The tax deferral mechanism (report d'imposition, Article 150-0 B ter of the French General Tax Code) is the legal basis for the apport-cession structure: when a taxpayer contributes securities to a controlled holding company that sells them within three years, the capital gain is not taxed immediately but deferred until a qualifying "triggering event" — disposal of the holding company's shares, the holding's failure to reinvest at least 60% of the proceeds within two years, or the taxpayer's transfer of tax residence outside of qualifying states.

The tax deferral is not a tax exemption: the gain remains latent in the holding company's tax position and will eventually be taxed when the deferral conditions are no longer met. The deferred tax is adjusted for inflation and changes in the applicable rate. A critical point: if the taxpayer donates the holding company's shares to their children, the deferred gain is extinguished — the children acquire the shares with no taxable history on the deferred gain, making the donation of a holding post-apport-cession a powerful generational transfer tool.

The valuation of the contributed securities at the time of the contribution is central to the mechanism: it determines the deferred gain (contribution value minus acquisition cost) and the holding company's tax cost base for future disposals. An overvalued contribution reduces the future taxable gain on the holding's disposal; an undervalued contribution is subject to tax authority challenge. Independent valuation is therefore both a legal requirement and a risk management necessity.

At Hectelion, we value securities for apport-cession contributions and advise on tax deferral structuring in our valuation and structuring mandates.