Long touted as one of the main targets of the 2026 Finance Act, the Dutreil Pact has ultimately escaped any fundamental overhaul. Although the legislature has tightened certain conditions for its application, it has preserved the essence of a scheme that is essential for the transfer of family businesses. This reform confirms the commitment to supporting business succession whilst imposing stricter conditions on eligibility for the scheme. Legal column by Stéphanie Hamis, partner, Alice Bouchaudy, manager, and Hugo Cernettig, associate, at the law firm Arsene.

Few tax reforms have raised such high expectations for changes that ultimately proved so limited. Since the publication of the Court of Auditors’ report in autumn 2025[1], the Dutreil Pact appeared to be under threat. Its rising budgetary cost, estimated at several billion euros, fuelled criticism, and some MPs went so far as to propose a much more far-reaching overhaul of the scheme (a reduction in the 75 per cent allowance on transferred assets, the abolition or reduction of the allowance rate for regulated activities, or even a reduction in the allowance rate above a certain value of assets transferred to each donee).

A more consensus-based approach

The text that was ultimately adopted reflects a more consensus-based approach. The government has chosen to retain a mechanism considered essential to the continuity of family businesses, whilst seeking to refocus its benefits on the economic instrument itself. For business leaders, investors and family offices, the Dutreil Pact remains an important tool in wealth management strategy, but its use will now require more thorough preparation.

As a reminder, the Dutreil Pact provides for an exemption of 75 % of the value of securities transferred by gift or inheritance, subject to compliance with a number of holding and management commitments[2]. This prevents the burden of inheritance tax from forcing heirs to sell all or part of their business in order to finance the transfer. For more than twenty years now, the Dutreil Pact has been a key instrument in ensuring the stability of the capital of SMEs, mid-cap companies and family-owned groups.

The 2026 Finance Act does not call this philosophy into question, but it does, however, modify its scope in two significant respects.

The first change concerns the retention period for the documents submitted under the individual conservation commitment. Until now, beneficiaries of a gift or an inheritance were required to retain their shares for four years from the date of transfer, following a prior period of collective commitment of at least two years. This individual commitment period has now been extended to six years, which automatically extends the total period for which the securities must be held.

Long-term vision

This development reflects a desire to strengthen the stability of the shareholder base and to promote a long-term vision. It also reduces the liquidity of the shares transferred by extending the period during which heirs or donees must retain their investment. This additional constraint is likely to remain acceptable to most family-owned groups, whose objective is precisely to ensure intergenerational succession, but it may require more in-depth consideration not only of governance but also, and above all, of the beneficiaries’ future liquidity needs.

The second change is undoubtedly the most significant in terms of wealth management strategy. Until now, provided a company carried out an activity eligible under the scheme, the exemption could apply to the full value of the securities, even where this included certain assets with no direct link to the economic activity.

From now on, a non-exhaustive list of assets used for personal enjoyment that are not exclusively allocated to business activities may be excluded from the exemption. This includes, in particular, passenger cars, yachts, aircraft, jewellery, works of art, racehorses, wines and spirits, and certain properties owned by the company, where these are not used exclusively in the course of the company’s main business for the required period.

Refocusing the Dutreil Pact

With this amendment, the legislator intended to refocus the Dutreil Pact on its primary purpose: to facilitate the transfer of the means of production rather than that of a portfolio of assets held for personal enjoyment within an operating company.

However, the practical implications of this reform should not be overestimated. Contrary to certain proposals discussed during the parliamentary debates, the legislator did not opt for a blanket exclusion of all assets not used for business purposes. Cash, financial investments and other assets therefore remain, in principle, included in the basis for the exemption, provided that the company continues to carry out a predominantly operational activity.

This approach preserves the appeal of a scheme that contributes directly to the competitiveness of French law in the area of business succession. At a time when many European countries are also offering mechanisms to substantially reduce inheritance or gift tax, and when personal taxation is already very high in France, an excessively stringent tightening of the rules could have encouraged certain strategies for relocating assets.

For company directors and their boards, however, this reform calls for a new way of thinking. Transfers of ownership will now need to be preceded by a more thorough audit of the composition of the company’s assets, in order to identify any assets that may be excluded from the exemption and, where appropriate, to consider a reorganisation of assets prior to the gift or inheritance. The quality of the documentation and the demonstration of the business use of certain assets – particularly in the case of assets used for personal enjoyment – will also become key factors in ensuring compliance.

[1] Court of Auditors, The Dutreil Pact: a rapidly growing tax scheme that needs to be better targeted, 18 November 2025.

[2] Article 787 B of the General Tax Code