot be less than €25.
Tax Exemption
The transfer shall be subject to abatement of €500,000 on the value of the shares in the company where it is held with one of the following :
- Let's say one employee of the transferred company. He must have been employed on a full-time contract for at least 2 years or have a apprenticeship contract ongoing at the time of transfer.
- Let's say one family member of the transferor (her Civil partnership or partner, her direct ascendants or descendants, or her siblings).
This reduction shall be applied when all following conditions are respected:
- The company shall exercise commercial, industrial, craft, agricultural or liberal activity, with the exception of the management of its own movable or immovable property.
- The transferor shall have held the securities for more than 2 years (if the transferor has acquired the shares free of charge, no holding period is required).
- The purchaser must to continue the business of the business whose shares have been transferred as a professional activity unique and in an effective and continuous manner, for 5 years after the date of sale.
- The purchaser must to ensure effective management of company during these five years.
A transfer of shares implies a new distribution of shares among the members and therefore an amendment to the articles of association.
The statutory amendment shall be made in 3 steps.
1. Convening of a special general meeting
The decision to amend the articles of association must be voted on and approved by the members meeting in special general meeting (AGE)
If the status change is not approved at the first meeting, the partners are consulted again.
SARL incorporated before 4 August 2005
The decision to amend the articles of association of an LLC must be adopted by the members representing at least 3/4 of the shares.
There's no pitch of quorum required, a minimum number of participants present or represented at the AGE is not required.
SARL incorporated after 4 August 2005
The general meeting may validly deliberate only if the partners present or represented possess at least 1/4 shares (on first notice) and 1/5 of these (on second notice).
If not, a new meeting must be convened within 2 months.
If the quorum is respected, the amendments must then be decided by a majority of 2/3 of the shares held by the members present or represented.
2. Publishing legal announcements in a media
Any amendment to the articles of association must be published in a legal listing support of the department in which your business' headquarters are located.
Legal notices must be published in the media within 1 month as of the amendment.
The notice of publication must contain the following :
- Name or corporate name
- Legal form
- Share capital
- Social purpose
- Address of the seat
- Place and registration number of SCR: titleContent
- Decision or minutes of the general meeting, dated and signed
- Changes made
This notice must be signed by the manager of the business or by the notary who drafted the document of assignment of shares.
3. Declaration of amendment
Finally, the amendment to the Staff Regulations must be declared within the1 month, on the website of the company formalities office :
Please note
Auto-insert at Bodacc (Official Bulletin of Civil and Commercial Advertisements) will make the change enforceable against third parties.
When reporting, you must submit the supporting documents following:
- Copy of the minutes of the amendment of the statutes
- Copy of the updated articles of association: dated and certified as original by the legal representative
- Certificate of publication of the notice in a legal listing support
FYI
If the status change results in a change in beneficial ownership, it must also be declared on the formalities window.
During the sale, you can realize a capital gain which is the difference between the sale price and the original value of your business securities.
Capital gains realized on the sale of shares may be taxed according to 2 methods of taxation different, you can choose:
- Flat rate of income tax
- Progressive Income Tax Schedule
Flat rate
In principle, capital gains are taxed to the extent of 12.8% under the flat rate income tax, plus social security contributions at the rate of 17.2%, or a total of 30% on the amount of the capital gain.
Example :
You give up for €150,000 the business titles you originally purchased €100,000. So you realize an added value of €50,000.
- Calculation of social security contributions: 50,000 x 17.2% = €8,600
- Income tax calculation: 50,000 x 12.8% = €6,400
You will therefore have to pay in total €15,000 on the transfer of its securities.
FYI
This flat rate of 12.8% is the default regime, you can opt for the progressive scale.
Progressive scale
You can waive the flat rate of 12.8% and choose, on express and irrevocable option, to be subject to the progressive scale of income tax.
The surplus value is then factored into your overall net income and is taxed according to your tax bracket (from 0 to 45%).
Income brackets | Income tax bracket rate |
|---|---|
Up to €11,294 | 0% |
From €11,295 to €28,797 | 11% |
From €28,798 to €82,341 | 30% |
From €82,342 to €177,106 | 41% |
More than €177,106 | 45% |
Please note
The social security contributions shall be applied in the same way to the 17.2% on the amount of the capital gain.
In addition, when you opt for progressive taxation, you can benefit from a abatement on your capital gains resulting from the sale of the securities you have acquired or subscribed before 1er january 2018.
There is an abatement of ordinary law and an abatement reinforced.
General abatement
L'ordinary allowance is applicable in all situations and is directly related to the length of time the securities are held:
- 50% for securities held between 2 and 8 years
- 65% for securities held since older than 8 years
Reinforced reduction
L'increased abatement is also linked to the length of time the securities are held, but it is more advantageous from a tax point of view:
- 50% for securities held between 1 and 4 years
- 65% for securities held between 4 and 8 years
- 85% for securities held since older than 8 years
The enhanced allowance shall apply in any of the following :
- You dispose of the shares of an SME under 10 years of age on the date of subscription or acquisition of the securities : this is a company with less than 250 employees and a turnover of less than EUR 50 million.
- You divest the shares of an SME of which you are a director and you retire : you must have been a continuous leader and have held at least 25% the rights of the business during the 5 years preceding the assignment. You must cease all activity in the business and assert your retirement rights within 2 years of the transfer.
Please note
A retiring SME manager may also opt for a fixed abatement of €500,000. This shall apply to divestments made until 31 december 2024, irrespective of the way in which capital gains are taxed (flat rate or progressive scale). It cannot be combined with a proportional reduction under ordinary or reinforced law.
CNS
The system of approval depends on the social form company and transferee : spouse (spouse or civil partnership partner), ascendant or descendant, partner or third party operator.
The shares may be transferred between members, to the spouse, to the ascendants and descendants or to third parties only with the consent of all partners.
‘Third party’ means any natural or legal person not associated on the date of assignment. They may be a former partner, employees or non-associated managers.
Any clause to the contrary is not valid.
This rule cannot be circumvented by any derogating clause and also concerns donations, exchanges and the liquidation of a community between spouses.
Where the approval of members is necessary, it must be obtained at a general meeting. It has 3 months to answer. In the absence of a written reply within that period, approval shall be granted.
Please note
if you are married under the legal community or under the division, your spouse's consent to the transfer is required. A transfer of shares effected without his agreement may be canceled within a period of 2 years from the date of transfer.
Where the transfer is for an amount greater than €1,500, this shall be subject to a written :
- either by authentic instrument (by a notary),
- either by private act (between parties only).
Please note
Below €1,500, the assignment may be proven by any means (e.g. email, fax, testimony).
The deed of assignment must count as many copies as parts to the contract. Each copy must be signed by the parties.
The electronic signature is based on a trusted digital certificate that allows for the secure identification of its author and prohibits further modification. The electronic signature is secure until proven otherwise.
Conversely, the scanned signature and affixed to a document does not allow the author to be identified with certainty. This signature is valid but may be challenged before the courts by one of the parties to the contract who would like, for example, to have the assignment annulled.
The deed of assignment must contain certain mandatory particulars :
- Name of parties
- Identity of the business
- Number and designation of the shares transferred (if numbered)
- Sale price of the assignment and payment terms (except in the case of a donation)
- Details of the approval of the partners.
In the absence of a written statement, the assignment shall remain valid. However, the purchaser who is therefore unable to carry out the publication formalities necessary to make the transfer effective may request the termination of assignment.
Purpose of the guarantee
After the sale of shares (and in particular those carrying control of the business), the appearance of unknown debts is a major risk that the buyer must avoid to ensure the sustainability of the company.
By the asset-liability guarantee clause, you guarantee the accuracy of all the information provided to the buyer: company activity, company accounts, customers and suppliers, salary costs, allocation of capital, absence of any disposition affecting the transferability of securities, status of collateral, possible acquisitions of shares in other businesses, ongoing disputes, etc.
This guarantee clause allows the purchaser to protect himself against:
- The Discovery of a Liability which had not been reported at the time of the assignment (it must be a debt prior to the assignment and disclosed after the assignment)
- Incorrect valuation of the asset whose value is ultimately lower than agreed (e.g. too generous stock valuation).
If any of these assumptions is confirmed after the sale of the securities, the buyer may activate the guarantee to obtain a compensation on your part.
Please note
It is also possible to conclude an asset or liability non-guarantee clause when the buyer knows the company well, either for having been a reference partner (e.g. a minority represented on the board) before the sale, or for having been an officer of the target business.
References to the guarantee clause
The guarantee clause must be expressly provided for in the deed of assignment or in a separate document signed by the parties. It must contain the following information :
- Categories of debt which fall within the scope of the guarantee. In the absence of precision, the guarantee covers all debts linked to the business' activity.
- Departure Date of the guarantee: the date from which the earlier or later origin of the debt can be assessed.
- Term of the clause : between 3 and 5 years.
- Calculation of compensation : the percentage of the debt that you commit to pay. This percentage may decrease over time.
- Floor Amount Warranty: The amount from which the warranty can be activated.
- Ceiling Amount of compensation: the maximum amount to which you are committed. You won't have to pay more than that.
- Implementation arrangements : additional information needed to implement the guarantee (justification of the liability, modalities for sending the claim, etc.).
Declaration of assignment
Assignment established by an act
Assignments of social rights established by an act shall be subject to the formality of registration within the period of 1 month from the date of the act.
The deed of assignment must be deposited on the spot or by post, in 2 copies and accompanied by the payment of fees (by check or transfer) to the department in charge of the registration of the domicile of one of the parties or of the residence of the notary if the assignment is made by notarial act.
Who shall I contact
Assignment not established by an act
Assignments of social rights which are not not established by an act must be declared within the 1 month from the date of transfer:
- or by means of the online service available on impots.gouv.fr in your professional area, under Actions > Assignments of social rights
Impots.gouv.fr professional space
- or by means of Form No 2759, to be filed with the registration department on which one of the parties is dependent.
Assignment of social rights not established by an act to be declared obligatorily (form No 2759)
Who shall I contact
Payment of registration fees
The acquisition of shares shall give rise to payment by the purchaser a registration fee.
However, the deed of assignment may provide that the payment of the duties is to be borne by the seller or shared between the two parties.
This duty shall be fixed at 3% and calculated on the transfer price less one abatement equal to €23,000 reduced to percentage of the number of shares transferred in social capital.
Example :
You own 50 shares in an SNC, the capital of which is divided into 400 shares. You sell your shares to the buyer for a value of €50,000.
The amount of registration fees payable by the purchaser shall be calculated as follows: Transfer price - (23,000 x Number of shares sold ÷ Total shares in the business) x 3%.
Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 400) = 47,125 × 3% = €1,414 registration fees.
The rate is 5% for businesses with a predominance of real estate, i.e. businesses where more than half of the assets are made up of buildings not used for his professional purposes.
Registration fee cannot be less than €25.
Tax Exemption
The transfer shall be subject to abatement of €500,000 on the value of the shares in the company where it is held with one of the following :
- Let's say one employee of the transferred company. He must have been employed on a full-time contract for at least 2 years or have a apprenticeship contract ongoing at the time of transfer.
- Let's say one family member of the transferor (her Civil partnership or partner, her direct ascendants or descendants, or her siblings).
This reduction shall be applied when all following conditions are respected:
- The company shall exercise commercial, industrial, craft, agricultural or liberal activity, with the exception of the management of its own movable or immovable property.
- The transferor shall have held the securities for more than 2 years (if the transferor has acquired the shares free of charge, no holding period is required).
- The purchaser must to continue the business of the business whose shares have been transferred as a professional activity unique and in an effective and continuous manner, for 5 years after the date of sale.
- The purchaser must to ensure effective management of company during these five years.
A transfer of shares implies a new distribution of shares among the members and therefore an amendment to the articles of association.
The statutory amendment shall be made in 3 steps.
1. Convening of a special general meeting
The decision to amend the articles of association must be voted on and approved by the members meeting in special general meeting (AGE)
If the status change is not approved at the first meeting, the partners are consulted again.
Any amendment to the Articles of Association shall require the agreement of the unanimity of the members (100%).
However, the statutes may provide for certain decisions to be taken with the agreement of a majority (50 %).
2. Publishing legal announcements in a media
Any amendment to the articles of association must be published in a legal listing support of the department in which your business' headquarters are located.
Publication shall take place within 1 month as of the amendment.
The notice of publication must contain the following :
- Name or corporate name
- Legal form
- Share capital
- Social purpose
- Address of the seat
- Place and registration number of SCR: titleContent
- Decision or minutes of the general meeting, dated and signed
- Changes made
This notice must be signed by the manager of the business or by the notary who drafted the document of assignment of shares.
3. Declaration of amendment
Finally, the amendment to the Staff Regulations must be declared within the1 month, on the website of the company formalities window :
Please note
Auto-insert at Bodacc (Official Bulletin of Civil and Commercial Advertisements) will make the change enforceable against third parties.
When reporting, you must submit the supporting documents following:
- Copy of the minutes of the amendment of the statutes
- Copy of the updated articles of association: dated and certified as original by the legal representative
- Certificate of publication of the notice in a legal listing support
FYI
If the status change results in a change in beneficial ownership, it must also be declared on the formalities window.
During the sale, you can realize a capital gain which is the difference between the sale price and the original value of your business securities.
Capital gains realized on the sale of shares may be taxed according to 2 methods of taxation different, you can choose:
- Flat rate of income tax
- Progressive Income Tax Schedule
Flat rate
In principle, capital gains are taxed to the extent of 12.8% under the flat rate income tax, plus social security contributions at the rate of 17.2%, or a total of 30% on the amount of the capital gain.
Example :
You give up for €150,000 the business titles you originally purchased €100,000. So you realize an added value of €50,000.
- Calculation of social security contributions: 50,000 x 17.2% = €8,600
- Income tax calculation: 50,000 x 12.8% = €6,400
You will therefore have to pay in total €15,000 on the transfer of its securities.
FYI
This flat rate of 12.8% is the default regime, you can opt for the progressive scale.
Progressive scale
You can waive the flat rate of 12.8% and choose, on express and irrevocable option, to be subject to the progressive scale of income tax.
The surplus value is then factored into your overall net income and is taxed according to your tax bracket (from 0 to 45%).
Income brackets | Income tax bracket rate |
|---|---|
Up to €11,294 | 0% |
From €11,295 to €28,797 | 11% |
From €28,798 to €82,341 | 30% |
From €82,342 to €177,106 | 41% |
More than €177,106 | 45% |
Please note
The social security contributions shall be applied in the same way to the 17.2% on the amount of the capital gain.
In addition, when you opt for progressive taxation, you can benefit from a abatement on your capital gains resulting from the sale of the securities you have acquired or subscribed before 1er january 2018.
There is an abatement of ordinary law and an abatement reinforced.
General abatement
L'ordinary allowance is applicable in all situations and is directly related to the length of time the securities are held:
- 50% for securities held between 2 and 8 years
- 65% for securities held since older than 8 years
Reinforced reduction
L'increased abatement is also linked to the length of time the securities are held, but it is more advantageous from a tax point of view:
- 50% for securities held between 1 and 4 years
- 65% for securities held between 4 and 8 years
- 85% for securities held since older than 8 years
The enhanced allowance shall apply in any of the following :
- You dispose of the shares of an SME under 10 years of age on the date of subscription or acquisition of the securities : this is a company with less than 250 employees and a turnover of less than EUR 50 million.
- You divest the shares of an SME of which you are a director and you retire : you must have been a continuous leader and have held at least 25% the rights of the business during the 5 years preceding the assignment. You must cease all activity in the business and assert your retirement rights within 2 years of the transfer.
Please note
A retiring SME manager may also opt for a fixed abatement of €500,000. This shall apply to divestments made until 31 december 2024, irrespective of the way in which capital gains are taxed (flat rate or progressive scale). It cannot be combined with a proportional reduction under ordinary or reinforced law.
SCS
The system of approval depends on the social form company and transferee : spouse (spouse or civil partnership partner), ascendant or descendant, partner or third party operator.
The shares may be transferred between members, to their ascendants and descendants, or to third parties, only with the consent of all partners.
However, the statutes may to make adjustments.
For example, partners may stipulate in the articles of association the following information:
- The shares of the limited partners (which provide the capital) may be freely transferred between partners.
- The shares of the limited partners may be transferred to third foreigners to the business, provided that the consent of all sponsors (responsible for managing CBS) and the majority in number and capital of the limited partners.
- The shares of a general partner may be transferred in part a limited partner or a third party to the business, provided that the consent of all limited partners and the majority in number and capital of the limited partners is obtained.
‘Third party’ means any natural or legal person not associated on the date of assignment. They may be a former partner, employees or non-associated managers.
Where the approval of members is necessary, it must be obtained at a general meeting. It has 3 months to answer. In the absence of a written reply within that period, approval shall be granted.
Please note
if you are married under the legal community or under the division, your spouse's consent to the transfer is required. A transfer of shares effected without his agreement may be canceled within a period of 2 years from the date of transfer.
Where the transfer is for an amount greater than €1,500, this shall be subject to a written :
- either by authentic instrument (by a notary),
- either by private act (between parties only).
Please note
Below €1,500, the assignment may be proven by any means (e.g. email, fax, testimony).
The deed of assignment must count as many copies as parts to the contract. Each copy must be signed by the parties.
The electronic signature is based on a trusted digital certificate that allows for the secure identification of its author and prohibits further modification. The electronic signature is secure until proven otherwise.
Conversely, the scanned signature and affixed to a document does not allow the author to be identified with certainty. This signature is valid but may be challenged before the courts by one of the parties to the contract who would like, for example, to have the assignment annulled.
The deed of assignment must contain certain mandatory particulars :
- Name of parties
- Identity of the business
- Number and designation of the shares transferred (if numbered)
- Sale price of the assignment and payment terms (except in the case of a donation)
- Details of the approval of the partners.
In the absence of a written statement, the assignment shall remain valid. However, the purchaser who is therefore unable to carry out the publication formalities necessary to make the transfer effective may request the termination of assignment.
Purpose of the guarantee
After the sale of shares (and in particular those carrying control of the business), the appearance of unknown debts is a major risk that the buyer must avoid to ensure the sustainability of the company.
By the asset-liability guarantee clause, you guarantee the accuracy of all the information provided to the buyer: company activity, company accounts, customers and suppliers, salary costs, allocation of capital, absence of any disposition affecting the transferability of securities, status of collateral, possible acquisitions of shares in other businesses, ongoing disputes, etc.
This guarantee clause allows the purchaser to protect himself against:
- The Discovery of a Liability which had not been reported at the time of the assignment (it must be a debt prior to the assignment and disclosed after the assignment)
- Incorrect valuation of the asset whose value is ultimately lower than agreed (e.g. too generous stock valuation).
If any of these assumptions is confirmed after the sale of the securities, the buyer may activate the guarantee to obtain a compensation on your part.
Please note
It is also possible to conclude an asset or liability non-guarantee clause when the buyer knows the company well, either for having been a reference partner (e.g. a minority represented on the board) before the sale, or for having been an officer of the target business.
References to the guarantee clause
The guarantee clause must be expressly provided for in the deed of assignment or in a separate document signed by the parties. It must contain the following information :
- Categories of debt which fall within the scope of the guarantee. In the absence of precision, the guarantee covers all debts linked to the business' activity.
- Departure Date of the guarantee: the date from which the earlier or later origin of the debt can be assessed.
- Term of the clause : between 3 and 5 years.
- Calculation of compensation : the percentage of the debt that you commit to pay. This percentage may decrease over time.
- Floor Amount Warranty: The amount from which the warranty can be activated.
- Ceiling Amount of compensation: the maximum amount to which you are committed. You won't have to pay more than that.
- Implementation arrangements : additional information needed to implement the guarantee (justification of the liability, modalities for sending the claim, etc.).
Declaration of assignment
Assignment established by an act
Assignments of social rights established by an act shall be subject to the formality of registration within the period of 1 month from the date of the act.
The deed of assignment must be deposited on the spot or by post, in 2 copies and accompanied by the payment of fees (by check or transfer) to the department in charge of the registration of the domicile of one of the parties or of the residence of the notary if the assignment is made by notarial act.
Who shall I contact
Assignment not established by an act
Assignments of social rights which are not not established by an act must be declared within the 1 month from the date of transfer:
- or by means of the online service available on impots.gouv.fr in your professional area, under Actions > Assignments of social rights
Impots.gouv.fr professional space
- or by means of Form No 2759, to be filed with the registration department on which one of the parties is dependent.
Assignment of social rights not established by an act to be declared obligatorily (form No 2759)
Who shall I contact
Payment of registration fees
The acquisition of shares shall give rise to payment by the purchaser a registration fee.
However, the deed of assignment may provide that the payment of the duties is to be borne by the seller or shared between the two parties.
This duty shall be fixed at 3% and calculated on the transfer price less one abatement equal to €23,000 reduced to percentage of the number of shares transferred in social capital.
Example :
You own 50 shares in a CBS, the capital of which is divided into 400 shares. You sell your shares to the buyer for a value of €50,000.
The amount of registration fees payable by the purchaser shall be calculated as follows: Transfer price - (23,000 x Number of shares sold ÷ Total shares in the business) x 3%.
Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 400) = 47,125 × 3% = €1,414 registration fees.
The rate is 5% for businesses with a predominance of real estate, i.e. businesses where more than half of the assets are made up of buildings not used for his professional purposes.
Registration fee cannot be less than €25.
Tax Exemption
The transfer shall be subject to abatement of €500,000 on the value of the shares in the company where it is held with one of the following :
- Let's say one employee of the transferred company. He must have been employed on a full-time contract for at least 2 years or have a apprenticeship contract ongoing at the time of transfer.
- Let's say one family member of the transferor (her Civil partnership or partner, her direct ascendants or descendants, or her siblings).
This reduction shall be applied when all following conditions are respected:
- The company shall exercise commercial, industrial, craft, agricultural or liberal activity, with the exception of the management of its own movable or immovable property.
- The transferor shall have held the securities for more than 2 years (if the transferor has acquired the shares free of charge, no holding period is required).
- The purchaser must to continue the business of the business whose shares have been transferred as a professional activity unique and in an effective and continuous manner, for 5 years after the date of sale.
- The purchaser must to ensure effective management of company during these five years.
A transfer of shares implies a new distribution of shares among the members and therefore an amendment to the articles of association.
The statutory amendment shall be made in 3 steps.
1. Convening of a special general meeting
The decision to amend the articles of association must be voted on and approved by the members meeting in special general meeting (AGE)
If the status change is not approved at the first meeting, the partners are consulted again.
Any amendment shall be decided upon with the agreement of all general partners and the majority (in number and capital) of the limited partners.
2. Publishing legal announcements in a media
Any amendment to the articles of association must be published in a legal listing support of the department in which your business' headquarters are located.
Publication shall take place within 1 month as of the amendment.
The notice of publication must contain the following :
- Name or corporate name
- Legal form
- Share capital
- Social purpose
- Address of the seat
- Place and registration number of SCR: titleContent
- Decision or minutes of the general meeting, dated and signed
- Changes made
This notice must be signed by the manager of the business or by the notary who drafted the document of assignment of shares.
3. Declaration of amendment
Finally, the amendment to the Staff Regulations must be declared within the1 month, on the website of the company formalities office :
Please note
Auto-insert at Bodacc (Official Bulletin of Civil and Commercial Advertisements) will make the change enforceable against third parties.
When reporting, you must submit the supporting documents following:
- Copy of the minutes of the amendment of the statutes
- Copy of the updated articles of association: dated and certified as original by the legal representative
- Certificate of publication of the notice in a legal listing support
FYI
If the status change results in a change in beneficial ownership, it must also be declared on the formalities window.
During the sale, you can realize a capital gain which is the difference between the sale price and the original value of your business securities.
Capital gains realized on the sale of shares may be taxed according to 2 methods of taxation different, you can choose:
- Flat rate of income tax
- Progressive Income Tax Schedule
Flat rate
In principle, capital gains are taxed to the extent of 12.8% under the flat rate income tax, plus social security contributions at the rate of 17.2%, or a total of 30% on the amount of the capital gain.
Example :
You give up for €150,000 the business titles you originally purchased €100,000. So you realize an added value of €50,000.
- Calculation of social security contributions: 50,000 x 17.2% = €8,600
- Income tax calculation: 50,000 x 12.8% = €6,400
You will therefore have to pay in total €15,000 on the transfer of its securities.
FYI
This flat rate of 12.8% is the default regime, you can opt for the progressive scale.
Progressive scale
You can waive the flat rate of 12.8% and choose, on express and irrevocable option, to be subject to the progressive scale of income tax.
The surplus value is then factored into your overall net income and is taxed according to your tax bracket (from 0 to 45%).
Income brackets | Income tax bracket rate |
|---|---|
Up to €11,294 | 0% |
From €11,295 to €28,797 | 11% |
From €28,798 to €82,341 | 30% |
From €82,342 to €177,106 | 41% |
More than €177,106 | 45% |
Please note
The social security contributions shall be applied in the same way to the 17.2% on the amount of the capital gain.
In addition, when you opt for progressive taxation, you can benefit from a abatement on your capital gains resulting from the sale of the securities you have acquired or subscribed before 1er january 2018.
There is an abatement of ordinary law and an abatement reinforced.
General abatement
L'ordinary allowance is applicable in all situations and is directly related to the length of time the securities are held:
- 50% for securities held between 2 and 8 years
- 65% for securities held since older than 8 years
Reinforced reduction
L'increased abatement is also linked to the length of time the securities are held, but it is more advantageous from a tax point of view:
- 50% for securities held between 1 and 4 years
- 65% for securities held between 4 and 8 years
- 85% for securities held since older than 8 years
The enhanced allowance shall apply in any of the following :
- You dispose of the shares of an SME under 10 years of age on the date of subscription or acquisition of the securities : this is a company with less than 250 employees and a turnover of less than EUR 50 million.
- You divest the shares of an SME of which you are a director and you retire : you must have been a continuous leader and have held at least 25% the rights of the business during the 5 years preceding the assignment. You must cease all activity in the business and assert your retirement rights within 2 years of the transfer.
Please note
A retiring SME manager may also opt for a fixed abatement of €500,000. This shall apply to divestments made until 31 december 2024, irrespective of the way in which capital gains are taxed (flat rate or progressive scale). It cannot be combined with a proportional reduction under ordinary or reinforced law.
SCI
The system of approval depends on the social form company and transferee : spouse (spouse or civil partnership partner), ascendant or descendant, partner or third party operator.
The transfer of shares to a ascendant or to a descendant is free, unless the statutes provide otherwise.
The articles of association may also preclude the need for authorization when shares are transferred to a member or to the spouse.
Where the approval of members is necessary, it must be obtained at a general meeting. It has 6 months to answer. In the absence of a written reply within that period, approval shall be granted.
Please note
if you are married under the legal community or under the division, your spouse's consent to the transfer is required. A transfer of shares effected without his agreement may be canceled within a period of 2 years from the date of transfer.
Where the transfer is for an amount greater than €1,500, this shall be subject to a written :
- either by authentic instrument (by a notary),
- either by private act (between parties only).
Please note
Below €1,500, the assignment may be proven by any means (e.g. email, fax, testimony).
The deed of assignment must count as many copies as parts to the contract. Each copy must be signed by the parties.
The electronic signature is based on a trusted digital certificate that allows for the secure identification of its author and prohibits further modification. The electronic signature is secure until proven otherwise.
Conversely, the scanned signature and affixed to a document does not allow the author to be identified with certainty. This signature is valid but may be challenged before the courts by one of the parties to the contract who would like, for example, to have the assignment annulled.
The deed of assignment must contain certain mandatory particulars :
- Name of parties
- Identity of the business
- Number and designation of the shares transferred (if numbered)
- Sale price of the assignment and payment terms (except in the case of a donation)
- Details of the approval of the partners.
In the absence of a written statement, the assignment shall remain valid. However, the purchaser who is therefore unable to carry out the publication formalities necessary to make the transfer effective may request the termination of assignment.
Purpose of the guarantee
After the sale of shares (and in particular those carrying control of the business), the appearance of unknown debts is a major risk that the buyer must avoid to ensure the sustainability of the company.
By the asset-liability guarantee clause, you guarantee the accuracy of all the information provided to the buyer: company activity, company accounts, customers and suppliers, salary costs, allocation of capital, absence of any disposition affecting the transferability of securities, status of collateral, possible acquisitions of shares in other businesses, ongoing disputes, etc.
This guarantee clause allows the purchaser to protect himself against:
- The Discovery of a Liability which had not been reported at the time of the assignment (it must be a debt prior to the assignment and disclosed after the assignment)
- Incorrect valuation of the asset whose value is ultimately lower than agreed (e.g. too generous stock valuation).
If any of these assumptions is confirmed after the sale of the securities, the buyer may activate the guarantee to obtain a compensation on your part.
Please note
It is also possible to conclude an asset or liability non-guarantee clause when the buyer knows the company well, either for having been a reference partner (e.g. a minority represented on the board) before the sale, or for having been an officer of the target business.
References to the guarantee clause
The guarantee clause must be expressly provided for in the deed of assignment or in a separate document signed by the parties. It must contain the following information :
- Categories of debt which fall within the scope of the guarantee. In the absence of precision, the guarantee covers all debts linked to the business' activity.
- Departure Date of the guarantee: the date from which the earlier or later origin of the debt can be assessed.
- Term of the clause : between 3 and 5 years.
- Calculation of compensation : the percentage of the debt that you commit to pay. This percentage may decrease over time.
- Floor Amount Warranty: The amount from which the warranty can be activated.
- Ceiling Amount of compensation: the maximum amount to which you are committed. You won't have to pay more than that.
- Implementation arrangements : additional information needed to implement the guarantee (justification of the liability, modalities for sending the claim, etc.).
Declaration of assignment
Assignment established by an act
Assignments of social rights established by an act shall be subject to the formality of registration within the period of 1 month from the date of the act.
The deed of assignment must be deposited on the spot or by post, in 2 copies and accompanied by the payment of fees (by check or transfer) to the department in charge of the registration of the domicile of one of the parties or of the residence of the notary if the assignment is made by notarial act.
Who shall I contact
Assignment not established by an act
Assignments of social rights which are not not established by an act must be declared within the 1 month from the date of transfer:
- or by means of the online service available on impots.gouv.fr in your professional area, under Actions > Assignments of social rights
Impots.gouv.fr professional space
- or by means of Form No 2759, to be filed with the registration department on which one of the parties depends.
Assignment of social rights not established by an act to be declared obligatorily (form No 2759)
Who shall I contact
Payment of registration fees
The acquisition of shares shall give rise to payment by the purchaser a registration fee.
However, the deed of assignment may provide that the payment of the duties is to be borne by the seller or shared between the two parties.
This duty shall be fixed at 3% and calculated on the transfer price less one abatement equal to €23,000 reduced to percentage of the number of shares transferred in social capital.
Example :
You own 50 shares in a SCI whose capital is divided into 400 shares. You sell your shares to the buyer for a value of €50,000.
The amount of registration fees payable by the purchaser is calculated as follows: Transfer price - (23,000 x Number of shares sold ÷ Total shares in the business) x 3%.
Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 400) = 47,125 × 3% = €1,414 registration fees.
The rate is 5% for businesses with a predominance of real estate, i.e. businesses where more than half of the assets are made up of buildings not used for his professional purposes.
Registration fee cannot be less than €25.
Tax Exemption
The transfer shall be subject to abatement of €500,000 on the value of the shares in the company where it is held with one of the following :
- Let's say one employee of the transferred company. He must have been employed on a full-time contract for at least 2 years or have a apprenticeship contract ongoing at the time of transfer.
- Let's say one family member of the transferor (her Civil partnership or partner, her direct ascendants or descendants, or her siblings).
This reduction shall be applied when all following conditions are respected:
- The company shall exercise commercial, industrial, craft, agricultural or liberal activity, with the exception of the management of its own movable or immovable property.
- The transferor shall have held the securities for more than 2 years (if the transferor has acquired the shares free of charge, no holding period is required).
- The purchaser must to continue the business of the business whose shares have been transferred as a professional activity unique and in an effective and continuous manner, for 5 years after the date of sale.
- The purchaser must to ensure effective management of company during these five years.
A transfer of shares implies a new distribution of shares among the members and therefore a amendment of the statutes.
The statutory amendment shall be made in 3 steps.
1. Convening of a special general meeting
The decision to amend the articles of association must be voted on and approved by the members meeting in special general meeting (AGE)
If the status change is not approved at the first meeting, the partners are consulted again.
Any amendment to the Articles of Association shall require the agreement of the unanimity of the members (100%).
However, the statutes may provide for certain decisions to be taken with the agreement of a majority (50 %).
2. Publishing legal announcements in a media
Any amendment to the articles of association must be published in a legal listing support of the department in which your business' headquarters are located.
Publication shall take place within 1 month as of the amendment.
The notice of publication must contain the following :
- Name or corporate name
- Legal form
- Share capital
- Social purpose
- Address of the seat
- Place and registration number of SCR: titleContent
- Decision or minutes of the general meeting, dated and signed
- Changes made
This notice must be signed by the manager of the business or by the notary who drafted the document of assignment of shares.
3. Declaration of amendment
Finally, the amendment to the Staff Regulations must be declared within the1 month, on the website of the company formalities office :
Please note
Auto-insert at Bodacc (Official Bulletin of Civil and Commercial Advertisements) will make the change enforceable against third parties.
When reporting, you must submit the supporting documents following:
- Copy of the minutes of the amendment of the statutes
- Copy of the updated articles of association: dated and certified as original by the legal representative
- Certificate of publication of the notice in a legal listing support
FYI
If the status change results in a change in beneficial ownership, it must also be declared on the formalities window.
During the sale, you can realize a capital gain which is the difference between the sale price and the original value of your business securities.
Capital gains realized on the sale of shares may be taxed according to 2 methods of taxation different, you can choose:
- Flat rate of income tax
- Progressive Income Tax Schedule
Flat rate
In principle, capital gains are taxed to the extent of 12.8% under the flat rate income tax, plus social security contributions at the rate of 17.2%, or a total of 30% on the amount of the capital gain.
Example :
You give up for €150,000 the business titles you originally purchased €100,000. So you realize an added value of €50,000.
- Calculation of social security contributions: 50,000 x 17.2% = €8,600
- Income tax calculation: 50,000 x 12.8% = €6,400
You will therefore have to pay in total €15,000 on the transfer of its securities.
FYI
This flat rate of 12.8% is the default regime, you can opt for the progressive scale.
Progressive scale
You can waive the flat rate of 12.8% and choose, on express and irrevocable option, to be subject to the progressive scale of income tax.
The surplus value is then factored into your overall net income and is taxed according to your tax bracket (from 0 to 45%).
Income brackets | Income tax bracket rate |
|---|---|
Up to €11,294 | 0% |
From €11,295 to €28,797 | 11% |
From €28,798 to €82,341 | 30% |
From €82,342 to €177,106 | 41% |
More than €177,106 | 45% |
Please note
The social security contributions shall be applied in the same way to the 17.2% on the amount of the capital gain.
In addition, when you opt for progressive taxation, you can benefit from a abatement on your capital gains resulting from the sale of the securities you have acquired or subscribed before 1er january 2018.
There is an abatement of ordinary law and an abatement reinforced.
General abatement
L'ordinary allowance is applicable in all situations and is directly related to the length of time the securities are held:
- 50% for securities held between 2 and 8 years
- 65% for securities held since older than 8 years
Reinforced reduction
L'increased abatement is also linked to the length of time the securities are held, but it is more advantageous from a tax point of view:
- 50% for securities held between 1 and 4 years
- 65% for securities held between 4 and 8 years
- 85% for securities held since older than 8 years
The enhanced allowance shall apply in any of the following :
- You dispose of the shares of an SME under 10 years of age on the date of subscription or acquisition of the securities : this is a company with less than 250 employees and a turnover of less than EUR 50 million.
- You divest the shares of an SME of which you are a director and you retire : you must have been a continuous leader and have held at least 25% the rights of the business during the 5 years preceding the assignment. You must cease all activity in the business and assert your retirement rights within 2 years of the transfer.
Please note
A retiring SME manager may also opt for a fixed abatement of €500,000. This shall apply to divestments made until 31 december 2024, irrespective of the way in which capital gains are taxed (flat rate or progressive scale). It cannot be combined with a proportional reduction under ordinary or reinforced law.
Who can help me?
The public service accompanying companies
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SARL Scheme
Tax treatment of capital gains
Registration fees
Exemption from registration fees