Deferral of Capital Gains Tax on Business Sales: The New 2025 Conditions – Step-by-Step Guide to Secure Your Business Transfer!
SME leaders, selling your business is a pivotal moment: capital gains can represent 20-50% of your net worth. The capital gains deferral regime (Art. 151 septies A of the French General Tax Code – CGI) allows you to postpone income tax (up to 30% + 17.2% social charges) on these gains by reinvesting the proceeds in a new economic activity. Good news for 2025: the 2025 Finance Act (No. 2025-127 of February 14) relaxes the conditions, particularly for transfers to young farmers (fixed allowance increased to €600k under Art. 150-0 D ter for share sales upon retirement) and broader exemptions (Art. 70). But non-compliance = immediate taxation + penalties (10%). For a €500k gain, potential savings: €100-150k in taxes.
Based exclusively on official guidelines, here are the key new 2025 conditions and a 5-step action plan.
New 2025 Conditions (Finance Act No. 2025-127, Art. 70, applicable to sales from January 1, 2025):
Broader Eligibility:
Deferral available for sales of sole proprietorships, complete business branches, or 100% shares in partnerships taxed under IR, with activity ≥5 years. Excludes building land (Art. 151 septies CGI). Transfers to young farmers (eligible for aids under Art. 73 B CGI): increased exemption thresholds (Art. 151 septies), and fixed allowance of €600k (up from €500k) for retirement share sales (Art. 150-0 D ter).
Mandatory Reinvestment:
100% of proceeds (net of social charges) into an economic activity (commercial, agricultural, etc.) within 2 years. Hold for at least 5 years; otherwise, deferral ends + interest charged (0.2%/month).
Exemption on Retirement:
For sales of SME shares (IS-taxed) combined with retirement (±2 years), full exemption of deferred gains (IV bis Art. 151 septies A). No ongoing role in the acquiring company.
Revenue Thresholds for Full/Partial Exemption:
<€250k (sales) or <€90k (services) for full; <€350k/<€126k for partial. Agricultural: <€350k full, raised to €450/550k for young farmers.
Strengthened Reporting:
Report deferred gains on forms 2074/2042 C Pro; annual tracking (statement 2074-I). Non-compliance = taxation at progressive IR rates + optional 30% flat tax (PFU).
5-Step Action Plan for Your 2026 Sale (Start Q1):
1. Check Eligibility: Calculate net gain (offset prior losses) using the BOFiP simulator. Confirm ≥5 years activity and revenue thresholds (excl. VAT, years N-2/N-1/N). For agricultural, verify buyer’s young farmer aids.
2. Plan Reinvestment: Identify target (similar activity, within 2 years). Draft notarized commitment for 100% proceeds. Test via tax ruling request to DGFiP (response in 3 months).
3. Opt for Retirement Exemption: If applicable, document cessation of role/retirement (±2 years). Apply IV bis Art. 151 septies A; no rights in acquiring company.
4. Report Correctly: Enter deferred gains on 2042 C Pro/2074 (Annex I for tracking). Archive for 10 years (contracts, proofs). Avoid penalties via DSN/EDI submission.
5. Anticipate Audits: Request approval if company opts for IS tax. Budget: €1-3k for expert advice. ROI: indefinite deferral if holding respected, possible full exemption.
These 2025 relaxations make many annual transfers easier: turn your sale into a smooth opportunity. Don’t miss the window!
Ready to defer your 2025 capital gains?
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Official sources : legifrance.gouv.fr, bofip.impots.gouv.fr, impots.gouv.fr
#CapitalGains #BusinessSale #SMETax #ExecutiveRetirement #BusinessTransfer
(Article based on source from legifrance.gouv.fr, bofip.impots.gouv.fr, and impots.gouv.fr – Updated January 2026)
