The capital gains made by SME executives subject to corporate income tax, upon the sale of the shares they hold in the company upon their retirement, are reduced, under certain conditions, by an allowance of €500,000.

Reminder: These capital gains are subject to income tax under the single flat-rate levy (PFU1) unless the interested party opts for the progressive scale. This option is irrevocable and global, meaning it applies, without the possibility of changing your mind, to all the household’s investment income for the same year. It should be noted that in the event of an option for the progressive scale, capital gains on the sale of shares acquired before January 1, 2018, may benefit from an allowance for the ownership period. But be careful, in this case, the fixed allowance cannot be combined with the allowance for the duration of ownership.

To benefit from this €500,000 allowance, the seller must have been in a management position within the company whose shares are sold during the 5 years preceding the sale, as well as cease any function (management or employee) in this company and exercise his or her pension rights, in principle, within 2 years of or prior to the sale.

Note: The tax authorities accept that the termination of employment and retirement may occur, indifferently, one before and the other after the sale, provided that the period between these 2 events does not exceed 4 years.

New: The allowance, which was due to end in 2024, has been extended for sales made until December 31, 2031. In addition, it is increased for sales of shares made as of January 1, 2025, for the benefit of young farmers. Indeed, in this context, the allowance is increased from €500,000 to €600,000 and it can be extended to sales staggered over a maximum period of 6 years.

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