The Dutreil agreement, also known as the Dutreil pact, is a French law that provides tax incentives for family-owned businesses. This agreement allows shareholders to transfer their shares to their heirs while still maintaining control over the company. It is named after Renaud Dutreil, a former French Minister of Small and Medium-Sized Enterprises.
The main purpose of the Dutreil agreement is to encourage business continuity and prevent the breakup of family-owned companies due to inheritance tax issues. In France, inheritance taxes can be as high as 60% on the value of the estate. For family-owned businesses, this can be a significant burden, making it difficult for heirs to retain control over the company.
The Dutreil agreement provides tax breaks for families who sign the pact and agree to maintain control of the company for a set period, usually six years. During this time, the shareholders can transfer their shares to their heirs without incurring any inheritance tax. The agreement also allows for the transfer of shares between family members without triggering any capital gains tax.
To be eligible for the Dutreil agreement, the company must be a French legal entity and have less than 250 employees. The company must also be majority-owned by one or more families, and the shares must have been held by the same family for at least two years.
The Dutreil agreement has been praised for its ability to promote business continuity and help family-owned companies remain competitive. It has also been credited with encouraging entrepreneurship and promoting economic growth in France. However, some critics argue that the agreement favors certain types of businesses over others and may not be fair to shareholders who are not part of the family.
Overall, the Dutreil agreement is an important tool for family-owned businesses in France. It provides tax incentives for families to pass on their businesses to the next generation while maintaining control and continuity. As with any tax law, it is important to consult with a tax professional to determine if the Dutreil agreement is the right choice for your family-owned business.