OD FLASH | Dutreil pact and holding company: the requirement for effective commercial activity is assessed on the date of death

Cass. Com, 17 December 2025, no. 24-17.415

Following the death of her direct ascendant in 2010, a taxpayer heir filed a succession declaration on May 30, 2011. The estate included, in particular, shares in a holding company that held stakes in several real estate civil companies engaged in furnished rental activities. The taxpayer considered these shares eligible for the partial 75% exemption from inheritance tax under Article 787 B of the French General Tax Code (hereinafter “CGI”), arguing that the company qualified as an “active holding.” The tax administration, however, disagreed, holding that the company could not be classified as an active holding.

The Court of Cassation recalled that the operational nature of subsidiaries must be assessed on the date of death, which constitutes the tax-generating event, and not on the date the succession declaration is filed. The Court observed that, on the date of death, the subsidiaries of the holding company had not yet effectively conducted the construction-sale activities invoked by the taxpayer to demonstrate the existence of a commercial activity. Their activity was limited to holding or preparing real estate projects, which constitutes a civil patrimonial management activity, excluded from the scope of the Dutreil Pact.

Consequently, as the subsidiaries were not operational and did not carry out a commercial activity, the holding company could not be considered an “active holding” with respect to these participations in the civil companies and, therefore, could not benefit from the exemption regime provided by Article 787 B of the CGI.