Are you wondering how to prepare the sale or takeover of a business without making legal or tax mistakes? Which items to list and which formalities to follow to secure a transfer of a business as a going concern (fonds de commerce)?
Transferring a fonds de commerce is a strategic operation that is heavily regulated. In this comprehensive guide, we will also clarify the difference between selling the business and selling the commercial premises. This article offers a practical guide to the key steps in the project: valuation, drafting the deed, publication in the BODACC, escrow, and tax exemptions.
With Optimhome, contact your local real-estate advisor specializing in commercial premises and business assets in your region for personalized support and a successful project. Are you a buyer or a transferee? Browse our listings of businesses for sale.
What Is a Fonds de Commerce and What Does It Include?
A fonds de commerce brings together the tangible and intangible elements necessary to operate a commercial activity. It includes the customer base, goodwill, and the trade name, which together form its intangible value.
Among the tangible elements are furniture, tools, and, where applicable, inventory. This stock is often valued separately in the transaction.
It is essential to identify precisely the items being transferred to avoid disputes. The list should indicate the equipment, transferable contracts, licenses, online accounts, trade name, and the leasehold rights.
This precision facilitates the allocation of the price between tangible and intangible elements for the tax authorities.
A fundamental element is the leasehold right (droit au bail). It often determines the value of the business in an attractive area.
If the seller is not the owner of the premises, taking over the lease or negotiating with the landlord directly influences the continuity of the business.
The Distinction Between the Business (Fonds de Commerce) and the Commercial Premises (Murs Commerciaux)
Commercial premises are separate real-estate assets. They are not part of the fonds de commerce, unless transferred separately by the owner. Professional premises for sale can therefore be distinct from the business to be transferred.
Buying the business without acquiring the premises generally involves taking over the commercial lease or signing a new rental contract.
Check the status of the owner and the lease clauses before making any offer. Review the term, renewal, and assignment conditions.
Securing the right of occupancy is often as important for the buyer as acquiring the customer base.
The Different Constituent Elements of the Fonds de Commerce
The business includes tangible elements such as furniture, equipment, and tools. It also includes intangible elements: customer base, trade name, business name, leasehold rights, trademarks.
Supplier contracts, licenses, and administrative authorizations are among the assets necessary for operations.
Today, intangible assets include the website, domain names, social media accounts, and electronic customer lists. Arrange for the transfer of these assets carefully.
Inventory is valued separately and must be specifically mentioned in the transfer deed.
The Business Transfer Process: Key Stages
Successful completion relies on a structured methodology. Preparation, valuation, negotiation, letter of intent or preliminary agreement, then final deed.
Each phase involves legal and tax watchpoints.
Before signing, the parties and their notaries agree on the transfer price allocated between tangible and intangible elements. Check for the absence of liens and pledges.
Have the deed drafted by a lawyer or chartered accountant to secure the transaction.
Registration of the deed and publication in a legal announcements journal are mandatory. Publication in the BODACC triggers the creditor opposition period.
Preparation and Valuation of the Business Before Transfer
Start with an inventory of the tangible and intangible elements included. The seller must provide the accounts and turnover for the last three financial years.
Also provide operating profit so an objective valuation can be made.
Engage a chartered accountant or specialist valuer. They will combine several methods: net asset value, earnings multiples, and market comparison.
Verify the necessary administrative authorizations and licenses, such as municipal or health permits.
Draft a letter of intent or a preliminary sale agreement to formalize the offer. Provide for conditions precedent: loan approval, clearance of any pre-emption rights, etc.
Drafting and Signing the Transfer Deed
The transfer deed defines the scope of the sale: assets transferred, price allocation, origin of the business, status of liens, and payment terms.
Even though the law has relaxed some mentions, it remains prudent to include this information to protect the parties.
Include essential clauses: conditions of transfer including conditions precedent, hidden-defects warranty, non-compete clause, and escrow of the price.
Verify the parties’ consent and capacity to contract, for example corporate statutes and powers of representation.
The Legal and Administrative Formalities of the Transfer
After signing, registration with the tax office is mandatory. Publish the deed in a legal announcements journal and then in the BODACC.
Publication triggers the creditor opposition period. Creditors have 10 days to oppose payment of the price.
While the period runs and until the tax authorities have ruled, the seller cannot safely receive the price.
The municipality may exercise a right of pre-emption within a protected zone. The seller sends a Cerfa declaration and the municipality has two months to respond.
Also request a planning certificate (certificat d’urbanisme) to inform the buyer of applicable rules and potential changes.
The Obligation to Inform Employees and Its Implications When a Business Is to Be Transferred, Sold, or Taken Over
The seller must inform employees of the planned sale. For companies without a works council, the information must be given at least two months before completion.
Notification must be traceable: meeting with attendance record, posted notice, email, or registered letter with acknowledgment of receipt.
If the conditions of the transfer are not met, the seller faces potential civil liability and a fine. The fine can reach 2% of the sale price.
However, the transfer cannot be annulled for this sole reason. Exemptions exist: companies with more than 250 employees, transfers within the family, or insolvency proceedings.
The Municipality’s Right of Pre-emption and the Planning Certificate
Within a commercial protection zone, the municipality can pre-empt the business. The seller sends the declaration in four copies to the town hall.
The municipality has two months to respond. If it does not, pre-emption is deemed waived and the sale may proceed.
The planning certificate informs the buyer about applicable rules. It helps assess whether an extension, a change of activity, or a fit-out is compatible.
Taxation of the Business Transfer: Obligations and Exemptions
The transfer entails tax obligations for the seller and duties for the buyer. The seller is taxed on professional capital gains.
The buyer pays registration duties calculated on a progressive scale.
Exemptions exist: for small businesses, depending on the value of the business, or in the event of retirement.
These regimes require precise documentation and adherence to deadlines, for example actually ceasing functions.
VAT may apply depending on the elements transferred. A full transfer of the business may be exempt from VAT.
Tax liability can be joint between seller and buyer for typically 90 days, unless reduced by the authorities.
Tax Applicable to the Seller: Capital Gains and Taxation
The capital gain is the difference between the sale price and the carrying amount of the assets sold.
Depending on the holding period, the gain is treated as short-term or long-term. Tax treatment differs, and allowances apply based on duration.
Small businesses may benefit from full or partial exemption if they meet turnover thresholds and legal conditions.
Anticipate these points with your chartered accountant to optimize taxation.
Taxation for the Buyer: Rights and Responsibilities
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The buyer pays registration duties: 0% up to €23,000, 3% from €23,001 to €200,000, then 5% above that.
They may also be subject to VAT depending on the structure and the nature of the items transferred.
Moreover, the buyer may be jointly liable for the seller’s tax debts for a defined period. This requires checking past returns and payments.
Publication in the BODACC and escrow of the price protect against these risks.
Legal Security of the Transfer and Post-Transaction Management
To secure payment, the parties often set up an escrow for the price. This account is managed by a lawyer or notary.
The amount remains blocked during checks and tax review, generally between three and five months.
The agreement must provide for the handover of keys and the transfer of supplier and maintenance contracts.
It must also organize the transfer of employment contracts if staff remain. Arrange the transfer of digital assets: account access, domain name, and website.
List all these transfers in the deed to avoid disputes.
After the transfer, the buyer must proceed with any required registrations, for example with the Trade and Companies Register (RCS). They must file tax returns within the deadlines, often between 45 and 60 days.
The Role of Escrow in Securing Payment
Escrow of the price consists of depositing the amount due with a third party, lawyer or notary. It covers the creditor opposition period and the tax joint-liability period.
Escrow protects both buyer and seller by ensuring legitimate creditors are paid before funds are released.
In practice, the price remains unavailable during verifications, tax review, and creditor oppositions. This period generally includes 60 days for tax examination and 10 days for opposition after BODACC publication.
Post-Transfer Obligations of the Buyer When Purchasing or Taking Over a Business
After closing, the buyer must ensure registration with the RCS if required. They must also complete fiscal and filing formalities, such as registration.
Then proceed to transfer necessary licenses and approvals. Failure to complete these steps may engage the buyer’s liability.
Quickly update digital assets: website, social accounts, and Google listings. Inform partners and customers of the change to ensure continuity of operations.
Optimhome, Your Expert Partner for Selling or Acquiring a Business
Optimhome advisors specialize in commercial real estate. They know the local market for businesses and professional premises in your region.
They support sellers and buyers at every stage: valuation, marketing, negotiation, and coordination of formalities. They can also connect you with partners if needed.
To secure your transaction, contact your local Optimhome advisor. They will help you assess the transfer price, structure the administrative file, and facilitate negotiations.
Benefit from tailored support and in-depth local market knowledge.
Conclusion
Clear definition: a fonds de commerce brings together tangible and intangible elements essential to the activity, to be distinguished from the commercial premises.
Preparation required: precise inventory, accounting documents, and an expert valuation are indispensable.
Strict formalities: tax registration, publication in a legal journal and in the BODACC, compliance with creditor opposition deadlines.
Tax planning: capital gains, registration duties, and exemption schemes require an appropriate strategy.
Payment security: common use of price escrow and protective clauses (non-compete, warranties).
Post-transfer management: transfer of contracts, registration, update of digital assets, and tax filings.
Recommended local support: contact your Optimhome advisor for personalized assistance to successfully sell or acquire a business.
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FAQ
How do you sell a business ?
The sale requires an accurate valuation, employee notification, and drafting a transfer deed. Comply with registration and publication formalities. Using a professional secures the transaction.
What are the tax consequences of selling a business?
The seller is taxed on professional capital gains depending on holding period. The buyer pays registration duties and may be jointly liable for certain tax debts.
What is a fonds de commerce?
A fonds de commerce includes the customer base, trade name, equipment, and other intangible elements. It does not include the premises unless sold separately.
How do you account for a business transfer?
Record the disposal of the assets sold and recognize any capital gain or loss. Then handle related receivables and payables. Consult a chartered accountant for compliant entries.
How do you declare a transfer of a business to the INPI?
For trademarks and patents, notify the INPI of the transfer of ownership. The business transfer itself is registered with the tax office and published in the BODACC.
How do you register a business transfer?
Register the transfer deed with the tax office, generally within one month of signing. This formalizes the transfer and triggers tax obligations.
How do you publish a business transfer in the BODACC?
After insertion in a legal announcements journal, the court clerk publishes the transfer in the BODACC within three days. This opens the creditor opposition period.
What is the difference between a contribution in kind and a business sale?
A contribution transfers the business to a company in exchange for shares. A sale is a direct transfer. Tax and formal requirements differ.
What is the difference between an asset sale and a business (fonds) transfer?
An asset sale concerns isolated assets. A fonds transfer transmits all elements necessary for operations.
What is the difference between an assignment of lease and a transfer of a fonds de commerce?
An assignment of lease transfers the right to occupy the premises. A fonds transfer includes the customer base and equipment. The operations can be linked but remain legally distinct.
Author of the Publication
Fabrice DOBROWOLSKI, Network Development Director at Optimhome
“Benefit from my expert advice, based on many years of experience in the real estate sector, to ensure the success of your buying or selling project.”
