Reinvestment of your sale proceeds (Article 150-0 B ter of the French General Tax Code)

The reuse of contribution-transfer provided for in Article 150-0 B ter is the fact of reinvesting the capital gain from the sale of your business in the real economy. The objective of this device is the tax optimisation of your sale. This 3-step system (holding contribution-transfer-reinvestment), under very specific conditions, can prove to be complex. Delubac Private Banking accompanies you through the stages of contribution-transfer and brings you its expertise to reinvest in eligible solutions adapted to your objectives.

The holding company must make a commitment to reinvest at least 60% of the sale proceeds received, within two years.

The purpose is to reinvest, directly or indirectly, the sums for the benefit of the real economy.

There are 4 ways to reinvest which are not mutually exclusive:

• Reinvestment in the financing of permanent operating resources
• Acquisition of the securities of one or more companies carrying out an operational activity (subject, in particular, to having control of the acquired company)   
• Subscription to the capital of one or more operational companies (subject to conditions)    
• Subscription within investment capital structures, such as FCPR, FPCI and SLP.
  

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In order to maintain the tax deferral, the following conditions must in particular be strictly observed:

• Reinvestment by the holding company benefiting from the contribution
• Of at least 60% of the sale proceeds
• For the benefit of the real economy, directly or indirectly
• Within 2 years of the sale
  
  

The contribution-transfer operation is an operation that is generally set up some time before a business transfer. This operation can theoretically be broken down as follows:

Contribution: the contribution in kind of securities consists of the transfer of ownership of securities held by a natural person directly for the benefit of a company, known as a holding company. The contributor receives, in return for their contribution, the securities of the holding company.

Tax deferral: all conditions being met, the contributor is subject to the regime of Article 150-0 B ter of the French General Tax Code.
In concrete terms, the contributor benefits from a payment period for the tax on the capital gain realised during the contribution (the contribution being in fact a taxable event). This payment period, known as deferral, may be temporary or permanent.

The transfer: it is the holding company, beneficiary of the contribution, which is now the owner of the securities. In the event of a sale, the latter will receive the sale proceeds relating to the securities contributed.

Reinvestment: if the sale takes place within 3 years after the contribution, the holding company must reinvest at least 60% of the sale proceeds received so that the tax deferral continues.

Delubac Private Banking accompanies you, with accounting and legal professionals, at each stage of this operation.

To comply with all the conditions of Article 150-0 B ter and benefit from the tax deferral of the capital gain on sale, a 3-step operation must be carried out:

3 years

2. TRANSFER
of securities by the holding company to a third party

2 years

3. MANDATORY REINVESTMENT
by the holding company

of 60% minimum of the sale proceeds
in eligible activities.

EXAMPLE*

Mrs Robert created her company 10 years ago with a modest capital (let's consider 0 for simplification).
She receives a purchase offer €1,000,000.

During the sale, she realises a capital gain of €1,000,000.
Taxation (depending on Mrs Robert's situation):

• Income tax: €128,000  (12,8%)
• Social contributions: €172,000  (17,2%)
• Exceptional contribution on high incomes: €40,000  (4%)

After taxation, Mrs Robert has €660,000 on a personal basis.

Prior to the sale, we advise Mrs Robert to:

•  create a holding company by contributing, for example, 100% of the securities of her operational company,
  
• sell securities contributed at the same price, by the holding company, i.e. €1,000,000 by assumption,
• reinvest at least 60% or €600,000 in the real economy,

Thanks to the system, Mrs Robert benefits from a payment period (temporary or definitive) for her taxation of €340,000 and therefore has €1,000,000 to invest via her holding company, including:

• €600,000 in an economic activity    
  
•  €400,000 free of all constraints

*Example given for illustrative purposes according to the tax rules in force on 01/03/2023 in France.

*Financial investments can allow you to benefit from the potential performance of the financial markets in return for taking some risk, including capital loss. Before any investment, you should be aware of the risks associated with the product. A financial instrument’s past performance is not a guide to its future performance. The information provided on our site is not intended to list exhaustively all the risks that the client may face when benefiting from an investment service provided by Banque Delubac & Cie.