Minor abuse of rights: a first opinion from the committee on abuse of rights
A taxpayer formed an EURL in 2013 and contributed the shares he held in an SAS formed in 1996 to that company.
At the end of 2020, it was decided to:
Convert the EURL into an SAS Y
Create a new SAS X and transfer the shares of SAS Y to it.
make a lifetime gift to each of his daughters consisting of 335 shares held in full ownership and the bare ownership of 22,464 shares of SAS Y “as an advance division of the estate, subject to a reservation of usufruct.”
enter into a quasi-usufruct agreement between the taxpayer and his daughters regarding the split shares, which does not impose any obligation on him to use or reinvest the proceeds. He therefore retains full discretion over the shares.
transfer the shares in question from SAS Y to SAS X. According toadministration, the sale price of the split shares was deposited into the taxpayer’s bank account, where it was used for personal purposes.
In 2021, the taxpayer also made a gift to each of his daughters consisting of 12.5% of the capital of SAS X. This gift qualified for the Dutreil program.
Following a tax audit, the Tax Appeals Commission (administration ) determined that the taxpayer had received the full sale price of the split shares, from which a portion of the capital gain relating to the bare ownership of the shares had been deducted. It found that the gain realized was nearly double the amount of the transfer taxes paid in connection with the gift.
It excluded gifts of bare ownership, recalculated the capital gain accordingly, and applied the surcharge for willful noncompliance.
In its opinion, the Committee on Abuse of Rights noted that the French Tax Authority (administration ) acknowledges that the purpose of the 2021 gifts was to transfer the taxpayer’s business assets to his daughters, but that it considers the gifts of bare ownership of the shares“to constitute an intermediate transaction that was not carried out in the interest of the donees.” The primary purpose of this transaction is said to be to reduce the taxpayer’s tax burden.
He therefore considers that the direct gifts“are part of the overall plan for the transfer of the business that he had initiated with his children,” who have committed to retaining the securities.
The Committee concludes that theadministration does not provide evidence of even a minor abuse of rights.
Theadministration . stated that it did not agree with the Committee's opinion.
CADF, March 19, 2026, No. 2/2026
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