From the seller's perspective: a share deal is almost always preferable. Capital gains on share sales by French individuals are taxed at 30% PFU; gains on asset sales by a French company are subject to corporate tax (25%) and then a second layer of tax when proceeds are distributed to the shareholder (PFU on dividends, potentially another 30%). The effective tax rate on an asset deal for a French founder can therefore reach 40–50% of the gain, versus 30% for a share deal.
From the buyer's perspective: an asset deal is often preferable. In an asset deal, the buyer can reset the tax basis of acquired assets to their purchase price — creating depreciation and amortization shields that reduce future taxable income. In a share deal, the buyer inherits the target's historical tax basis. The buyer also avoids inheriting pre-closing tax liabilities, contingent liabilities, and off-balance-sheet obligations. These buyer-side benefits often lead buyers to request an asset deal and offer a price premium to compensate the seller for the higher tax cost.
In France, the most common transaction structure for non-holding company SMEs is a share deal (cession de titres). Asset deals (cession de fonds de commerce — goodwill transfer) are used for: businesses run as sole proprietorships or partnerships (SNC, SCS), carve-outs of specific business units, or distressed situations where liability ring-fencing is critical. In Switzerland, both structures are common; the choice depends on cantonal tax treatment and whether the target holds real estate (which affects transfer tax obligations).
Tax cost comparison
French founder sells business for €10m. Acquisition cost (shares): €50k. Net gain: €9.95m. Share deal (PFU 30%): tax = €2.985m, net proceeds = €7.015m. Asset deal (fonds de commerce): corporate tax 25% on company gain = €2.4875m, distributable net = €7.5125m, PFU 30% on distribution = €2.25m, net to founder = €5.26m. Effective tax rate: 30% vs 47%. Difference: €1.76m — more than VBP's M&A fee.
Frequently asked questions
Can a buyer and seller agree to treat a share deal as an asset deal for tax purposes?
In France, Article 1655 sexies of the tax code allows buyers and sellers to jointly elect to treat certain share sales as asset transfers for tax purposes (an 'option de traitement fiscal des droits sociaux'). This is rarely used in practice as it typically requires complex cross-indemnification arrangements and doesn't fully replicate the economics of a true asset deal.
What are the transfer taxes in France for asset deals vs share deals?
Share deals: 0.1% on unlisted French company shares (capped at €5,000 per share for unlisted companies under certain conditions; different rates for listed shares). Asset deals (fonds de commerce): sliding scale — 0% on the first €23k, 3% from €23k to €200k, 5% above €200k. For a €10m fonds de commerce: approximately €490k in droits d'enregistrement — typically borne by the buyer.
What about real estate in the target company?
If the target company holds significant real estate, buyers often push for an asset deal to avoid inheriting the company's tax history. But real estate transfers are subject to higher transfer taxes (up to 5.8% in France for 'droits de mutation'). Some transactions are structured as a combination: a share deal for the operating company with a simultaneous property transfer to a real estate holding company before closing.