Dutreil Pact: The Court of Appeal of Saint-Denis Challenges the Role of the Holding Company

The recent decision of the Court of Appeal of Saint-Denis dated 28 March 2025 firmly reiterates the strict conditions required to qualify a holding company as an “active holding company” (holding animatrice) under the French Dutreil Pact regime.

A tax-efficient regime, subject to strict conditions

This scheme, which offers a 75% exemption on transfer duties (donations or inheritances), is particularly attractive for business succession. However, the regime is subject to strict conditions, which are regularly clarified by French case law.

In its ruling, the Court held that the mere provision of administrative, accounting or legal services to subsidiaries is not sufficient to characterise a company as an active holding.

Active involvement must be demonstrated

To be considered an active holding company, the parent entity must play an effective, documented, and strategic role in defining and implementing the group’s overall policy and direction.

The burden of proof lies with the taxpayer and must be detailed, structured, and comprehensive.

Key recommendations to secure the 75% exemption

To safeguard the application of the Dutreil regime, several best practices should be adopted:

• Formalise a written management agreement, clearly outlining the responsibilities of the holding company, its strategic objectives, and the obligations imposed on its subsidiaries;
• Document the reality and effectiveness of the holding company’s activities with respect to its subsidiaries:
  • minutes of strategic meetings,
  • progress reports,
  • internal communications;
• Provide concrete evidence of the holding’s active and direct involvement in managing the subsidiaries, beyond simple support functions.

Strategic planning is key

In light of this ruling and the growing scrutiny from French tax authorities, it is essential to review group structures and ensure robust documentation of management activities to preserve eligibility under the Dutreil Pact.