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The transfer of shares of a business must be carried out in accordance with certain administrative and fiscal rules. It is therefore necessary to comply with the imposed formalism. However, provisions allow exemption from all or part of the taxation of the transfer of shares. Here is a point on the subject!

The necessary formalities

Before considering the actual transfer of shares, it is advisable to first check that this type of operation is technically feasible. In particular, make sure that there is no question of an accreditation procedure. If this were the case, then you would need to take a few additional steps. The partner who is considering the sale therefore has the obligation to inform the other partners at least eight days before the convocation of a general meeting. A vote will take place on this occasion. In the event of an unfavorable result, the sale will have to wait at least three months before being able to be carried out. On a similar principle, you should also know that if the assigning partner is married under the community regime, it is essential to present the consent of the spouse in question.

The written deed of transfer, regardless of its form (notarial deed or deed under private signature), must necessarily mention this information:

  • Name, first name and address of the transferor
  • Name, first name and address of the purchaser
  • Number of shares sold
  • Amount of the transaction and method of payment
  • Conditions surrounding the assignment (if they exist)

Once these operations have been carried out, you will have to file with the registry the minutes of the general meeting as well as the new version of the articles of association of the company. Advertising in the trade and companies register, required by law, will then be carried out automatically without any further intervention on your part. Finally, you have a maximum of one month thereafter to have the new documents registered by the tax services. You will then receive more details about the taxation for the sale of shares.

Taxation of transfers of SARL shares

To begin with, only the taxation on the sale of shares applied to individuals will be mentioned here. Procedures do indeed differ with regard to legal persons.

Registration fees

The law requires the purchaser to pay the recording rights following the transfer. They amount to 3 % of the total sale with a deduction of 23,000 euros if the buyer acquires all the shares in the company. Otherwise, the pro rata rule will be used. Thus, for the repurchase of 80 % of shares in a company representing a total of 100,000 €, it will be necessary to pay the sum of 2,448 euros for registration fees ((100,000 - (23,000 * 80 %)) * 3 %).

Taxation of the assignor on the capital gain from the sale of shares

If the seller realizes a capital gain on the sale of the shares, he will then be subject to the payment of social security contributions and income tax. A rate of 17.20 % is applied for the former. For income tax, everything has changed since January 1, 2018. From now on, a single flat-rate deduction of 12.80 % is applied. The buyer can still opt for a progressive scale on condition of waiving the allowance for the duration of the holding of the shares.

The allowances

The General Tax Code defines three types of deductions. The first is calculated according to the length of time the shares are held (up to 65 % for 8 years). The second applies according to certain characteristics of the company. The last concerns the situation of the sales manager and in particular his retirement.

Cases of exemption of capital gains from sales of shares

The legislator has taken certain measures in order to leave some room for fiscal maneuver in the event of capital gains from the sale of shares. This is the case, for example, for all “family” companies, in which any transferor can benefit from exemptions in the event of the sale of all of the shares in his possession.

The other most frequently encountered case remains the transfer of shares imposed by the retirement of the holder. It also gives the right to an exemption under certain conditions. Among the most notable are the following configurations:

  • The company must not have a workforce exceeding 250 employees nor present a final balance sheet exceeding 43 million euros. Its annual turnover must also be less than 50 million euros.
  • The seller no longer participates in the smooth running of the company and he must have asserted his retirement rights twenty-four months before or after the transfer of his shares.
  • The transferor worked for five consecutive years before the sale
  • The seller did not own more than half of the rights in the business at the time of the transfer
  • The sale represents all the shares of the company subject to income tax

Deferral of capital gains tax

There are also provisions allowing the deferral of taxation linked to the realization of a capital gain on the sale of shares. They apply, for example, when this transfer is carried out free of charge. It is then up to the beneficiary of this donation to calculate the amount of his personal capital gain generated by such a transaction. Another case with the change in the company's tax regime. The postponement is applicable until the date of transmission of the securities.

Finally, it is logically possible to also benefit from a postponement when the company ceases to operate, even though this operation does not give rise to any sale of shares.

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