Guarantees for the Optional Exit Tax Deferral (V)

Why guarantees are required

The optional deferral under paragraph V of article 167 bis CGI is conditioned on the provision of guarantees sufficient to secure recovery of the tax claim should a lapse event subsequently occur. That is the consideration for postponing payment: the State accepts a deferral of enforceability but requires the ability to attach a liquid asset if a lapse event arises.

The deadline set by Decree No. 2019-868 of August 21, 2019 — filing of Form 2074-ETD together with the guarantee proposal no later than 90 days before the transfer (Article 41 tervicies A of Annex III to the CGI; Article R 277-8 of the LPF) — is strictly enforced. A late proposal is rejected, which causes the deferral to lapse.

Typology of accepted guarantees

Bank guarantee (the benchmark)

An on-demand bank guarantee issued by a recognized French or European institution is the most commonly accepted security. Advantages: immediate liquidity for the tax authority, legal certainty, and clearly defined scope. Drawbacks: annual cost (between 0.5% and 2% of the guaranteed amount depending on the financial strength of the principal), and the need to pledge collateral with the issuing bank.

Pledge of securities or securities accounts

A pledge of securities held by the taxpayer can be accepted where the securities are liquid and reliably valuable. The risk to the tax authority lies in price volatility: a pledge on securities whose value falls may become insufficient. The tax authority may require a supplemental guarantee during the deferral.

Mortgage on real property

A conventional mortgage on a property located in France, free of encumbrances and of a value exceeding the secured debt (typically 130% to 150%), may be accepted. The procedure is heavier (notarial deed, registration fees) and the property must remain free of any disposal throughout the deferral period.

Cash deposit

A cash deposit on a blocked account placed at the disposal of the tax authority is an ideal guarantee from a recovery standpoint. In practice, few taxpayers choose this option, which ties up significant cash for a potentially long period (2 to 5 years depending on portfolio value).

Personal guarantee from a solvent third party

Possible but rare. The third party (typically a relative) must demonstrate solvency commensurate with the amount at stake. The guarantee is joint and several and covers the full amount of the tax.

Calibrating the guaranteed amount

The amount of the guarantee to be lodged in the year of transfer is set by statute: for transfers occurring since 1 January 2018, it equals 12.8% of the total gross amount of the gains and claims concerned, before any holding-period allowance (Article 167 bis, V-1 of the French Tax Code (CGI)). By exception, for gains in deferral under Article 150-0 B ter of the CGI, the guarantee is computed at the specific rate of Article 200 A, 2 ter of the CGI. For reference, the rate was 30% for transfers made up to 31 December 2017.

Within one month of receipt of the exit-tax assessment notice (income tax and social levies — i.e., 31.4% of the gain in 2026 under the PFU), a top-up guarantee is lodged, where applicable, for the difference between the tax actually assessed and the initial guarantee; conversely, if the tax is lower, the taxpayer may request a partial release of the guarantees (BOI-RPPM-PVBMI-50-10-30). If the guarantees depreciate or become insufficient during the deferral, the public accountant may require a supplement (Article R* 277-2 of the LPF).

Indicative cost of guarantees

Submission procedure

1. Preliminary audit of the valuation and the amount to be guaranteed (T-6 to T-12 months).
2. Selection of the type of guarantee and preparation of the supporting documentation.
3. Filing of the guarantee proposal with the competent tax office (Direction générale des Finances publiques, non-resident service for upcoming transfers) no later than 90 days before departure.
4. Review by the tax authority: the public accountant notifies his decision within 45 days of the filing of the offer; absent a reply within that period, the guarantees are deemed accepted (Article R* 277-1 of the LPF).
5. Execution of the guarantee instrument (authentic deed for the mortgage, guarantee agreement for the bank guarantee).
6. Confirmation by the tax authority and formal grant of the deferral.

Risks in the event of rejection

If the tax authority rejects the proposed guarantees, the taxpayer may either provide an alternative guarantee (Article R 277-4 of the LPF: replacement by any other guarantee of at least equal value), accept immediate payment of the exit tax as of the date of transfer, or postpone the departure. The challenge against a rejection lies before the tax interim-relief judge (juge du référé fiscal), a member of the administrative court, seized by simple written request within fifteen days of receipt of the accountant's registered letter (Article L 279 of the LPF). In practice, these timeframes call for early preparation of the file rather than reliance on litigation.