Management packages: taxation of executives’ instruments
A management package is the set of instruments offered to a company’s executives and managers to share in the value created. Under article 163 bis H of the French Tax Code, the gain it produces is in principle taxed as salary; only the portion within a limit tied to the company’s performance is taxed as a capital gain.
This rule, in force since 15 February 2025, follows the three decisions of the Conseil d’État of 13 July 2021, which characterised such gains as employment income where they derive essentially from the duties performed. The firm analyses the instruments on offer, quantifies what the package will actually leave the beneficiary under each exit scenario, and acts before signing as well as before the sale.
How can the taxation of a management package be secured?
- Reading the instruments: ordinary or preference shares, share warrants, free shares, BSPCE.
- Conditions for capital gains treatment: risk of loss, holding period, entry value.
- Calculating the limit tied to the financial performance multiple and the portion taxed as salary.
- Quantifying the net amount under several valuation scenarios (waterfall).
- Reinvestment, contribution to a holding company and gifts of shares under the new regime.
What are the figures and thresholds for 2026?
| Item | Value | Reference |
|---|---|---|
| Capital gain portion: flat tax | 31.4% | Art. 200 A CGI |
| Salary portion: top marginal rate, incl. 10% contribution and CEHR | 59% | Art. 163 bis H CGI |
| Holding period (excl. free shares, BSPCE, options) | At least 2 years | Art. 163 bis H CGI |
| Financial performance multiple | 3 × growth in real value | Art. 163 bis H CGI |
In which cases has the question arisen?
Securing your management package ahead of a sale
Executive holding several incentive instruments: characterisation of the gain, modelling of the net after-tax amount, valuation and preparation for the liquidity event.
Creating a bespoke management package for the founders of a new company
Designing a bespoke management package for the founders of a new company: comparing instruments, preference shares, taxation (article 163 bis H) and the articles of association.
Choosing the Instrument Before a Sale: Salary, Free Shares or Co-investment
One million euros to be paid to each of five executives at the time of the sale. The amount was settled, the instrument was not: three routes modelled, and a gap of €204,600 per person for the same value delivered.
Selling or reinvesting shares received as an employee
An employee holding RSUs and shares ahead of a liquidity event: distinction between acquisition gain and capital gain, article 163 bis H, net simulation and contribution to a holding.
Frequently asked questions
How is the gain on a management package taxed?
Under article 163 bis H of the French Tax Code, the gain is in principle taxed as salary. The portion within a limit tied to the financial performance multiple is taxed as a capital gain, provided the holder bore a risk of loss and, except for free shares, BSPCE and stock options, held the shares for two years.
What rates apply?
The portion taxed as a capital gain bears the flat tax of 31.4%. The portion taxed as salary falls under the income tax scale and a 10% employee contribution, giving a top marginal rate of 59% including the exceptional contribution on high incomes.
Since when has this regime applied?
Article 163 bis H applies to gains realised since 15 February 2025. Before that, the Conseil d’État held, in three decisions of 13 July 2021, that such gains are employment income where they derive essentially from the duties performed.
Answers current as at 9 October 2026
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