PLF 2026: the end of real estate reinvestment in the contribution-transfer regime (article 150-0 B ter of the CGI)
The finance bill for 2026 marks a major turning point for entrepreneurs who were considering reinvesting the proceeds from the sale of their businesses into real estate. In its version approved by the Government and engaged under Article 49.3, the text introduces a profound reform of the contribution-transfer mechanism provided for in Article 150-0 B ter of the General Tax Code (CGI).
Although the text has not yet been enacted, this "last-minute surprise" is already reshaping the landscape of wealth management for executives and shareholders.
The 150-0 B ter Mechanism: A Key Tool for Deferring Capital Gains Tax
The contribution-transfer mechanism (Article 150-0 B ter of the CGI) allows an entrepreneur to defer the taxation of the capital gain realized when they contribute the shares of their company to a holding company they control.
In practical terms, this means that the capital gains tax only becomes due in the event of a subsequent occurrence (sale of the holding's shares or distribution of the proceeds), provided that the holding reinvests the proceeds from the sale into the real economy.
Historically, the notion of "reinvestment" was interpreted quite broadly. In this context, many entrepreneurs were able to utilize the mechanism for real estate investments: development projects, property trading, club deals, or subscriptions to real estate investment funds.
This scheme had the advantage of combining a favorable tax treatment (which we remind you is more of a "tax leverage effect" than a real definitive tax advantage, since the cash-out remains encapsulated in a company and will be subject to the flat tax in the event of dividend distribution) with a wealth management strategy often perceived as secure.
Extensive Use... That Concerned Legislators
The administration had already attempted several times to regulate this practice. However, in the absence of an explicit exclusion of the real estate sector in the text, case law and practice had legitimized the use of the mechanism for real estate purposes, as long as the reinvestment complied with the substantive conditions: real control of the contributing company, respect for reinvestment thresholds, and compliance with timing.
However, in the current economic context, public authorities wish to refocus savings from business sales towards activities considered "productive": industry, innovation, and financing of SMEs.
This political orientation is reflected in the finance bill for 2026.
The Main Changes in the PLF 2026
A General Tightening of the Mechanism
The text provides for several general adjustments:
- The minimum reinvestment rate of the proceeds from the sale would increase from 60% to 70%.
- The deadline for reinvestment would be extended from two to three years.
These measures aim to strengthen the economic substance of the mechanism, ensuring that sales do not merely serve to defer taxation but genuinely contribute to new business projects.
Exclusion of the Real Estate Sector: A Major Break
The most significant — and unexpected — measure concerns the near-total exclusion of the real estate sector from the scope of eligible reinvestment activities.
According to the current version of the text, activities such as real estate development, property trading, subdivision, or property management would be expressly excluded, by analogy with the definition of "eligible activity" in the IR-PME mechanism.
In other words, entrepreneurs would no longer be able to meet the conditions for deferring taxation if they decided to reinvest the proceeds from their sale into a real estate activity, even through a non-listed operational structure.
This evolution marks the end of real estate club deal structures used as reinvestment levers in sophisticated wealth management strategies.
Extension of the Holding Period: Five Years Instead of One
The PLF 2026 also provides for a significant extension of the minimum holding period for shares acquired or subscribed through direct reinvestment: five years instead of just one currently.
While this constraint does not pose major difficulties in the context of entrepreneurial reinvestment (for example, in an industrial or technological company), it becomes nearly incompatible with the cyclical and capital-intensive nature of real estate operations.
Real estate investors, traditionally positioned for short to medium-term horizons, thus risk falling outside the scope of 150-0 B ter.
Uncertainties Surrounding Investment Funds
Structures such as FPCI (professional private equity funds) or SLP (limited partnership companies) have until now been preferred vehicles for indirect real estate reinvestment.
The text does not clearly determine their fate.
Real estate development seems explicitly excluded, but ambiguity remains regarding property trading activities. Due to the complexity of the references between different tax definitions, it is likely that the administration will adopt a restrictive interpretation, progressively aligning all real estate vehicles with an exclusion regime.
This period of legal uncertainty should therefore be closely monitored, especially for entrepreneurs who initiated a reinvestment before the reform takes effect.
A Transitional Mechanism for Ongoing Operations
The Government has provided for a transitional clause to avoid unjustified retroactive effects.
The new rules would apply to sales made by the holding from the date the law comes into effect.
Thus, entrepreneurs who have already completed a sale before this date could finalize their reinvestment according to the previous rules.
However, this transition period remains short and requires heightened vigilance to anticipate the timelines and conditions for validating the reinvestment, particularly in a context where real estate operations take a long time to structure.
A Redefinition of the Economic Role of 150-0 B ter
Through this reform, the Government does not call into question the principle of tax deferral, but it profoundly reorients its philosophy:
the mechanism is no longer intended to serve as a tool for wealth restructuring, but rather to support productive investment and economic recovery.
This tax policy is part of a broader desire to reinject entrepreneurs' capital into the economic fabric and not into real estate assets, which are considered "passive" from the perspective of value creation and employment.
For executives and shareholders wishing to sell their business in 2026, a complete revision of the reinvestment strategy is necessary. Investment levers will need to be reconsidered, particularly towards sectors of innovation, energy transition, and industry.
In Conclusion: Anticipate, Secure, Act
As the PLF 2026 is soon to be put to a vote, this evolution of the contribution-transfer regime will surprise many.
The exclusion of the real estate sector, introduced late in the legislative process, profoundly transforms a mechanism that has been widely utilized for several years.
For the entrepreneurs concerned, it becomes essential to anticipate the consequences of this reform, analyze the reinvestments already considered, and explore new investment strategies compliant with the new legal framework.
PRAX Avocats regularly supports executives, start-ups, and investors in structuring their sale and reinvestment operations.
Our approach combines expertise in business law, legal engineering, and entrepreneurial vision, to help you make tax-optimized and legally secure decisions.
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For personalized legal support in your contribution-transfer or reinvestment operations, contact PRAX Avocats.