Legal position verified as at 5 October 2026
The rules cited in this article are those in force at that date. They may change, in particular with the 2027 Finance Law.
Gifting your shares before leaving France serves two objectives at once: passing on your assets, and neutralising the unrealised capital gain that exit tax would otherwise catch. The mechanism is real, and so is its cost. Gift duties are paid immediately, whereas exit tax, when you move to another country of the European Union, involves no cash outlay. The comparison only favours the gift in specific situations.
The full process of a departure is set out on our page changing your tax residence.
Why a gift wipes out the unrealised capital gain
A gift transfers ownership of the shares to the donee. For the donee, the acquisition price is the value used to calculate gift duties. The capital gain accumulated between the original acquisition and the gift therefore disappears, with no capital gains tax for the donor, since a gift is not a disposal for consideration.
For exit tax purposes, two effects combine depending on when the gift is made.
- Gift before departure: the gifted shares are no longer among your assets on the date your domicile is transferred. They fall outside the tax base of Article 167 bis of the French Tax Code (code général des impôts, CGI), and may bring the remaining holding below the €800,000 threshold.
- Gift after departure: Article 167 bis provides for the discharge of the deferred tax where the shares are gifted, under the conditions it sets.
Gift duties vs exit tax on shares: a worked example
A 58-year-old director holds 100% of a company valued at €5,000,000, with a cost price of €200,000. He has two children and is considering moving to a country of the European Union. He is looking at gifting 60% of the share capital, worth €3,000,000, i.e. €1,500,000 per child. No previous gift has been made within the last fifteen years.
| Scenario | Taxable base per child | Duties, two children |
|---|---|---|
| Departure without a gift, exit tax with automatic deferral | Unrealised gain on the 60% gifted: €2,880,000 | Tax assessed at €368,640 at the 12.8% rate, excluding social levies, but no cash outlay while the deferral runs, and discharge after five years |
| Gift of full ownership, without a Dutreil pact | €1,500,000 minus the €100,000 allowance, i.e. €1,400,000 | €825,356, payable immediately |
| Gift of full ownership with a Dutreil commitment | €1,500,000 with a 75% exemption, i.e. €375,000, minus the allowance: €275,000 | €106,389 |
| Gift of bare ownership with a Dutreil commitment | Bare ownership valued at 50% for a donor under 61 full years of age, i.e. €750,000, with a 75% exemption then the allowance: €87,500 | €31,389 |
Duties are calculated using the direct-line rates in Article 777 of the CGI, after the €100,000 allowance under Article 779 and, where applicable, the usufruct scale in Article 669.
The table reads clearly. A gift of full ownership without a retention commitment costs, in immediate cash, more than twice the income tax, excluding social levies, that exit tax would assess without ever collecting it. Combined with a Dutreil pact (pacte Dutreil, the French share-retention commitment regime) and a reserved usufruct, it becomes a rational choice again, but for succession planning reasons, not for avoidance.
Gift before or after leaving France?
Before departure. The shares fall outside the exit tax base. The donor remains resident, and therefore subject to French law for the gift, with the benefit of the allowances and, where applicable, the Dutreil regime. This is the clearest route where passing on the shares had been decided in any event.
After departure. The gift triggers the discharge of the deferred tax, under the conditions of Article 167 bis of the CGI. But a gift made by a non-resident raises further questions: territorial scope of the duties under Article 750 ter of the CGI, applicable civil law, local formalities. See our article on international transfers of wealth.
The risk of recharacterisation
A gift followed by a quick sale, whose proceeds in fact return to the donor, is regularly challenged. The tax authorities then rely on Article L64 of the French Tax Procedure Code (livre des procédures fiscales, LPF), which targets sham transactions and those motivated solely by tax avoidance, or on Article L64 A, which catches transactions with a mainly tax-driven purpose.
The indicators relied on are well known: no real divestment, reinvestment of the price for the donor’s benefit, a general power of attorney over the donee’s accounts, a very short interval between the gift and the sale, and a sale price negotiated before the deed of gift.
Conversely, a gift that has its full effect, with a donee who actually receives and manages the assets, holds up. The boundary is explored in our article on the distinction between tax planning and fraud.
Interaction with the Dutreil pact since 2026
The 75% exemption under Article 787 B of the CGI remains available, under conditions tightened by Law No. 2026-103 of 19 February 2026: the individual retention commitment is extended from four to six years, and certain exhaustively listed assets (passenger vehicles, yachts, works of art, residential properties…) are excluded where they have not been used exclusively for the business for at least three years.
One point deserves attention when planning a departure: the retention commitment is borne by the donee, who remains bound for six years after the collective commitment expires. A child who is themselves considering an international move should weigh this constraint before committing.
The order of steps
Three decisions must be taken in a set order, not at the same time.
- Value. The value of the shares on the date of the gift sets both the basis for the duties and the donee’s acquisition price. For unlisted shares, the valuation is documented using a method explained in a report, kept with the deed.
- Sign the retention commitments where the Article 787 B regime is sought. The collective commitment must be in progress on the date of the gift, which means it must have been entered into beforehand, or that a deemed commitment is relied on where its conditions are met.
- Transfer your domicile afterwards, once the gift has been registered. Reversing the last two steps changes the law applicable to the gift and complicates its interaction with exit tax.
A timing constraint is added where you are moving to a country outside the European Union: the deferral request must be filed no later than ninety days before the transfer. The whole sequence is built around this deadline.
Key points
- A gift wipes out the unrealised capital gain, but gift duties are paid immediately, whereas exit tax with deferral is not paid.
- With a Dutreil commitment and a reserved usufruct, the cost of the gift can be reduced by a factor of more than twenty-five in the example studied.
- A gift followed by a sale without real divestment is recharacterised: the deed must have its full effect.
Frequently asked questions
Does a gift remove exit tax?
It takes the gifted shares out of the tax base when made before the transfer of domicile, and it triggers the discharge of the deferred tax when made afterwards, under the conditions of Article 167 bis of the CGI.
Should you gift full ownership or bare ownership?
A gift of bare ownership reduces the taxable base according to the donor’s age, under the scale in Article 669 of the CGI, and leaves the donor the income from the shares. On the other hand, it complicates governance, and its interaction with a Dutreil commitment requires careful drafting.
How long should you wait between the gift and a sale?
No statutory period is set. What matters is real divestment and the absence of any recovery of the price. A sale already negotiated on the date of the gift seriously weakens the transaction.
Does the Dutreil pact apply to a gift before moving abroad?
Yes, subject to the conditions of Article 787 B, which are now stricter: a collective commitment of at least two years, an individual commitment of six years, a management role for three years after the transfer of the shares, and the exclusion of certain non-business assets.
Can you make a gift to a child living abroad?
Yes. The territorial scope of the duties is determined under Article 750 ter of the CGI, which takes into account the donor’s domicile, the location of the assets and the donee’s domicile where the donee has been resident in France for six of the last ten years.
Comparing both routes on your case
We quantify the gift and the exit tax on the same assumptions, with and without a retention commitment, then set the order of the deeds. See our article on exit tax thresholds and discharge, the one on early transfer of wealth (in French), the one on real estate capital gains for non-residents, and our page tax lawyer for leaving France. Every situation is different and deserves a dedicated analysis.
Official sources
- Article 167 bis of the French Tax Code, exit tax and cases of discharge – Légifrance (in French)
- Article 777 of the French Tax Code, rates of gift and inheritance duties – Légifrance (in French)
- Article 779 of the French Tax Code, allowances – Légifrance (in French)
- Article 787 B of the French Tax Code, retention commitments – Légifrance (in French)
- Article 669 of the French Tax Code, usufruct scale – Légifrance (in French)
- Article L64 of the French Tax Procedure Code, abuse of law – Légifrance (in French)
- Article L64 A of the French Tax Procedure Code, transactions with a mainly tax-driven purpose – Légifrance (in French)
- Law No. 2026-103 of 19 February 2026, the 2026 Finance Law – Légifrance (in French)
This article sets out the law for general information purposes, as verified on the date of publication. It does not constitute legal advice. Every situation is different and deserves a dedicated analysis. Content compliant with the professional conduct rules of the legal profession.
