BSPCE
Art. 163 bis G CGI
Warrants allowing employees and executives of an eligible young company to subscribe shares at a price set at grant (art. 163 bis G CGI).
Please note.This definition is deliberately simplified. It does not constitute legal or tax advice. The exact conditions, thresholds, rates and periods depend on your situation and on the regulations in force.
Which text applies?
- Art. 163 bis G CGI : Defines the eligible companies and beneficiaries, the rules for setting the exercise price and the taxation of the benefit arising on exercise of the warrants.
- Art. 200 A CGI : Sets at 12.8% the flat rate referred to in article 163 bis G.
Which companies and which beneficiaries can use BSPCE (founders’ share warrants)?
- a company limited by shares liable to corporate income tax in France, registered for less than fifteen years;
- an unlisted company, or a listed company with a market capitalisation below €150 million;
- share capital held directly and continuously as to at least 15% by individuals, or by legal entities themselves held as to at least 75% by individuals (25% threshold for warrants granted before 1 January 2026);
- beneficiaries: employees, executives subject to the tax regime of employees and board members, and, subject to conditions, those of subsidiaries and sub-subsidiaries held as to at least 75%.
How is the exercise price set?
The price at which the beneficiary will subscribe the shares is set on the date of grant. If the company carried out, in the preceding six months, a capital increase in securities conferring equivalent rights, the price is at least equal to the price of that issue, subject to a discount justified by the loss of value since then or by a difference in rights.
How is the gain taxed?
For warrants exercised since 1 January 2025, the gain is split in two. The benefit, equal to the difference between the value of the shares on the date of exercise and the exercise price, is taxed when the shares are sold at the flat rate of 12.8%, or on election under the rules for employment income, and at 30% if the beneficiary has worked in the company for less than three years at the date of the sale. Social levies of 18.6% are added. The gain on sale, above the value on exercise, is taxed as a capital gain.
The benefit is not a capital gain: it qualifies for neither deferral (sursis) nor postponement (report) of taxation when the shares are contributed. The company bears neither social security contributions nor an employer contribution. Since 10 October 2024, neither the warrants nor the shares resulting from their exercise can be held in a PEA (equity savings plan) or a PEE (company savings plan).
How does the rule apply? A worked example
Exercise and sale of 10,000 warrants
Illustrative example: an employee exercises 10,000 BSPCE at a price of €1 when the share is worth €5, then sells the shares at €12. The amounts below exclude the exceptional contribution on high incomes and the differential contribution.
- Benefit on exercise (10,000 × (€5 − €1))
- €40,000
- Gain on sale (10,000 × (€12 − €5))
- €70,000
- Three years’ activity or more at the sale: 31.4% × €110,000
- €34,540
- Less than three years: 48.6% × €40,000 + 31.4% × €70,000
- €41,420
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