The LDF for 2025 took effect on February 16. It introduces significant changes to management packages.

> The Finance Act amends the rules governing capital gains on the sale of securities, which were subscribed to, acquired, or granted to employees or executives, when such capital gains are realized in connection with their employment or executive duties at the company issuing the securities or at an affiliated company.

> This reform applies to gains realized under plans governed by law (bonus shares, stock options, BSPCE) as well as those realized outside of these plans (notably BSA).

Until now: the capital gain on the sale—that is, the difference between the “acquisition gain” and the sale price of the securities—was subject in full to the flat tax rate (or, optionally, to the progressive income tax scale plus social security contributions).

• Since the passage of the Finance Act: capital gains are treated as wages, except for a portion not exceeding three times the change in the issuing company’s performance. This portion of the capital gain continues to be eligible for the flat tax rate, provided that the seller has taken on a genuine capital risk.

• This tax regime is limited to the “net gain,” that is, the capital gain realized since the subscription, purchase, or allocation of the securities. However, the “acquisition gain”—that is, the difference between the subscription or acquisition price and the value of the securities on the date of their subscription or acquisition—remains outside the scope of this new regime. They are taxed either in accordance with existing tax regimes (bonus shares, stock options, BSPCE) or under the regime for wages and salaries if their grant is linked to the recipient’s status as an employee or executive of the issuing company or group.

• This rule applies even if the securities were placed in a PEA.

• Capital gains realized in this context—for securities already owned by the seller—are therefore taxed as wages for sales made on or after February 15, 2025. Only for purchases, subscriptions, and allocations made on or after February 15, 2025, will a portion of these capital gains be eligible for the flat tax rate, subject to the conditions outlined above.

• The 10% “employee” contribution— which we were already familiar with and which was calculated based on the gain realized under free stock and stock option plans—has been extended to all gains realized by executives or employees upon the sale of securities that were subscribed to, acquired, or granted in exchange for their duties as employees or executives of the issuing company. This tax applies to gains realized when the sale takes place between February 15, 2025, and December 31, 2027. In our opinion, this tax should apply to all gains realized by the beneficiary that qualify as wages—that is, not only a portion of the capital gain on the sale, but also the capital gain on acquisition, and even the discount—that is, the difference between the exercise price and the value of the security on the date the option was granted.

• The triggering event for management package instruments now appears to be a single event: the date of sale of the securities (previously, “acquisition” gains could be taxed upon the exercise of certain options, and thus potentially earlier than the sale of the securities to which they were linked).

• Only the portion of the gain on the sale that is taxed as a capital gain (and not as wages) should be eligible for the tax deferral or deferral schemes (Articles 150 0B and 150 0B ter of the General Tax Code)—to be confirmed by the tax authorities

• Investment vehicles that already benefit from specific tax regimes—such as carried interest, FCPE, and capital gains distributions—should not be affected by this reform, but the tax authorities will need to confirm this.

• In the event of a gift of securities subject to this new regime, the donor will remain liable for tax on the portion of the capital gain that is treated as wages at the time the donee sells the securities received as a gift. In other words, a gift will no longer exempt the donor from capital gains tax.