Contribution-in-kind followed by a sale: tightening rules to be mastered
Stanislas Vailhen, Partner in Tax Law, Litigation and Customs, has published a new article in Profession CGP devoted to the evolution of the contribution-in-kind followed by a sale (Article 150-0 B ter of the French Tax Code) following the Finance Act for 2026.
“Largely unnoticed at the time, an amendment introduced by the Finance Act for 2026 restricts the scope of the contribution-in-kind followed by a sale regime. Article 150-0 B ter of the French Tax Code has been progressively refined both by the legislator and administrative doctrine. Here is an overview.
Over just more than a decade, Article 150-0 B ter has become a cornerstone of contribution-and-sale schemes implemented by individual executives, gradually replacing the tax deferral mechanism under Article 150-0 B, which, since 2012, applies only to contributions of shares by individuals to non-controlled companies.
This provision establishes an automatic deferral of taxation on capital gains arising from the contribution of shares to a company subject to corporate income tax and controlled by the contributor. It allows taxation to be deferred while ensuring close monitoring of subsequent transactions. Although technical in nature, this mechanism is widely used in practice in many wealth structuring operations and business reorganizations.
Originally designed as a tool to combat “cash-out” arrangements lacking genuine economic reinvestment, the regime has gradually been refined by both the legislator and administrative doctrine, particularly with regard to the notion of reinvesting the proceeds from the sale of contributed shares. Its overall structure now relies on a simple principle: the sale by the holding company of the contributed shares, within three years of the contribution, does not necessarily trigger the end of the deferral, provided that the holding company reinvests a substantial portion of the sale proceeds in an eligible economic activity within strictly defined timeframes.”
Read the full article: https://www.professioncgp.com/article/juridique-et-fiscal/entreprises/apport-cession-les-regles-se-sont-durcies.html