BSPCE: how they work, what they cost, and when to set them up

Bons de souscription de parts de créateur d'entreprise (BSPCE, founder share warrants) are the most widely used equity incentive in French startups. They let you tie a team to the value the company creates without spending a euro of cash. But the mechanism comes with strict conditions, a tax regime that changed two years in a row, and set-up mistakes that cost real money. Here is what a founder needs to know before signing anything.

What BSPCE are, concretely

A BSPCE gives its holder the right to buy shares in the company at a price set in advance, the exercise price, fixed when the warrant is granted, not when it is exercised.

If the startup is worth €5M at grant and €50M when the shares are sold, the beneficiary buys their shares on the €5M basis and sells them on the €50M basis. The gap is their gain. That gain is what gets taxed, not the shares themselves, and only on the day they are sold.

The logic fits in one sentence: nothing to pay until you have sold. No tax at grant, no tax at exercise, tax at the sale only. The term has its short definition in the glossary; what follows is the long version.

The eligibility conditions

BSPCE are governed by article 163 bis G of the French Tax Code. The conditions bear on the company and on the beneficiaries, and are assessed at the time of grant.

Conditions on the company

On the day of the grant, the company must meet all of the following:

• be a joint-stock company (SA, SAS or SCA) headquartered in France or in a European Union or European Economic Area state that has a tax treaty with France, and be subject to French corporate tax or an equivalent tax;
• have been registered for less than fifteen years;
• be unlisted, or have a market capitalisation below €150M;
• not have been created through a merger, restructuring, extension or takeover of pre-existing activities;
• have at least 15% of its capital held by individuals, or by legal entities themselves held at least 75% by individuals.

That last threshold was 25% until 31 December 2025. The 2026 Finance Act lowered it to 15% for warrants granted from 1 January 2026. It is the change that matters most for a company whose cap table is dominated by funds. It remains the most often forgotten criterion, and it is checked at every grant, not only when the plan is created.

Conditions on the beneficiaries

BSPCE may be granted to:

• employees of the company;
• executives taxed as employees: the president and managing directors of an SAS, the chief executive and deputy chief executives of an SA, members of a management board;
• since the 2020 Finance Act, members of the board of directors, the supervisory board or, in an SAS, any equivalent statutory body;
• employees and executives of subsidiaries held at least 75% and, since the 2026 Finance Act, of the sub-subsidiaries held by those subsidiaries.

External contractors, consultants and freelancers are not eligible, however involved they are. A founding shareholder who is neither an employee, nor an executive, nor a member of a governing body is not eligible either.

How the exercise price is set

The exercise price must be at least equal to the share value at the time of grant. The law adds a mechanical rule: if the company has raised capital in the previous six months by issuing shares with rights equivalent to those the warrants will produce, the exercise price cannot be lower than the price of that capital increase.

Three situations in practice.

Before any funding round. The valuation is free but must be defensible. Most startups use the nominal value or slightly above, documented with a simple method that an accountant can formalise.

Within six months after a round. The round's price is the floor, but only if the shares are comparable. Since 2020, when the shares produced by the warrants do not carry rights at least equivalent to those issued in the round (ordinary shares against the investors' preferred shares, which is the usual case), the price may be reduced by a discount reflecting that difference in rights. The tax administration has published no scale: the discount must be justified by an analysis of the rights attached to each class of shares, which is work for a lawyer or a valuer.

More than six months after a round. The company regains some freedom but must document the valuation it uses. A large gap with the last round, without serious justification, exposes the gain to being requalified as salary.

What the shareholders' meeting must vote

BSPCE are issued by decision of the extraordinary general meeting (AGE). The meeting sets the frame: the maximum number of warrants, the period during which the president or the board may grant them (eighteen months at most) and the general conditions of grant. Individual grants are then decided within that frame.

The plan rules specify:

• the number of warrants granted to each beneficiary;
• the exercise price and the method that justifies it;
• the vesting schedule, meaning the pace at which rights become definitively acquired;
• the leaver conditions, good leaver and bad leaver;
• the exercise conditions: windows, validity period of the warrants.

Vesting is not required by law but is universal in practice. A standard plan has a one-year cliff (no warrant vested before twelve months), then linear vesting over three more years, four years in total with 25% vested at the end of the first year.

BSPCE taxation in 2026

The regime rests on a distinction the 2025 Finance Act made explicit: on one side the exercise gain, on the other the capital gain on sale.

The exercise gain

The exercise gain is the gap between the share value on the day the warrant is exercised and the exercise price paid. It is taxed in the year the shares are sold, at a rate that depends on the beneficiary's length of service in the company, assessed on the date of the sale, not the date of exercise.

An employee who exercises their warrants after two years but sells the shares after three benefits from the reduced rate. Since the 2026 Finance Act, periods of employment or office in the group's eligible subsidiaries and sub-subsidiaries add up towards those three years.

Two details that weigh heavily. Since 2025, contributing the shares to a holding company no longer allows the exercise gain to be deferred: it becomes taxable at the time of the contribution. And BSPCE, like the shares they produce, can no longer be registered in a PEA, a PEA-PME, a PEE or a PERCO for shares subscribed from 1 January 2025.

The capital gain on sale

If the beneficiary keeps the shares after exercise and their value keeps rising, the gap between the value on the day of exercise and the final sale price falls under the ordinary regime for capital gains on securities: the 30% flat tax, or by global election the progressive income tax scale, with no holding-period allowance for shares acquired after 2018.

What nobody pays

BSPCE bear no social security contributions, employer or employee, at grant or at exercise. The 17.2% in the table are the social levies on investment income, paid by the beneficiary at the sale. Against stock options and their 30% employer contribution, that is the structural advantage of the scheme.

When to set up a first plan

There is no legal timetable, but two moments account for almost every grant.

At the first strategic hire. A CTO, a first senior salesperson, an engineer who joins below their market salary expects something in equity. Setting up a plan at that point, even for a single beneficiary, beats a verbal promise nobody will be able to quantify two years later.

Just before or just after a funding round. Before the round, the valuation is lower and the exercise price more favourable to beneficiaries. After the round, the investors' price serves as the reference, discount included where rights differ. Granting after makes the justification simpler; granting before increases the potential gain. Both schools exist.

What to avoid in either case: granting in a hurry, without plan rules, with an undocumented exercise price. A clearly undervalued price exposes the gain to requalification as salary, with the contributions that come with it.

The most common mistakes at grant

Checking eligibility once. The individual-ownership condition, now 15%, is checked at every grant. A round that pushes the funds above the threshold closes the door to further grants, not to warrants already issued.

Setting an exercise price without documentation. If the administration challenges the valuation and obtains a requalification, the gain is taxed as salary, social contributions included.

Neglecting leaver clauses. An employee who left on bad terms with vested warrants can exercise them at a funding round or a sale. The plan rules and the shareholders' agreement must provide for forfeiture or buy-back in that case.

Granting to a contractor. A consultant or freelancer, however central to the project, is not eligible. The grant is irregular and the gain will be requalified.

Confusing the exercise date with the sale date. The rate depends on length of service on the date the shares are sold. The confusion is paid for at filing time.

Counting on a PEA to change the picture. That ended in 2025 for shares subscribed from that date.

What to prepare before the meeting

Before convening the shareholders, you need:

1. a documented valuation, or the reference to the last round if it is less than six months old, with the rights analysis if a discount is intended;
2. a draft resolution setting the frame of the plan;
3. plan rules detailing grant, vesting, leaver and exercise conditions;
4. an individual grant letter per beneficiary;
5. the update of the share transfer register after each exercise.

These documents are drafted by a corporate lawyer; the accountant handles the valuation. The cost depends on the firm and the number of beneficiaries: ask for a fixed quote for the whole plan, not an hourly rate.

Tracking your cap table after the grant

A BSPCE grant changes the company's potential capital. Warrants are not shares until they are exercised, but they represent future dilution that investors will price in at the next round.

So keep your cap table fully diluted, warrants included: it is the only view an investor looks at. To measure what an 8% or 10% plan changes for each shareholder, the BSPCE simulator announced among our tools will do the arithmetic; until then, dilution is computed on the number of shares after all warrants are exercised.

Sources

• Article 163 bis G of the French Tax Code, Légifrance: the reference text, conditions and tax regime.
• BOI-RSA-ES-20-40, BOFiP: the tax administration's commentary on BSPCE.
• Amendments to the BSPCE regime, 2025 Finance Act, art. 92, BOFiP: exercise gain, end of deferral, PEA exclusion.
• Reform of the BSPCE regime, 2018 and 2020 Finance Acts, BOFiP: extension to board members and exercise price discount.
• 2026 Finance Act: amendments to the BSPCE regime, LégiFiscal: 15% threshold, sub-subsidiaries, length of service.
• Article L. 137-13 of the Social Security Code, Légifrance: employer contribution on stock options and free shares.