Pacte Papin: what will change for employee buyouts

Why this scheme is arriving now

The demographic timetable has been known for a long time. The minister's office says that around 500,000 companies will change hands over the next five to ten years, 370,000 of them by 2030, representing three million employees.

This wall of business transfers is hitting a country where solvent outside buyers are rare and where investment funds are reluctant to go below a €1m valuation. The employee is therefore the natural buyer of many of these companies. They know the customers, the machines, the teams. What they almost always lack is the same thing: capital.

A different logic from the Pacte Dutreil

The confusion is common and deserves to be cleared up straight away. The Pacte Dutreil organises family transfers free of charge, by gift or inheritance, with a partial exemption from transfer duties.

The Pacte Papin, by contrast, targets sales for consideration, in particular when the buyers are employees. It does not replace the Dutreil, which the Prime Minister has undertaken to preserve. The two schemes address two situations that do not overlap.

The four announced levers

Additional depreciation on productive investment. The minister's office notes a lack of investment in the years leading up to a transfer. The answer is to offer an additional tax deduction on equipment bought after the buyout, at 30% for SMEs with up to 250 employees and 60% for companies with fewer than ten employees, the latter with a much wider scope including IT and professional equipment.

Registration duties cut to 0.1%. This is the most visible measure. The government wants to make these duties, presented as the equivalent of notary fees for individuals, all but disappear by bringing them down from 3% to 0.1%. The scheme would cover individuals as well as legal entities when several employees set up a company to buy the business.

A doubled allowance for the seller who retires. The allowance on the capital gain from the sale would rise from €500,000 to €1m.

A vendor loan that finally works. The tool already exists but is little used. Today, the seller has to pay tax on the capital gain before receiving the full price. The pact provides for this tax to be paid in step with the repayment of the vendor loan.

What it changes on a deal

The example given by the ministry concerns a €250,000 business, for which the duties would fall from €7,800 to €250, an immediate saving of nearly €7,500. On this type of file, the saving is real but it does not tip a financing plan.

The effect becomes significant on larger deals, those involving SMEs with ten to a hundred employees. On a €1.2m sale of SARL shares, the current duties approach €35,000. At 0.1%, they fall to €1,200. That is €34,000 less equity to raise, at the very moment when the buyers are scraping the bottom of the barrel. We set out the full calculation in our worked example on an SME with 28 employees.

The point nobody picks up on

A similar scheme already exists. Article 732 ter of the French General Tax Code provides a €500,000 allowance on transfer duties for the outright purchase of companies by their employees, provided they undertake to keep working in the company for five years. In other words, an employee who buys a €250,000 business on their own already pays nothing today.

This regime has, however, been ruled out for acquisitions through a company with several shareholders, which excludes precisely the most useful structure, the buyout holding company set up by several employees. This is where the Pacte Papin would bring something genuinely new, by explicitly covering legal entities. The political message is about the lower rate; the technical interest lies in the wider scope.

What remains to be settled

The eligibility conditions have not been published. The length of service required of the employee, the duration of the management commitment, the list of equipment qualifying for additional depreciation, how it fits with existing allowances: all of this will be written into the law and the amendments. The rules for setting up employee buyer companies and the protection of creditors also remain to be clarified.

The logic put forward by the ministry is one of exchange. The public authorities support the transfer; the buyer commits to continuing the business. It remains to be seen how this commitment will be monitored and enforced.

The timeline

The 2027 budget bill is due to be tabled at the National Assembly on 30 September 2026, the constitutional deadline being 6 October. The first part, which carries the tax measures, will be debated from 12 to 19 October with a formal vote on the 20th, then the vote on the whole budget is scheduled for 17 November. The text will then go to the Senate.

One piece of context weighs on all of this. The ordinary session ends on 28 February 2027 to make way for the presidential campaign, whose first round is set for 18 April. A tax measure voted in these conditions is never definitively secured. We go through the steps and formalities in detail in our article on the steps and the timeline.

Our reading

The Pacte Papin is a step in the right direction. It tackles a real problem with levers that cost the State little, the initial cost being estimated at a few tens of millions of euros.

Yet it does not solve the main constraint. An employee who wants to buy an SME valued at €2m has to contribute several hundred thousand euros of equity. Saving €50,000 in duties and taxes does not close that gap. The capital question remains unanswered, and it is the one that business transfer financing structures exist to address.

The Pacte Papin makes employee buyouts cheaper. It does not yet make them financeable.