When you want to sell your company, you have several options. You can decide to sell your business (as well as other assets) separately and then liquidate the company. Another possibility is to sell your shares.

In all cases, you are subject to capital gains tax.

The capital gain is calculated by the difference between the sale value (i.e. the value retained for the sale, donation or contribution of the securities) and the acquisition value of these securities.

Transfers of securities of companies owned or created before January 1, 2018 offer an alternative to the taxpayer in the taxation of his capital gain: he can choose to subject this capital gain to the single flat-rate levy (PFU) of 30% or prefer taxation to the progressive scale of income tax, then benefiting from an abatement according to the length of ownership (the capital gain will in this case also be subject to social security contributions of up to 17.2%) .

However, the taxation of capital gains on securities of companies owned or created since January 1, 2018 has tightened. The business owner can always choose between the 30% PFU and the progressive scale tax, but in this second case, he no longer has the allowance for length of detention.

In a context of tightening of the taxation of business disposals, we present to you a device making it possible to optimize the related taxation: the contribution-disposal.

It is important to note that the contribution-transfer is only applicable to transfers of securities of companies, and not to transfers which consist in the sale of the business before liquidation.

The securities eligible for the contribution-disposal system are:
- on the one hand, securities of companies subject to corporate tax, regardless of whether the transferring taxpayer exercises his professional activity in the company or not;
- and, on the other hand, the securities of semi-transparent companies (subject to IR) but only if the partner does not exercise any professional activity there.

Take the example of Mr. HENRI, business manager who acquired a SAS with a bakery activity in 2010 for the sum of € 200,000.

In 2020, Mr. HENRI decides to sell his business, which is now worth € 600,000.
Instead of selling his business directly, he will set up a holding company to which he will contribute the shares of the bakery. In return for this contribution, he will receive shares in the holding company.

Since Mr. HENRI has contributed his shares to the holding company, he is subject to capital gains tax, which here amounts to € 400,000 (600,000 - 200,000).

1. If he opts for the taxation of the capital gain on the progressive scale, he will benefit from a reduction of 65% since he has held the titles of the bakery for more than 8 years. If he is liable for income tax at a marginal rate of 30%, his tax will be € 110,800:
(400,000 x 35% x 30%) + (400,000 x 17.2%)

2. If he chooses the PFU, his tax will amount to € 120,000:
(400,000 x 30%)

In the context of a contribution-transfer, the payment of this tax is deferred for 2 years on condition that the taxpayer controls the holding company which received the contribution and that the amount of the payment paid, if applicable, does not not exceed 10% of the value of the securities contributed. Mr. HENRI's situation meets these two conditions.

The holding company will then, during the deferral phase, sell the titles of the bakery. It will then have to reinvest at least 60% of the sale price of the securities (ie € 360,000) in operational companies.

This investment can be made through funds. Mr. HENRI can therefore, for example, decide to place € 360,000 in eligible funds, and € 240,000 on a capitalization contract.

Finally, after having kept the funds for 5 years, the capital gain will be entirely exempt from tax, and Mr. HENRI will have made a tax gain of € 110,800.

Wealth A7 has selected the best funds in the market that are eligible for sale and transfer, so you can reinvest the proceeds from the sale of your company in quality products based on economic activity.

Are you a business owner planning to sell your company or have you sold your company through a holding company less than two years ago and want to optimize taxation which risks reducing your capital gain?

Our Wealth A7 experts are at your side to offer you relevant solutions following the sale of your business in order to reduce your tax burden while investing in high-end products.