2025 Finance Bill

The 2025 Finance Bill introduces a major overhaul of the tax regime for management packages, fundamentally changing how they are treated. The stated objective is to clarify the taxation of compensation received in exchange for salaried or executive roles.

The new Article 163 bis H of the General Tax Code, applicable to sales made on or after the effective date of the 2025 Finance Act, establishes the general principle that gains on the sale of securities are taxed in accordance with the rules governing wages and salaries. As an exception, taxation under the capital gains regime is maintained within certain limits and provided that certain conditions are met. Thus, for securities acquired “in exchange for salaried or executive duties,” the capital gains regime is now: • subject to (i) the existence of a risk of capital loss and (ii) a two-year holding period (for securities other than AGAs, BSPCEs, and stock options); • limited to the portion of the sale price not exceeding an investment multiple equal to 3 times the “Equity” multiple.

This applies not only to paid shares but also to free shares and other instruments subject to legal regulations (BSPCE, stock options). Furthermore, the final version of the text no longer allows for the exclusion of structures that incorporate a “sweet equity” effect: they are subject to the same provisions as “ratchet”-type instruments.

Income that does not meet the first condition or that exceeds the cap is therefore subject to the wages and salaries tax regime and is taxed at a marginal rate of 59% (including the progressive income tax scale, the special contribution on high incomes, and a 10% employee contribution).

In our report, you will find a summary of this new system and the preliminary questions it raises. This development also raises questions about the competitiveness of the Paris financial center. Compared to jurisdictions such as London or Luxembourg, where the tax treatment of management packages remains more transparent and favorable, the reform could undermine the attractiveness of the French market and affect ongoing exit processes.