In more detail
This position statement published in the administrative guideline (Bofip) puts an end to the discussions on the eligibility for the tax deferral mechanism provided for under Section 150-0 B of the FTC on the contribution of shares issued from BSPCE to a company. Indeed, the FTA specifies that:
In the context of the preferential tax regime set out under Section 163 bis G of the FTC, the reference to Section 150-0 A of the FTC is intended to define the rules for the taxable amount of gain arising from the sale of securities subscribed to in the exercise of BSPCEs. This cannot be construed as an implicit reference to all the tax rules applicable to capital gains and, in particular, to Section 150-0 B of the FTC relating to tax deferral.
This position is regrettable and seems to result from the FTA's strict interpretation of the provisions of Sections 163 bis G and 150-0 A of the FTC. It may be expected that, by extension, the FTA could consider that the tax deferral mechanism provided for under Section 150-0 B of the FTC would not apply as well.
Restructuring operations involving employees and directors holding shares resulting from BSPCE will be more complex to structure. This is because the employees and directors may be faced with a lack of cash to pay the tax on gains arising from BSPCE due because of the share contribution to a company, and the contributed securities within the context of the contribution will not be liquid for some time. It is undoubtedly highly regrettable as the current context is to promote regulated and qualified employee share schemes.
The taxpayers who would have realized contributions of shares resulting from BSPCE and who would not have reported their gains in their income tax return will have to reconsider their tax situation. The FTA's position is now clear, and the probability of being tax reassessed will be higher. However, it seems to us that there are some existing arguments and that the matter does not appear to be closed…
In any case, we can only hope for a change in the legal provisions to allow shareholder-employees through exercising BSPCE to benefit from the provisions of tax deferral provided for under Section 150-0 B of the FTC.
1 BSPCE are stock options which can be granted and issued, under several conditions, by new companies (i.e., companies set up less than 15 years ago) to the benefit of employees and managers.
