In France, professional capital gains (or plus-values professionnelles) refer to the profit made when a business disposes of certain assets, such as real estate, equipment, or shares in a company. These gains can arise from the sale, transfer, or contribution of assets used in a commercial, artisanal, agricultural, or liberal professional activity.
Unlike private capital gains, which apply to personal investments or real estate, professional capital gains are taxed under different rules depending on:
- The legal form of the business (e.g. sole trader vs. company)
- The nature of the asset
- The duration of ownership
- And the circumstances of the sale (e.g. retirement, transfer to a family member, or sale to a third party)
For example, when a business sells a building used for its operations or transfers goodwill (fonds de commerce), the resulting gain may be subject to income tax (IR) or corporate tax (IS), and may also trigger social contributions.
At French Tax Online (FTO), we help business owners and entrepreneurs understand the tax implications of such transactions — especially during sensitive moments like business succession, retirement, or restructuring. Whether you’re a small business owner or managing a larger structure, anticipating the tax consequences of a sale is key to avoiding unpleasant surprises.
In upcoming sections, we’ll explore the different tax regimes that apply, the conditions for full or partial exemptions, and the rules that govern business transfers — especially for small and medium enterprises (SMEs).
Tax Regimes Applicable to Professional Capital Gains in France
Businesses Taxed Under Income Tax (IR)
This regime typically applies to:
- Sole traders (entrepreneurs individuels)
- Liberal professionals
- Partnerships such as SNC, Sociétés civiles, or family-owned businesses
In this case, the capital gain is taxed at the individual level, as part of the owner’s personal income. The gain is included in the category of BIC, BA, or BNC, depending on the nature of the activity (commercial, agricultural, or non-commercial).
Depending on the asset and the duration of ownership, different types of gains are distinguished:
- Short-term capital gains: from assets held less than two years (fully taxed)
- Long-term capital gains: for assets held more than two years (benefit from specific allowances)
These gains may be subject to:
- Progressive income tax
- Social contributions (17.2%)
Companies Subject to Corporate Tax (IS)
This includes:
- SAS, SARL, SASU, and most incorporated companies
Here, professional capital gains are included directly in the company’s taxable result and taxed at the standard corporate tax rate, which is currently 25% (as of 2025). There’s no distinction between short- or long-term gains — all are treated equally for tax purposes.
Note: If the asset sold is a participating interest (i.e., shares held for at least 2 years in another company), only 12% of the gain is added to the taxable base under certain conditions. This can significantly reduce the effective tax burden.
Curious how capital gains are handled in companies subject to corporate tax? Check out our detailed guide for corporate structures.
Deferred Taxation or Contribution Transfers
In cases where a business owner contributes assets to a company (e.g., transferring business assets to an incorporated structure), capital gains may be temporarily exempted under a deferral regime (report d’imposition), such as:
- Article 151 octies of the French tax code (for full business transfers)
- Article 150-0 B ter (for contributions of securities)
These mechanisms are complex but can be powerful tools in a broader business restructuring or succession plan — and should be handled with care, ideally with expert guidance.
If you’re operating a furnished rental under the LMNP regime, specific capital gains rules apply. Learn more about LMNP taxation here.
If you’re registered as an LMP (professional rental business), taxation rules are different and sometimes more complex. Find out more about capital gains in the LMP regime.
Important: The LMP status does not apply to non-French residents when it comes to capital gains tax. If you’re not a French tax resident, the special LMP regime cannot be used to reduce or avoid CGT on your sale.
Exemptions on Professional Capital Gains in France
Although professional capital gains are generally taxable in France, there are several relief mechanisms that allow eligible business owners to fully or partially avoid taxation. These exemptions are often designed to support small businesses, entrepreneurs nearing retirement, or those transferring their business under specific conditions.
One of the most common cases is when a sole trader or individual entrepreneur has modest annual revenues and sells or closes their business after several years of activity. In this situation, the French tax code (Article 151 septies CGI) allows for full or partial exemption depending on the average turnover over the past two years. For example, a service provider whose annual revenue stays under €90,000 can potentially walk away with no capital gains tax due, provided they’ve operated the business for at least five years.
Retirement is another key moment where exemptions may apply. Under Article 151 septies A, business owners over 60 — or those who can no longer work due to a disability — may benefit from a full exemption, as long as they permanently cease their activity and have been operating for at least five years.
In cases where the business is transferred rather than stopped, the exemption may depend on the value of the business itself. If the total transfer value is under €300,000, a full exemption is available. Partial relief applies for transfers up to €500,000. This mechanism (Article 238 quindecies) often applies when passing on a small company to a family member, a long-time employee, or even selling to a third party at a modest price.
If your activity involves furnished rentals, the rules depend on your status. As a non-professional (LMNP), your capital gains follow the rules for private real estate, including allowances based on how long you’ve held the property. But if you’re registered as a professional (LMP), your gains fall under the business taxation regime, with very different rules.
Lastly, some business owners choose to contribute their activity or assets to a company, often to restructure or limit their liability. In this case, capital gains may not be taxed immediately. Thanks to deferral regimes like Article 151 octies or 150-0 B ter, taxation is postponed until the company sells the asset. This option can be attractive — but it must be carefully planned to avoid pitfalls.
FAQ – Professional Capital Gains in France
What qualifies as a professional capital gain in France?
A professional capital gain refers to the profit made when a business disposes of an asset used for its professional activity — such as commercial property, equipment, shares, or goodwill (fonds de commerce). This is different from personal capital gains and is taxed under specific business tax regimes.
I’m retiring and selling my business — will I be taxed on the gain?
Not necessarily. If you’re over 60 (or medically unable to work), and you’ve operated the business for at least five years, you may qualify for a full exemption under Article 151 septies A. The exemption applies if you permanently cease the activity after the sale.
FTO can help assess your eligibility for this exemption.
What happens if I transfer my business to a relative or employee?
You may benefit from a partial or total exemption if the business is sold for less than €500,000. For transfers under €300,000, the exemption is typically total. This is designed to support the handover of small businesses. The buyer can be a family member, employee, or third party.
I turned my sole proprietorship into a company — do I owe capital gains tax?
Not necessarily. If you contributed your business assets or activity to a company (e.g., from a sole trader to an SAS), you might benefit from deferred taxation — meaning the gain is not taxed until the new company sells the contributed asset. This falls under Article 151 octies or 150-0 B ter of the French tax code.
I operate furnished rentals — which tax rules apply?
It depends on your status.
If you’re under LMNP (non-professional), gains are taxed as private real estate capital gains, with time-based allowances.
If you’re under LMP (professional), the gains are taxed as professional capital gains and follow different rules.
How do I declare professional capital gains?
If you’re taxed under income tax (IR), the gain is declared in your personal tax return, usually using Form 2042 and specific annexes (like 2035 or 2031 depending on your activity).
If you’re under corporate tax (IS), the gain is included in the company’s accounting result and taxed accordingly.
In both cases, proper documentation is essential.
Need help? FTO can assist with full preparation and submission.