The abatement is provided under Article 150-0 D ter of the French tax code (for share sales) and Article 238 quindecies (for asset sales). To qualify, the founder must: (1) hold at least 25% of the company's capital or voting rights; (2) have managed the company continuously for at least 5 years before the sale; (3) terminate all management functions at the time of sale; (4) retire within 24 months before or after the sale. The abatement is fixed at €500k regardless of the sale price — it does not scale proportionally.
The 24-month retirement window is the most commonly misunderstood condition. 'Retirement' means registration with a French pension fund (Sécurité Sociale des Indépendants for former sole traders; Agirc-Arrco for former employed managers). Pre-retirement planning is essential: the founder should initiate retirement procedures before or simultaneously with the M&A process to ensure the condition is met within the window.
The abatement applies before PFU calculation. If the gain is €8m and the abatement reduces taxable gain to €7.5m, PFU at 30% = €2.25m versus €2.4m without the abatement — a €150k saving. For founders in the exceptional contribution on high revenues (CEHR) zone, the effective saving is slightly higher because CEHR is also applied to the lower taxable base. The abatement can be combined with the apport-cession mechanism (Article 150-0 B ter) for additional tax optimization — but this requires structuring well in advance of sale.
Retirement abatement impact
Sale price: €10m. Acquisition cost: €50k. Net gain: €9.95m. Without abatement: PFU 30% = €2.985m tax. With abatement: taxable gain = €9.45m. PFU 30% = €2.835m tax. Tax saving: €150,000. At a 5% discount rate, €150k received 12 months earlier has a present value of ~€143k — still materially worth the planning effort to qualify.
Frequently asked questions
What does 'retirement' mean exactly for the abatement?
The founder must effectively cease professional activity and register for pension entitlements. Simply stating intention to retire is insufficient. The French tax authority (DGFiP) requires evidence of actual retirement registration (attestation de cessation d'activité) from the relevant pension fund. Starting retirement procedures 3–6 months before or after the sale and completing them within the 24-month window is the target approach.
Can the abatement be claimed if the founder continues consulting after the sale?
This is a grey area. Post-sale consulting to the buyer under a limited advisory agreement (typically 12–24 months) is generally compatible with retirement abatement qualification, provided the founder has genuinely registered for retirement and is not continuing their previous management role. Extended consulting arrangements that replicate full-time employment may disqualify the abatement. French tax counsel should review any post-sale consulting agreement before it is signed.
Is there an equivalent abatement in Switzerland?
No — Switzerland does not have a specific retirement abatement for business sales. However, private capital gains in Switzerland are generally exempt from federal income tax for individuals (not for businesses or dealers). The canton may levy wealth tax changes post-sale as the capital becomes financial assets. Swiss founders approaching retirement should focus on timing the sale relative to Pillar 2 (LPP) benefit optimization and AHV/AVS contributions.