The Buyer Can Owe the Seller's Taxes: Joint Tax Liability After a French Business Purchase

Joint tax liability after a French business purchase: you can owe the seller's taxes

The strangest bill a buyer of a fonds de commerce can receive comes from the tax administration - for the seller's taxes. Under Article 1684, 1 of the Tax Code, the buyer is jointly liable with the seller for certain of the seller's direct taxes, up to the price of the fonds and for a limited time: the public accountant can simply demand the money from the buyer. The practical consequence organises every closing: the buyer must not hand the price to the seller until the liability window has closed, keeping it available for the Treasury instead - and the public accountant can also oppose the price directly in the escrow agent's hands. The window itself rewards a diligent seller: ninety days as a rule, thirty where the seller filed everything on time and was current on its taxes going into the sale - and a hard maximum of 165 days from the sale.

This guide goes deep on the liability alone: the taxes it covers, how the two clocks run and what shortens them, the cap at the price, the buyer's protections in the deed and the escrow, and the parallel liability that touches owners who let their fonds out instead of selling. The escrow's whole procedure is in this series' blocked-price guide, and the seller's declaration calendar in the tax pillar - this article is the reason both exist.

The scope of the liability: which taxes, and what "joint" means

The taxes covered. The buyer can be pursued for the seller's income tax or corporation tax on the profits of the year (or financial year) of the sale, and, in certain cases, on the profits of the previous year or financial year, plus the apprenticeship tax. The logic is the seller's exit: the sale triggers the immediate taxation of everything untaxed (this series' tax pillar covers it), and the law gives the Treasury a second debtor for precisely those amounts.

The cap. The liability runs only up to the sale price of the fonds. A buyer never answers beyond what it agreed to pay - which is exactly why the standard protection works: as long as the price sits in escrow, the buyer's whole exposure is covered by money that has not yet left its control.

What "joint" means in practice. Solidarity means the public accountant can claim the covered taxes directly from the buyer, without exhausting remedies against the seller first. The administration's own doctrine draws the practical rule: the liability obliges the buyer, in fact, not to pay the price over to the seller immediately, so it can be paid to the Treasury on demand - and the public accountant can also form opposition to the payment of the price, joining the seller's other creditors in the procedure the blocked-price guide describes.

The two clocks of the liability: 90 days - or 30

The default: 90 days from the seller's filing. The buyer can be pursued during ninety days running from the day the seller files its results declaration - or its turnover declaration, for micro-BIC sellers (CGI Art. 1684, 1). That filing is itself due within sixty days of the sale's publication (CGI Art. 201), and the publication within fifteen days of the signing (C. com. Art. L 141-12) - which is where the 165-day maximum comes from: fifteen plus sixty plus ninety.

The reward: 30 days for a diligent seller. The window shrinks from ninety to thirty days where the seller has done three things: declared the sale to the administration within the forty-five-day deadline; filed its results (or turnover) declaration within the sixty days; and, at the last day of the month preceding the sale, was current on its tax filing and payment obligations (CGI Art. 1684, 1, al. 3). Three boxes, all the seller's to tick - and each one the buyer should verify rather than assume.

The sanction of a late seller. Where the seller does not file in time, the ninety days run from the end of the filing period - the window opens later and stays at its full length. The rule's design is deliberate: the faster and cleaner the seller's compliance, the shorter the buyer's exposure - and the sooner the escrowed price can be released to the seller. A seller who drags its feet freezes its own money.

The release. A buyer not pursued within the window is definitively discharged: the Conseil d'État has confirmed that a mise en cause outside the period comes too late. The closing file should record the dates that prove it - publication, the seller's declarations, and the window's computed end.

How long does your liability window run?

Pick the seller's behaviour - the check gives the clock that applies.

Protecting the buyer from the liability: escrow, clauses, calendar

Never pay the seller inside the window. The first protection is the one the administration itself describes: keep the price out of the seller's hands until the liability window closes. The escrow organised for the creditors' oppositions does double duty here - but its legal minimum (the 25-day opposition period) is far shorter than the tax window, which is why the deed should fix the escrow's release on the tax clock, not the opposition clock. This series' blocked-price guide covers the escrow's own procedure; the point here is its duration.

Make the seller's diligence contractual. The 30-day window is built from the seller's acts. The deed should therefore stipulate: the seller's undertaking to declare the sale within forty-five days and file its results declaration within sixty days of publication, with copies to the buyer (or the escrow agent) as each filing is made; the seller's representation that it was current on its tax obligations at the last day of the month before the sale, with supporting evidence; and release conditions tying the escrow to the window's computed end. A well-drafted deed turns the statute's reward for diligence into an enforceable timetable.

If the demand comes. A buyer pursued within the window pays the Treasury up to the price, from the escrow if the deed was well built, and recovers against the seller, who remains the true debtor of its own taxes. The recourse is worth securing in advance: an indemnity clause, and where the crédit-vendeur or other structures leave sums flowing to the seller, a right of set-off.

The other joint liability: letting the business out instead of selling

Article 1684 has a second edge, for owners who put the fonds in location-gérance rather than selling. Until the location-gérance contract is published, the owner is solidarily liable with the tenant-manager for the direct taxes established on the fonds' operation (CGI Art. 1684, 3), income taxes, the local economic contribution, the apprenticeship tax, alongside the Commercial Code's own solidarity for the tenant's operating debts until publication (C. com. Art. L 144-7). The tax version is narrower than the commercial one: direct taxes only (no turnover taxes), and only where the assessments carried the surcharges for late or insufficient declaration and the owner knew, or could not ignore, the failures behind them; it never extends to the deliberate-breach surcharge. It is also short-lived by design: the contract must be published within fifteen days of its conclusion, and publication ends the exposure. The full location-gérance regime, including the owner's other liabilities, has its own cluster in this series.

The liability from your side of the deal

Pick your seat - the check gives your moves.

Frequently Asked Questions

This article is for general information only and states French law as published in the sources available at the date shown above, checked against official sources. It does not constitute legal or tax advice. The window's arithmetic depends on your dates. Always seek qualified advice before acting.