Flexibilities for the transfer of businesses

The Finance Act for 2022 eased tax rules on profit made on the disposal of a business.

Retirement made easier

A sole proprietor will not pay income tax on the profit made on the disposal of his business by the time he retires. For this, he must assert his retirement rights within 2 years before or following the disposal of his business.

The time-limit is extended to 3 years in the case of sole proprietors who have asserted their retirement rights in 2019, 2020 or 2021. This measure applies to sole proprietors who, having reached retirement age during the health crisis, are encountering difficulties in finding a buyer.

Note: The gains made by a manager on the sale of the shares of his/her SME, which is subject to corporation tax by the time of his/her retirement, may, under certain conditions, be reduced by a fixed tax relief of €500,000. Here too, the time-limit for transferring the shares, after having asserted his/her retirement rights in 2019, 2020 or 2021, is extended from 2 to 3 years. In addition, this tax relief, which was to apply to profit made on disposal of businesses executed up to 31 December 2022, is extended until the end of 2024.

The transfer of the sole proprietorship favoured

The profit made on the disposal of a sole proprietorship (or business assets related to a complete branch of activity) may, under certain conditions, be exempt from tax in full if the value of the items sold is less than €300,000, or partially if this value is between €300,000 and €500,000.

These ceilings are significantly increased. Now, they are raised, respectively, to €500,000 and €1,000,000 to better correspond to economic realities of the value of companies.

The case of lease-management

The system of tax relief on profit for retirement and the system of tax relief on profit made on the disposal of a sole proprietorship are now applicable to the transfer of an activity under lease-management to a person other than the tenant-manager. In this case, the transfer must concern all the items contributing to the operation of the activity under the lease-management.