BSPCE explained: the French equity incentive for startup employees
U.S. founders and investors in a French startup quickly meet an unfamiliar acronym in the cap table: BSPCE (bons de souscription de parts de créateur d'entreprise, often translated as "founder share warrants"). They play the role that stock options under an equity incentive plan play in a U.S. startup, with a favourable tax and social security treatment designed by French law for young companies.
This guide explains who can issue and receive BSPCE, how the exercise price is set, how they are taxed after the 2025 and 2026 reforms, and how they compare with U.S. options. It flags the points Romain Waiss-Moreau addresses for cross-border companies.
Which companies can issue BSPCE?
Under Article 163 bis G of the French Tax Code, the issuer must:
- be a French joint-stock company (SAS or SA) subject to corporate income tax;
- have been registered for less than fifteen years;
- be unlisted, or have a market capitalisation below €150 million;
- be at least 15% held directly by individuals, or by companies at least 75% held by individuals, a threshold lowered from 25% for warrants granted since 1 January 2026;
- not have been created through a restructuring or takeover of an existing business.
The ownership condition matters for venture-backed companies: as funds increase their stake, eligibility can be lost, and with it the ability to grant new BSPCE.
Who can receive BSPCE?
Employees, officers taxed like employees, and members of the board or equivalent governing body. Since 2026, employees of subsidiaries and second-tier subsidiaries held at least 75% can also benefit. Consultants and advisers are excluded; they receive share warrants (BSA) instead.
How do BSPCE compare with U.S. stock options?
| Feature | U.S. options (ISO/NSO) | French BSPCE |
|---|---|---|
| Approval | Board, under a stockholder-approved plan | Shareholders, with possible delegation to the president or board |
| Exercise price | Fair market value, often supported by a 409A valuation | At least the price of a capital increase in the previous six months, with a possible discount reflecting preferred rights |
| Vesting | Typically four years with a one-year cliff | Same market practice |
| Employer social charges | Depends on option type and jurisdiction | None on grant or exercise |
| Transferability | Generally not transferable | Not transferable |
How are BSPCE taxed today?
For shares acquired on exercise since 1 January 2025, French law distinguishes two gains:
- Exercise gain: the value of the share at exercise minus the exercise price. It is taxed at 12.8%, or 30% if the beneficiary has worked for the group for less than three years, plus social levies, when the shares are sold.
- Capital gain: sale price minus value at exercise, taxed under the ordinary capital gains regime.
Since 2026, the three-year seniority test counts time spent in the issuing company, its subsidiaries and second-tier subsidiaries. Shares from BSPCE can no longer be held in a French PEA savings plan.
What about U.S.-based employees of a French company?
BSPCE are a French tax regime. A U.S. resident employee holding BSPCE will be taxed under U.S. rules, which may treat them as non-qualified options. Companies with teams on both sides often adopt a dual structure: BSPCE for French employees, and a U.S. sub-plan of options or warrants for U.S. employees, with a valuation meeting U.S. requirements. Romain Waiss-Moreau coordinates both plans.
Worked example: what does an employee earn on exit?
An employee receives 10,000 BSPCE with a €2 exercise price. She exercises when the share is worth €8, after four years with the company, then sells at €12 when the company is acquired.
| Step | Calculation | Amount |
|---|---|---|
| Exercise price paid | 10,000 × €2 | €20,000 |
| Exercise gain | 10,000 × (€8 − €2) | €60,000 |
| Capital gain | 10,000 × (€12 − €8) | €40,000 |
| Total pre-tax gain | €100,000 |
The €60,000 exercise gain is taxed at 12.8% income tax, since she has more than three years of seniority, plus social levies. The €40,000 capital gain follows the ordinary capital gains regime. Had she exercised with less than three years of seniority, the rate on the exercise gain would have been 30%.
Case study: a French startup losing BSPCE eligibility
After its Series B, a startup finds that individuals now hold only 12% of its capital, below the 15% threshold. It can no longer grant BSPCE. Existing grants keep their regime, but new hires must receive free shares or stock options, which cost the employer more. The firm advises clients to anticipate the threshold before each round and grant the needed pool while the company is still eligible. For U.S. investors, this is a point to raise in due diligence, since it affects future hiring costs.
BSPCE: key points
- Losing eligibility without noticing: track the 15% individual ownership threshold at each round.
- Granting BSPCE to consultants: they are not eligible.
- Using BSPCE for U.S. employees without U.S. tax analysis: the French benefit does not travel.
Frequently asked questions
Can BSPCE be granted at a discount to the last round price?
Yes, if the discount reflects the difference in rights between the ordinary shares underlying the BSPCE and the preferred shares issued in the round, supported by a documented valuation.
What happens to BSPCE on an exit?
The plan usually provides for acceleration or exercise before closing. The resulting shares are then sold with the other shares, under the waterfall.
Do BSPCE holders have to sign the shareholders' agreement?
On exercise, yes, if the plan makes adherence a condition. Without it, the new shareholders escape drag-along and leaver clauses.
Do BSPCE trigger employer social security charges?
No. Neither the grant nor the exercise of BSPCE triggers employer contributions, which is their main advantage over stock options and free shares.
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