Company eligibility conditions
To issue BSPCE, a company must be a joint stock company (SA, SAS or similar), registered in France or the EEA, unlisted or meeting narrow exceptions for small listed companies, and generally younger than a statutory age threshold. The company's share capital must also not be majority owned by other listed companies, which is designed to keep the benefit targeted at genuinely independent young businesses, the kind of company usually covered under general employee equity planning.
- Must be a joint stock company incorporated in France or elsewhere in the EEA
- Must be unlisted, with narrow exceptions for small market capitalisation
- Must generally be under a statutory age limit since incorporation
- Must not be majority held by companies that fail the above tests
Eligibility rules and the exact age threshold have been adjusted by legislation over time. A company should confirm current eligibility with a French corporate lawyer before setting up a BSPCE plan, since eligibility also shapes which equity tax regime applies to the resulting gains.
Who can receive BSPCE
BSPCE can be granted to employees and, subject to conditions, to certain officers such as the chairman, chief executive or board members, provided they meet the relevant status requirements. Unlike some other regimes, BSPCE grants can also be extended to employees and officers of qualifying subsidiaries in some group structures.
BSPCE mechanics from grant to sale
A BSPCE holder is granted warrants with a fixed subscription price, usually set at the share value at grant. Once vested, exercising the warrant means paying the subscription price to receive shares. The gain on eventual sale, calculated from the subscription price to the sale price, is taxed under a specific regime, generally more favourable than ordinary stock option taxation, with the exact rate sometimes depending on the employee's length of service at the company.
| Event | Tax treatment |
|---|---|
| Grant | No tax |
| Exercise | No tax at exercise in most cases |
| Sale of shares | Gain taxed under the specific BSPCE regime, generally the flat tax, with conditions depending on tenure |
BSPCE eligibility and tax queries
- What makes BSPCE different from a normal stock option in France?
- BSPCE is a distinct legal warrant reserved for qualifying young unlisted companies, with its own more favourable tax regime on the eventual gain compared with ordinary stock options.
- Does the tax rate on BSPCE gains depend on how long the employee worked at the company?
- In some cases yes, tenure at the company can affect which rate applies to the gain. The exact conditions should be confirmed with a tax adviser given periodic changes to the regime.
- What happens to BSPCE if the company stops being eligible after grant?
- Warrants already granted while the company was eligible generally keep their BSPCE status. New grants after the company becomes ineligible would need to use a different instrument such as stock options or AGA.
General information for founders, not legal or tax advice. Thresholds and rates change, so confirm the current position with an adviser in the relevant country before granting.