Management package : taxation of related gains as salaries
In order to involve its managers and employees, a company can provide certain instruments called “management package” which aim at allowing them to acquire a portion of its capital. These instruments allow for an alignment of the interests of the managers and the employees with those of the shareholders.
The French administrative supreme court (Conseil d’Etat) has ruled, in three decisions rendered in a plenary session (CE plén. 13-7-2021 n° 428506, 435452 and 437498), that gains related to management packages, resulting from the granting of stock warrants (Bons de souscription d’actions and options d’achat), stock options or stock subscriptions outside of the legal framework of stock options are to be taxed as salaries rather than as capital gains from the sale of securities as far as they are essentially attributed by reason of the role of director or employee of the person concerned.
