Fiscalité | Management packages : qualification de la nature du gain réalisé par un dirigeant

In this decision, the Conseil d’Etat illustrates the principle laid down in its decisions of 13 July 2021 of taxing the gain as a capital gain when it does not arise from the salaried duties performed by the beneficiary.

The Conseil d’Etat (CE 8th and 3rd ch., 5 June 2023 n°467546) confirms that the gain realised by an employee when exercising a share purchase and sale option is taxable, not as additional salary, but as a capital gain on the sale of securities if it does not essentially arise from the duties performed.

As a reminder, in its decisions of 13 July 2021 (CE, plén, 13 juillet 2021 n° 437498), the Conseil d’Etat ruled that the gain realised when stock options and warrants were subscribed to at a preferential price originated from the beneficiary’s duties as a company director. The benefit recorded when the options were exercised was therefore in the nature of a salary supplement. The Conseil d’Etat added that, in principle, the gain on disposal is taxable as a capital gain on the disposal of securities. However, if it also stems from the seller’s salaried position, the gain must be taxed as a salary.

In this case, a company, in which the taxpayer was chief financial officer, was acquired by a group which, together with the management team, set up a holding company. A third party offered to buy the operating company from the holding company at a price that would have valued the holding company’s shares at €12 each. The majority shareholder rejected the offer, contrary to the wishes of the management team, and gave them a promise to buy their shares for a minimum of €10. The holding company was eventually sold for €2 per share. The directors therefore activated the offer to purchase the shares for €10.

The tax authorities took the view that the gain made constituted additional salary. The Conseil d’Etat ruled that :

– The promise was granted by the group independently of the professional investment made by the director;
– It was not intended to encourage him to remain with the company, since the option could be exercised even if he quit his position;
– The promise was made as a result of a disagreement between the shareholders over a third party’s offer to buy the company;
– The minimum repurchase price in the promise did not guarantee a future gain.

As a result, this gain had to be considered as a capital gain on the sale of securities.

The significance of this decision is that it provides a concrete example in which the benefit granted to an executive is recognised as not remunerating his salaried functions. The Conseil d’Etat gives positive indications of shareholder status. For example, the guarantee of a minimum share sale price in application of a promise to purchase does not necessarily constitute an advantage linked to the exercise of the seller’s duties as an employee. In this case, the aim is to compensate for a loss of opportunity due to a conflict between shareholders.

In conclusion, the analysis of the risk of reclassification of the gain from the sale as a salary for any new management packages will have to be carried out on a shareholder-by-shareholder basis.


If you have any questions about shareholder agreements and management packages, please contact our Tax Law team.

Photo by Ryoji Iwata on Unsplash
MSI Global Alliance, a worldwide network represented in 84 countries with 200 independent law firms, accountants, and tax advisers.
Réseau Entreprendre Paris gathers 250 CEOs who help and coach entrepreneurs during their company creation or purchase.

Terms of Service/Privacy Policy

© Schmidt Brunet Litzler