Business Sale: Key Differences Between France and Switzerland

Selling Your Business in France or Switzerland: Taxation, Strategies and Pitfalls to Avoid?

Introduction: France or Switzerland – A Structuring Choice When Selling a Business

The sale of a business is often presented as the natural culmination of an entrepreneurial journey. Yet behind the headline price and reassuring press releases lies a far more complex reality, where legal, tax and wealth structuring decisions can significantly alter the final outcome for the selling shareholder. Selling a company is not merely about signing a sale agreement; it involves arbitrating between different systems, different legal logics and sometimes different countries. As is often said among business leaders, “you do not simply sell a company — you organise an exit.”

It is precisely from this perspective that the comparison between France and Switzerland becomes particularly instructive. While France has progressively built a sophisticated framework — sometimes perceived as restrictive — based on conditional tax exemptions and tightly regulated reinvestment mechanisms, Switzerland relies on a simple but decisive principle: capital gains realised in a private capacity upon the sale of a business are, as a general rule, tax-exempt. This divergence in philosophy naturally raises a central question for any entrepreneur or shareholder contemplating a sale:

can the country in which the transaction takes place turn a good deal into an excellent one — or the opposite?

This article aims to provide a practical and comparative analysis of the French and Swiss frameworks governing business disposals. By highlighting differences in taxation, available planning mechanisms and strategic implications, it seeks to offer business owners a clear understanding of what is at stake. Far from being a theoretical exercise, understanding these differences is essential to securing a transaction, preserving the value created over many years, and making informed decisions well before final negotiations begin.

Key Tax Considerations When Selling a Business

A. Capital Gains Taxation in France

In France, the sale of company shares generally triggers taxation of the capital gain realised by the seller. Even when a business has been built over many years and involves substantial entrepreneurial risk, the exit is, by default, treated as taxable private income, unless specific relief mechanisms apply. This is a structuring factor, as it directly influences the sale strategy, the transaction timeline and the way in which the business owner prepares for an exit well in advance.

The most common tax regime is the Prélèvement Forfaitaire Unique (PFU), commonly referred to as the “flat tax,” which applies a single global rate to capital income. While designed to be clear and relatively simple, it is not always optimal. Depending on the seller’s income level, family situation and tax history, opting for the progressive income tax scale may, in certain cases, be more advantageous, particularly where specific allowances apply. The flat tax amounts to 30%, broken down into 12.8% income tax and 17.2% social contributions. Crucially, unlike Switzerland, there is no general principle of capital gains exemption: in France, capital gains are taxable by default.

This taxation is further compounded by the cumulative nature of French levies, combining income tax and social contributions. The resulting “effective” tax burden is often perceived as high, which explains why French business owners place significant emphasis on pre-sale structuring, sometimes many years before a transaction. In major deals, the issue is not only selling at the right price, but selling at the right time, through the right vehicle and under the right ownership structure.

The situation becomes even more strategic when the seller is also an operational executive. In such cases, capital gains taxation must be coordinated with remuneration, dividends, family succession planning and reinvestment considerations. In France, a business sale is rarely a “one-off” event; it is typically part of a broader wealth architecture, and insufficient anticipation can prove extremely costly.

B. Capital Gains Taxation in Switzerland

Switzerland adopts a radically different approach, which largely explains its attractiveness to entrepreneurs and shareholders. When a business is sold within the scope of private wealth, capital gains are, in principle, exempt from tax. In practice, a private individual selling shares in their company may, subject to certain conditions, pay no tax on the capital gain — fundamentally altering the economics of an exit. Where a French entrepreneur typically focuses on net proceeds after tax, a Swiss entrepreneur often reasons directly in terms of net proceeds after transaction costs.

This exemption is not automatic in the sense of being unconditional. It is based on a core principle of Swiss tax law: the distinction between private wealth management and professional trading or independent business activity. In most cases, an entrepreneur who has founded, developed and then sold their company qualifies as acting within the private sphere and benefits from the exemption. However, certain situations may lead to requalification, particularly where the seller’s behaviour resembles that of a professional trader or where the transaction structure is deemed abusive.

Practitioners are well aware of specific risk areas that can significantly affect Swiss transactions, including certain forms of pre-sale distributions, refinancing operations or structures that may be interpreted as disguised taxable value extraction. Switzerland is therefore simple in principle, but demanding in terms of economic substance and documentation. The objective is not to stack tax regimes, but to remain clearly within the boundaries of a private capital gain.

The practical consequence is significant: in Switzerland, capital gains taxation is generally a source of stability and predictability, whereas in France it often becomes a variable of optimisation — or risk. This contrast explains why internationally mobile entrepreneurs and cross-border groups must address the issue very early on, not once a buyer is already at the table, but at the strategic exit planning stage.

Planning and Optimisation Mechanisms

A. The Dutreil Pact in France

In France, anticipating the transfer of a business frequently involves the Dutreil Pact, a cornerstone of wealth planning for family-owned businesses. Initially designed to reduce tax on transfers by gift or inheritance, its implications extend far beyond that context and significantly influence many business sale strategies.

The Dutreil regime is based on a collective commitment to retain shares, followed by an individual holding commitment over a relatively long cumulative period. In return, a substantial partial exemption of the taxable base is granted. This reflects the French philosophy of business transmission: tax benefits are conditional upon shareholder stability and the continuation of economic activity. In essence, the State agrees to forego part of the tax burden provided the business remains embedded in the economy and is not immediately sold or dismantled.

In practice, the Dutreil Pact requires long-term discipline. Business owners must anticipate capital structuring, family shareholdings and their future role within the company well in advance. Poor coordination between tax timelines and business realities can lead to the loss of benefits and significant financial consequences. As a result, the regime is rarely used in isolation and typically forms part of a broader strategy combining governance, wealth structuring and long-term planning.

The regime provides a 75% exemption on the value of transferred shares, meaning that only 25% of the company’s value is subject to transfer taxes. For example, for a business valued at €10 million, the taxable base is reduced to €2.5 million, before applying personal allowances and progressive gift or inheritance tax rates.

Despite its power, the Dutreil Pact is not a universal solution. It is particularly suited to family or progressive transfers, but may be less appropriate in third-party sales or rapid exits, where its complexity can become a constraint rather than an advantage.

B. Wealth Structuring in Switzerland: An Upstream Logic Without a Dutreil Equivalent

Switzerland takes a fundamentally different approach. There is no equivalent to the Dutreil Pact, nor any conditional exemption regime based on shareholding commitments. This absence is not a legal gap, but the reflection of a tax philosophy centred on neutrality and simplicity. Optimisation is not achieved through exceptional regimes, but through coherent and transparent structuring from the outset.

The key lies in the qualification of ownership. As long as the entrepreneur acts within the scope of private wealth, the sale of the business generally benefits from capital gains exemption. The focus is therefore not on formal commitments, but on demonstrating the economic coherence of the entrepreneurial journey. Swiss wealth structuring prioritises clarity: direct ownership or simple holding structures, a clear separation between operational activity and private assets, and early anticipation of financial flows.

This upstream logic offers significant flexibility, but it also requires vigilance. Certain transactions undertaken close to the sale may be viewed as taxable value extraction if they disrupt the economic balance of the structure. Switzerland does not penalise the transfer itself, but it closely scrutinises artificial or opportunistic arrangements. Optimisation is therefore less about technical devices and more about sober, coherent wealth engineering.

Reinvesting After the Sale: Two Opposing Philosophies

A. The Contribution-and-Sale Mechanism in France

In France, post-sale reinvestment is closely linked to the contribution-and-sale mechanism. Governed by Article 150-0 B ter of the French Tax Code, this regime allows the seller to place the capital gain realised on the sale of shares into tax deferral, subject to strict conditions. The logic is explicit: defer taxation at exit, provided that sale proceeds are reinvested in qualifying economic activities.

Under this structure, the capital gain is not cancelled but deferred. The deferral is conditional upon reinvesting a substantial portion of the proceeds within a limited timeframe into eligible investments. As a result, the business owner does not have full discretion over liquidity: reinvestment becomes a structuring constraint, affecting both timing and investment choices. This reflects a distinctly French approach, whereby tax benefits are the counterpart of behaviour aligned with productive investment.

In practice, the mechanism is powerful but demanding. It requires precise control of deadlines, thorough documentation and strong economic coherence. Any error in timing, non-compliant reinvestment or change in control may trigger the collapse of the deferral and immediate taxation of the original gain. For the seller, the transaction does not mark the end of the process, but the beginning of a new phase of tax and wealth management.

For illustration, consider a company valued at €8 million, fully owned by its founder. Without contribution-and-sale structuring, the gain would typically be taxed in the year of sale under the PFU regime at 30%, resulting in net proceeds of approximately €5.6 million.

Ultimately, this mechanism significantly shapes exit strategy in France. Selling a business often requires simultaneous reflection on what comes next — not only from an entrepreneurial perspective, but also from a tax standpoint — sometimes at the expense of immediate wealth flexibility.

B. Free Reinvestment in Switzerland

In Switzerland, the logic is fundamentally different. Because private capital gains on the sale of a business are generally tax-exempt, there is no obligation to reinvest sale proceeds. Once the transaction is completed, the entrepreneur is free to use the proceeds without constraints as to timing or allocation. This freedom is a cornerstone of the Swiss model’s attractiveness.

Reinvestment thus becomes a purely wealth-related choice rather than a tax-driven obligation. Entrepreneurs may allocate capital to new ventures, financial investments, real estate or simply preserve wealth. This flexibility enables a highly personalised post-sale strategy, based on age, risk appetite and life objectives. The sale represents a genuine break, rather than a tax-regulated transition.

This does not mean that all transactions are automatically neutral. Swiss tax authorities remain attentive to overall coherence, particularly where structures are implemented shortly before a sale. Nevertheless, the underlying philosophy remains constant: as long as the gain qualifies as private wealth and the seller’s behaviour is economically consistent, the use of sale proceeds is unrestricted.

Other Mechanisms and Options When Selling a Business

A. France: A Rich but Conditional Toolkit

In France, business sales are not limited to the Dutreil Pact or contribution-and-sale mechanisms. French tax law provides a broad array of tools, each tailored to specific situations and rarely applicable in isolation. This diversity illustrates a defining feature of the French model: optimisation is based on anticipation and the combination of conditional regimes, rather than on a general principle of neutrality.

Among these mechanisms is the retirement relief regime, which allows, under strict conditions, a fixed allowance on the capital gain realised upon sale. Designed to support founder exits, it is closely linked to the seller’s personal situation and a precise timeline. Other strategies, such as donating shares prior to sale, may also significantly reduce the overall tax burden, provided the transfer has genuine substance and is not deemed artificial.

Long-standing holding company structures represent another commonly used lever. While they do not eliminate capital gains tax, they facilitate dividend optimisation, family governance and reinvestment capacity. Finally, some transactions rely on partial or staged sales, or earn-out mechanisms, to spread taxation over time and adapt exits to economic constraints.

Taken together, these mechanisms highlight a clear reality: in France, selling a business rarely involves applying a single rule. It is about orchestrating a tailored strategy, where success depends as much on early preparation as on technical mastery.

B. Switzerland: Few Mechanisms, One Structuring Principle

Switzerland adopts a markedly different approach. There is no proliferation of mechanisms comparable to those found in France, nor special regimes designed to offset a default tax charge. This is not a shortcoming, but the direct consequence of a fundamental choice: when a sale falls within private wealth, capital gains are generally exempt.

The issue is therefore not selecting the right regime, but ensuring that the seller’s situation clearly qualifies as private ownership. Swiss wealth structuring relies on stable principles, economic coherence and operational clarity. Post-sale options relate primarily to wealth choices — reinvestment, diversification, transmission — rather than complex tax arbitrage.

This apparent simplicity comes with a strong requirement for consistency. Switzerland does not encourage artificial arrangements and closely monitors situations that may lead to requalification. Unlike the French model, legal certainty is achieved through clarity and continuity rather than compliance with a succession of formal conditions.

Governance, Timing and Legal Certainty

A. France: Anticipation and Rigidity

In France, business disposals take place in an environment where governance and timing are critical. The multiplicity of tax regimes, combined with strict and cumulative conditions, requires anticipation well in advance. In many cases, structuring decisions must be made years before the actual sale, sometimes even before a sale project is clearly defined.

Once structures are in place — holding arrangements, deferral regimes, family ownership frameworks — flexibility becomes limited. A change in strategy, timing or governance can have significant tax consequences, including the loss of previously secured benefits. The sale is therefore not an isolated event, but the outcome of a carefully mapped process.

From a legal certainty perspective, France offers a dense and detailed framework that relies less on simplicity than on correct application and meticulous documentation. Business owners are therefore highly dependent on the quality of advice they receive, as even minor missteps can create significant post-transaction tax risk.

B. Switzerland: Pragmatism and Clarity

In Switzerland, governance and timing are governed by a more pragmatic logic. The legal and tax framework is more readable, allowing entrepreneurs to adapt more easily to business realities. Sales are less dependent on long-term preconditions, offering greater flexibility in execution.

This clarity is reflected in the close alignment between legal structuring and economic substance. As long as ownership clearly falls within private wealth and the seller’s behaviour remains consistent with a genuine entrepreneurial path, a sale can proceed without major governance overhaul. Entrepreneurs retain greater adaptability in both timing and transaction terms.

Legal certainty in Switzerland is rooted in economic coherence rather than regime accumulation. When necessary, dialogue with tax authorities often allows positions to be secured in advance, reducing post-sale uncertainty. As a result, governance and timing serve the exit strategy rather than constrain it.

Choosing the Country of Sale: A Strategic Decision

A. The Profile of the Business Owner

The choice of jurisdiction for a business sale is not merely a tactical tax decision. It is closely linked to the profile of the business owner, their entrepreneurial journey and long-term objectives. An actively involved founder will not approach a sale in the same way as a purely financial shareholder or an entrepreneur nearing the end of a career. Personal mobility, family structure and future involvement all play a decisive role.

In France, sellers often face a logic of continuity, where the sale extends the relationship between the entrepreneur, the business and the tax authorities. In Switzerland, by contrast, the system is more neutral toward personal status, provided the sale clearly falls within private wealth. Post-sale life plans — whether entrepreneurial, wealth-focused or personal — therefore take centre stage.

This difference explains why internationally active entrepreneurs pay close attention to tax residence and ownership structuring well before a sale. The seller’s profile is the starting point of any serious analysis, shaping both the tools available and the coherence of the exit strategy.

B. Selection Criteria

Beyond individual profiles, the choice of country depends on objective criteria that must be assessed holistically. Taxation remains central, but it cannot be considered in isolation. Legal stability, predictability of tax outcomes and legal certainty are just as important as headline tax rates. In this respect, the France–Switzerland comparison highlights two fundamentally different relationships between entrepreneurs and the State.

Timing is another key criterion. French sales often require long preparation phases, whereas Swiss flexibility allows exits to align more closely with market opportunities. This difference can be decisive in cyclical or fast-moving sectors.

Finally, the country of sale must align with post-transaction objectives: reinvestment, family transmission, wealth diversification or gradual withdrawal from economic life. Where some systems implicitly shape behaviour, others allow greater freedom. It is within this balance between constraint and freedom that the true strategic dimension of a business sale lies.

Message from the Managing Director

Advising on business sales in both France and Switzerland quickly leads to a common conclusion: a successful transaction depends not only on the sale price, but on the framework in which it takes place. Experience shows that these two countries are built on fundamentally different philosophies. France offers a rich but complex and rigid environment, where tax benefits are conditional, tightly regulated and often subject to long-term commitments.

By contrast, Switzerland provides a more flexible and readable framework, based on clear principles, but requiring strict respect for form, conditions and economic coherence. This distinction should not be oversimplified. Swiss flexibility does not mean the absence of rules, just as French sophistication does not imply inefficiency. In both systems, success lies in deep understanding and anticipation.

It is also important to emphasise a frequently misunderstood reality: not all entrepreneurs are free to “choose” the jurisdiction in which they will be taxed upon sale. Tax treatment does not depend solely on the company’s place of incorporation. Factors such as the seller’s tax residence, civil domicile, centre of economic interests, operational role and historical ownership structure may, on their own, determine the applicable tax regime.

For this reason, a business sale should never be treated as a one-off event. It forms part of a broader personal, wealth and professional trajectory that requires a global and tailored approach. Understanding the differences between France and Switzerland is ultimately about making informed decisions, taking into account not only tax rules, but the real constraints faced by each business owner.

Conclusion: Anticipating to Secure the Sale

The comparison between France and Switzerland in business disposals reveals far more than a difference in tax rates. It highlights two distinct visions of the relationship between entrepreneurs, their businesses and the State. In France, sales take place within a dense framework of powerful but conditional mechanisms requiring anticipation, discipline and long-term consistency.

In Switzerland, the system relies on simpler and more readable principles, offering greater freedom at exit, provided wealth structuring is coherent and aligned with the spirit of tax law.

There is no universal answer. Neither model is inherently superior; each serves different objectives, profiles and entrepreneurial paths. Some business owners will value the optimisation potential of the French framework, accepting its complexity. Others will prioritise the clarity and predictability of the Swiss system, particularly when securing the proceeds of years of value creation.

One certainty remains: a business sale cannot be improvised. It must be prepared well in advance and treated as a strategic project in its own right. Taxation, governance, wealth structuring, mobility and post-sale objectives are inseparable. Ignoring them — or addressing them in isolation — risks undermining an otherwise successful transaction.

In an increasingly international environment, the challenge is not to find an ideal model, but to understand the applicable rules and their real consequences. Only then can a business sale fulfil its true purpose: a controlled transition serving the entrepreneur, their wealth and their life project.