Equity taxation · Executives and founders

BSPCE: the tax regime after the recent reforms

You hold founder share warrants (BSPCE) and you are wondering how the gain will be taxed on exit. The Finance Act for 2025 (article 92) split this gain into two components: an exercise gain, treated as employment income and subject to income tax at a rate of 12.8 percent, increased to 30 percent if you have worked for the company for less than three years, and a disposal gain taxed under the regime applicable to capital gains on securities. The firm secures the grant of BSPCE, calibrates their place within a management package and defends the application of the regime in the event of a tax audit.

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— In brief
Instrument
Founder share warrants (BSPCE)
Statute
Article 163 bis G of the French Tax Code
Reform
Finance Act for 2025, article 92 (Act of 14 February 2025)
Exercise gain
Treated as employment income, income tax rate of 12.8 percent (30 percent if less than three years of service)
Capital gain
Regime applicable to disposal gains (article 150-0 A of the French Tax Code)
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An incentive instrument with a dedicated tax regime

A BSPCE gives its holder the right to subscribe, at a price set on the grant date, for shares in the company that employs them. Its purpose is to associate employees and executives with the value created by a young company, without any immediate financial outlay. Its appeal lies in a dedicated tax regime, provided for in article 163 bis G of the French Tax Code, which is largely shielded from the salary recharacterisation debate that weighs on the other instruments of a management package.

Since the Finance Act for 2025, the gain realised is broken down into two components. The exercise gain, equal to the difference between the value of the share on the exercise date and the exercise price, retains the character of employment income and is subject to income tax at a flat rate of 12.8 percent, increased to 30 percent where the holder has worked for the company for less than three years at the date of disposal (in addition to social security contributions). The disposal gain, equal to the difference between the sale price and the value retained on the exercise date, falls under the ordinary regime for capital gains on securities (article 150-0 A of the French Tax Code).

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The eligibility conditions

The regime of article 163 bis G is available only subject to strict conditions, relating both to the issuing company and to the beneficiary. A failure to qualify deprives the gain of the dedicated regime and exposes it to taxation as salaries and wages. Verifying these conditions, on the grant date and over time, is therefore decisive.

  • The issuing company must, among other requirements, be subject to corporate income tax, be less than fifteen years old, not result from a merger or restructuring, and be partly held by individuals;
  • Its share capital must meet an ownership condition, and the shares that may be subscribed must not exceed certain thresholds;
  • The beneficiary must be an employee, or an executive taxed as an employee, of the issuing company or of an eligible subsidiary;
  • The exercise price must be set on the grant date and reflect the value of the share on that date.

The holder's length of service within the company determines the income tax rate applicable to the exercise gain, set at 12.8 percent where the holder has worked for the company for at least three years and increased to 30 percent below that threshold. Tracking this length of service, like the company's eligibility, should be documented from the grant date onwards.

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What the Finance Act for 2025 changed

Article 92 of the Finance Act for 2025 (Act of 14 February 2025) rewrote article 163 bis G of the French Tax Code. The main change lies in the now explicit distinction between the exercise gain and the disposal gain. Previously, the entire gain on sale benefited from a unified treatment. The law now isolates the fraction corresponding to the employment benefit (the value of the share acquired on the exercise date, net of the exercise price) and subjects it to a specific regime, separate from the subsequent capital gain.

This rewriting has two practical effects. First, the exercise gain can no longer be held within a French equity savings plan (PEA), nor benefit from the mechanisms specific to disposal gains, whereas the disposal gain does give access to the deferral and rollover mechanisms of article 150-0 B of the French Tax Code. Second, these rules apply to shares subscribed on or after 1 January 2025, regardless of the date the warrants were granted, which requires an instrument-by-instrument review of existing positions.

This clarification of the BSPCE regime is part of a broader movement. The same Finance Act created, in article 163 bis H of the French Tax Code, a statutory framework for taxing management package gains, which by default treats the gain as salary and allows the capital gains regime only for a fraction, subject to a risk of capital loss and a holding period of at least two years. BSPCE retain their dedicated regime, but the interaction between the two provisions calls for an overall analysis.

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The areas in which the firm assists

01

Securing the grant

02

Calibrating exit taxation

03

Coordinating with the package

04

Defending during a tax audit

— Your contact

A dedicated counsel for your BSPCE

— FAQ

BSPCE: your questions on the tax regime

How is the gain on BSPCE taxed since 2025?

The gain is broken down into two parts. The exercise gain, treated as employment income, is subject to income tax at a rate of 12.8 percent, increased to 30 percent if you have worked for the company for less than three years (social security contributions apply in addition). The disposal gain, corresponding to the increase in the value of the share after exercise, falls under the regime for capital gains on securities (article 150-0 A of the French Tax Code). This framework results from article 92 of the Finance Act for 2025.

What are the exercise gain and the disposal gain?

The exercise gain is equal to the difference between the value of the share on the day you exercise the warrant and the exercise price set on the grant date. The disposal gain is equal to the difference between the sale price of the share and its value retained on the exercise date. The rewriting of article 163 bis G of the French Tax Code by the Finance Act for 2025 makes this distinction explicit.

What conditions must the issuing company meet?

Article 163 bis G of the French Tax Code makes the regime subject to several conditions, relating in particular to the company being subject to corporate income tax, being less than fifteen years old, not having been created through a restructuring, and being partly held by individuals. A breach of these conditions deprives the gain of the dedicated regime.

Does the rate depend on my length of service within the company?

Yes, for the exercise gain. The flat income tax rate is 12.8 percent where you have worked for the company for at least three years, and increased to 30 percent below that threshold. Tracking this length of service, from the grant date onwards, makes it possible to anticipate exit taxation.

From when do the rules resulting from the Finance Act for 2025 apply?

The new rules apply to shares subscribed on or after 1 January 2025, regardless of the date the warrants were granted. A position granted before that date and exercised afterwards therefore requires a careful, instrument-by-instrument review.

Can BSPCE be recharacterised as salary like other management packages?

BSPCE benefit from a dedicated regime (article 163 bis G of the French Tax Code) that largely shields them from the recharacterisation debate, provided all the eligibility conditions are met. Otherwise, the gain falls back into taxation as salary. The other instruments of a package fall, for their part, under the framework of article 163 bis H of the French Tax Code.

How should BSPCE be coordinated with a broader management package?

BSPCE are often combined with preference shares, free shares or share warrants. Each instrument is governed by its own rules: BSPCE by article 163 bis G of the French Tax Code, the others by the framework of article 163 bis H. An overall analysis, both when the package is put in place and on exit, secures the treatment of each instrument.

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