As part of the sale of his business, there are many solutions to reduce the taxation of his capital gains on disposal.
Indeed, they are subject to high taxation. The tax applied is 30% on capital gains with the single flat-rate levy.
However, it is possible to opt for other alternatives in order to avoid paying too much tax. Here are some solutions to reduce the taxation of capital gains on business transfers.
Reinvest the proceeds of the sale to reduce the taxation of its capital gains on disposal
The capital gain on disposal corresponds to the profit made by a transferor on the sale of his business. Its amount is equal to the difference between the sale price and the purchase price. Here are the strategies to reduce the taxation of its capital gains on disposal.
Investing in innovative companies
To make the most of the profits from the sale of your business, investing the proceeds of the sale in innovative companies is an excellent option, since it allows you to avoid high taxation.
Thanks in particular to the tax exemption scheme " Madelin PME ", it is possible to benefit from a tax reduction by investing your income in the capital of an innovative SME. The latter can be French or European. The reduction is 25% of the total amount invested.
To benefit from it, the transferor must have his tax residence in France, must make his investment in an eligible company before December 31 of the current tax year and proceed to his deferral on the 2042 C return. He must also undertake to hold his shares for at least 5 years.
Opting for the contribution-assignment regime
Governed by Article 150 0 B Ter of the General Tax Code, the contribution-transfer regime is a device allowing a shareholder to transfer his shares to a holding company that he controls. Thus, he will be able to benefit from a tax deferral or even a tax exemption on his capital gains.
In order to benefit from the advantages of this scheme, the transferor of shares must:
- Invest a rate of 60% of its sale proceeds if the sale was completed after January 1, 2019;
- Invest 50% of the proceeds of disposal, for disposals that took place before January 1, 2019.
The investment can be made directly or via specialized funds. In the first case, the shares must be held for at least one year to benefit from the income tax exemption.
In the second case, it takes a minimum of 5 years. The contribution-sale therefore appears to be an effective solution to reduce the taxation of its capital gains on sale in the context of the sale of its business. This page explains more about the topic.
Opt for the taxation of capital gains at the progressive income tax scale
In order to reduce the taxation of his capital gains on disposal, any manager concerned may choose to be subject to the progressive scale of income tax.
Subscription conditions
The system of taxation of capital gains on the progressive scale of income tax makes it possible to obtain certain tax advantages. To benefit from it, it is first necessary that the partner has acquired his shares before January 1, 2018.
Benefits
Opting for the taxation of capital gains at the progressive scale of income tax allows you to benefit from an allowance for holding period. The latter applies only to income tax, not to social security contributions.
If the shareholder has held the transferred securities for less than 2 years, there will be no abatement. If he has held them for at least 8 years, the abatement rate will be 65%. It is 50% when the securities have been held for a period of between 2 and 8 years. Learn more about this device here .
In addition, a special derogation may be granted to this tax deduction system. Indeed, the transferor can claim the reinforced abatement device. It may be granted:
- For the sale of the shares of a new SME ;
- For the transfer of securities in the event of retirement ;
- For the transfer of securities as part of a family group.
However, certain subscription conditions must be respected.
In summary, the transferor has the choice between the reinvestment of the proceeds of sale and the allowance for holding period to reduce the taxation of his capital gains on sale when selling his business.
Note: Cover photo by Ingo Joseph (Pexels)
