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Investing in a Venture Capital Company (SCR) can offer individuals attractive tax advantages, in particular the exemption from income tax on capital gains realized after holding for more than five years. However, to benefit from this exemption, certain conditions must be met.

What is a Venture Capital Company (SCR)?

An SCR is a public limited company whose main purpose is to invest in unlisted small and medium-sized enterprises (SMEs). It benefits from a specific tax regime aimed at encouraging the financing of these companies.

Exemption from capital gains tax after five years of ownership

Individuals residing for tax purposes in France who hold shares in SCR may be exempt from income tax on capital gains realized during the sale of their shares, provided they have held them for at least five years. However, these capital gains remain subject to social security contributions, the rate of which is 17.2% in 2025.

Conditions to be met to benefit from the exemption

To take advantage of this exemption, several conditions must be met:

1. Length of detention : SCR shares must be held for at least five years. In the event of a transfer before this period, the capital gain is taxed according to the ordinary law regime, with the exceptions provided for by law (death, disability, dismissal, etc.).
2. Reinvestment of distributions : During these five years, the investor must immediately reinvest any income distributed by the SCR into the SCR, in order to maintain the entire investment in the system.
3. Non-majority ownership : No shareholder, alone or with his family, should hold more than 30% of the rights to the benefits of the SCR.

SCR obligations to maintain tax eligibility

The SCR must also comply with certain obligations in order for its shareholders to benefit from tax advantages:

• Investment quota : At least 50% of its net accounting position must be invested in shares of unlisted SMEs that meet tax criteria.
• Diversification : No stake should represent more than 25% of SCR assets, thus ensuring diversification of investments.
• Exclusion of real estate : Companies with a preponderance of real estate are excluded from the eligible investment field.

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Valeureux invests 100% in French, unlisted companies based on Science.

Valeureux's first fund, Value-X, is therefore perfectly compatible with these obligations, with a large margin.

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Other cumulative tax arrangements

In addition to the capital gains exemption, investors can benefit from other tax advantages by combining their SCR investment with other devices:

• Real Estate Wealth Tax (IFI) : SCR shares, being non-real estate SME shares, do not fall within the IFI base.

Conclusion

Investing in an SCR can offer significant tax benefits to individuals, including exemption from income tax on capital gains after five years of ownership. However, it is essential to comply with the conditions related to the duration of ownership, the reinvestment of distributions and the obligations specific to SCR in order to fully benefit from these advantages. It is therefore recommended to be well informed and to consult experts before making such an investment.

Legal sources:

• Article 150-0 A, III-1 bis of the General Tax Code
• Article 163 quinquies C of the General Tax Code
• Article 208, 3° septies of the General Tax Code
• BoFiP taxes BOI-RPPM-PVBMI-10-20 §70-80 and §120 (regime for individuals)

And to join SCR Value-X, which is Valeureux's first multi-asset fund, to benefit from this tax exemption, discover our first participations and participate in the selection of the next ones, it happens directly here:

www.invest.valeureux.com

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Any investment in unlisted companies involves risks of illiquidity and capital losses.

Tax arrangements may change - consult the official sites and consult a specialist.

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