Free shares (AGA)

Which text applies?

• Art. L. 225-197-1 C. com. : Governs free share grants: authorisation by the extraordinary general meeting, vesting period of at least one year, combined vesting and holding period of at least two years.
• Art. 80 quaterdecies CGI : Treats the value of the shares on their vesting date as an employment benefit and subjects it to the regime of article 200 A, 3 within an annual limit of €300,000.
• Art. 200 A, 3 CGI : Includes that benefit in overall income after a 50% allowance.
• Art. L. 137-13 CSS : Charges the employer a 30% contribution on the value of the shares on their vesting date, payable the following month.

Under which conditions can free shares (AGA) be granted?

The grant is authorised by the extraordinary general meeting. The shares become the beneficiary’s property only at the end of a vesting period of at least one year; the combined vesting and holding periods cannot be less than two years. No shares may be granted to an employee or corporate officer holding more than 10% of the share capital.

In listed companies, a grant to corporate officers also requires a profit-sharing arrangement covering at least 90% of employees, as provided by article L. 22-10-60 of the French Commercial Code.

How is the beneficiary taxed?

The vesting gain, equal to the value of the shares on the date of final vesting, is taxed in the year of their sale, conversion to bearer form or letting. For plans authorised since 1 January 2018, it is taxed at the progressive rates after a 50% allowance up to €300,000 a year, with the social levies on investment income (18.6%). It is not a capital gain: the flat tax does not apply.

The fraction above €300,000 is taxed as salary, with CSG and CRDS on earned income and a 10% employee contribution. The gain on sale, above the value at vesting, is taxed as a capital gain; a capital loss is set off against the vesting gain.

What do free shares cost the company?

The 30% employer contribution applies to shares vesting since 1 March 2025, whatever the date of grant. SMEs and mid-sized companies that have made no dividend distribution since their incorporation are exempt from it, up to the annual social security ceiling per employee, assessed on the shares vesting in the year and the three previous years (art. L. 137-13 of the French Social Security Code). The cost of the shares is deductible from corporate income tax only if the shares are bought back rather than issued, and recharged to the French employing entity.

Where the shares form part of a management package, the gain on sale is also examined under article 163 bis H of the French Tax Code. A foreign RSU plan may qualify for this regime if it meets the conditions of the Commercial Code, where necessary through a French sub-plan.

Area of practice

• Management packages →
• BSPCE and free shares →

In which cases does this concept arise?

• Qualifying a Group RSU Plan for France→
• Choosing the Instrument Before a Sale: Salary, Free Shares or Co-investment→

Which related concepts should you know?

• Management package
• Managers’ gain (article 163 bis H)
• Financial performance multiple
• Sweet equity
• BSPCE
• 10% employee contribution