BSPCE, a tool for attracting, recruiting, and retaining talent in young companies
Free translation – for information purposes only
BSPCE (subscription warrants for shares of entrepreneurial creators) have been implemented as a management package tool to interest executives and directors of young companies in value creation under an attractive tax and social regime. In many situations, they have replaced stock options as an incentive tool.
BSPCE: What are the advantages for companies ?
BSPCE (subscription warrants for shares of entrepreneurial creators) have numerous advantages, among which we can cite :
- The absence of risk for beneficiaries who have a right to subscribe to shares in the future at a price established on the day the warrant is issued, rather than at the time of subscription. This allows them to benefit from the company’s value increase. If the company’s value decreases, the beneficiary will not subscribe to the shares and will therefore not suffer any loss.
- The absence of tax and social risk of requalification as salary as long as the conditions for issuing these BSPCE are met.
Which companies can issue BSPCE ?
- Only companies subject to the corporate income tax and formed as SA, SAS, SCA registered with the RCS for less than 15 years (or in the case of restructuring or takeover, the registration date of the entity with the greatest seniority) can issue BSPCE provided that:
- The entity issuing the BSPCE must be held by at least 25% by natural persons or by legal entities held by at least 75% by natural persons.
- The allocation of BSPCE must be authorized by a general meeting of the company’s shareholders based on the report of its supervisory body, which is given delegated authority to establish the conditions of issuance and the beneficiaries of BSPCE within 18 months.
- The company is free to establish the criteria for exercising BSPCE (for example, presence in the company, achievement of economic objectives) as well as the exercise price of BSPCE, which must nevertheless be consistent with the market value of the company at the time of their allocation. The allocation conditions must be the same for each category of employee in an identical work situation, in application of the principle of “equal pay for equal work.”
- Once allocated, BSPCE can be exercised within a period of 10 years.
BSCPE: What is the fiscal cost for companies ?
The allocation of BSPCE has no fiscal or social cost for the company. For the beneficiary (and to the extent that all legal conditions relating to the allocation of securities have been met, in particular with regard to article 163 bis G 1 of the General Tax Code), the net gain from their sale is treated as capital gains rather than as salary. For BSPCE allocated since January 1, 2018, the gain is taxable at a flat rate of 12.8% or, upon option, at the progressive income tax rate (after application of any retirement departure allowance). If the beneficiary has been working in the company for less than 3 years on the date of sale, the gain is subject to a rate of 30% without the possibility of an option to the progressive scale or to the retirement departure scheme. The BSPCE regime is a highly incentivizing tool for young (less than 15 years) company employees and managers, which must be implemented in a well-structured manner to ensure the legal and tax security attached to it. Our team of tax lawyers is at your disposal to assist you in implementing it.
Do not hesitate to contact AlterTax Avocats, a team of tax lawyers with solid experience, for more information.
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