Free Share Awards (AGA) 2026: Taxation, Conditions and Strategies for Directors and Employees

In 2026, the acquisition gain on free shares (AGA) is, for the fraction up to €300,000, taxed under the income-tax scale after a 50% deduction (with no retention condition) plus social levies on wealth at 18.6%. The capital gain on sale falls under the PFU of 31.4%. On the company side: a 30% employer contribution, with an SME exemption.

The allocation of free shares (AGA) has established itself as one of the most powerful tools for involving employees and managers in the creation of a company's value. Used massively in startups, technological scale-ups and many SMEs, AGAs allow beneficiaries to receive shares in the company without paying a single euro, after the end of an acquisition period known as "vesting". The tax and social treatment, although regulated, remains significantly advantageous compared to a traditional salary increase, provided you master the rules of the game.

Unlike BSPCEs (business creator share subscription warrants), reserved for young unlisted companies meeting strict age and capital criteria, AGAs are aimed at any SA or SAS, with no ceiling on size or seniority. They are also distinguished from stock options, which give a simple purchase option at a fixed price and whose taxation follows different rules.

In this complete guide updated for 2026, we detail: who can set up an AGM plan, the legal conditions to be respected, the taxation applicable to the beneficiary (gain on acquisition and capital gain on sale), the system of social contributions - employer and employee -, the errors to avoid, and the situations where the support of an accountant or a lawyer is essential.

As soon as an AGM plan is linked to a holding company, a management package or an exit strategy, a holding tax mission helps to properly model dilution, tax schedule and future flows before allocation.

Definition and operation#

The allocation of free shares is governed by articles L. 225-197-1 et seq. of the Commercial Code. The principle is simple: the company decides to allocate to certain beneficiaries : employees, assimilated-employee managers : shares of its capital free of charge, with no financial compensation required from the beneficiary.

The mechanism is based on two successive periods:

1. The vesting period: the beneficiary is not yet the owner of the shares. He has a conditional right which is acquired gradually. The minimum duration is set at 1 year since the Macron law of 2015 (previously 2 years). In practice, the plans provide for 2 to 4 years, sometimes with progressive vesting (e.g.: 25% of shares acquired per year over 4 years).
2. The retention period: it was the Macron law no. 2015-990 of 6 August 2015 (not the PACTE law, which is law no. 2019-486 of 22 May 2019) that made this retention optional. The beneficiary can therefore sell his shares as soon as vesting ends, the only constraint being a combined acquisition-and-retention period of at least 2 years. For plans authorized from 2018 onwards, the retention period no longer opens any specific tax or social advantage: the 50% deduction applies regardless of retention (see below).

At the end of the acquisition period, the beneficiary becomes full owner of the shares and can freely decide to keep them or sell them, subject to any lock-up clauses stipulated in the plan regulations.

Quoted example: An SAS valued at €5 million grants its sales director a plan of 10,000 shares (unit value estimated at €5, or €50,000 in potential gain) with vesting over 3 years. If the value of the share reaches €8 at the end of 3 years, the acquisition gain will be €8 × 10,000 = €80,000, taxed according to the regime described below.

Who can benefit from it?#

Beneficiaries eligible for AGA are:

• Employees of the awarding company or a subsidiary (subordination link required);
• Assimilated-employee managers: CEO, general manager, members of the management board of an SA, president of an SAS, minority or equal manager of an SARL (subject to being attached to the general Social Security regime).

On the other hand, are excluded:

• Self-employed workers (TNS): majority managers of SARLs, individual entrepreneurs;
• Partners without a corporate mandate or employment contract.

In terms of legal ceilings: since the value-sharing law no. 2023-1107 (in force on 1 December 2023), the total number of shares allocated free of charge cannot exceed 15% of the company's share capital on the allocation date (20% for SMEs, 30% where the award covers at least 25% of payroll and at least 50% of staff, 40% where it benefits all staff). A separate rule, not to be confused with this overall ceiling: no award may be made to an employee or officer already holding more than 10% of the capital. For listed companies, certain special regimes apply.

Difference between AGA, BSPCE and stock options#

Conditions relating to the company#

To implement an AGM plan, the company must be constituted in the form of SA (public limited company) or SAS (simplified joint stock company). SARLs, by nature composed of shares and not shares, cannot directly grant AGMs. A prior transformation into an SAS is necessary if the management of an SARL wishes to use this mechanism.

The actions allocated can be:

• Existing shares previously repurchased by the company (as part of a share buyback program);
• New shares issued as part of a reserved capital increase.

The company incurs several costs:

• The employer contribution (see below);
• The IFRS 2 accounting charge: the fair value of the shares on the grant date is spread out as charges over the vesting period;
• The costs of repurchasing own shares if applicable.

Legal ceilings#

The law sets an overall ceiling: since the value-sharing law no. 2023-1107 (in force on 1 December 2023), the number of shares that can be allocated free of charge cannot exceed 15% of the capital of the company at the time of allocation. This ceiling is raised to:

• 20% for SMEs;
• 30% where the award benefits at least 25% of payroll and at least 50% of staff;
• 40% where it benefits all staff.

These thresholds are separate from the individual limit: no award may target an employee or officer already holding more than 10% of the capital.

Good to know: there is no individual legal ceiling set by law for each beneficiary, but the rules of good governance and investor recommendations (in particular AFEP-MEDEF for listed companies) recommend a fair and justified distribution.

Minimum vesting period#

Since the Macron law (2015), the minimum vesting period is set at 1 year. Before this reform, it was 2 years. In fact, the vast majority of plans provide for a duration of 2 to 4 years, with progressive vesting ("cliff" after 1 year, then monthly or annual vesting). Since the PACTE law (2018), the retention period is no longer mandatory. Before this reform, beneficiaries had to keep their shares for at least 2 years after the final allocation to benefit from the favorable tax regime. Today, they can transfer the day after vesting : but lose certain tax and social advantages described below.

Example of progressive vesting: A 4-year plan with a one-year cliff provides that:

• 0 shares acquired before 12 months (total loss in the event of departure before 1 year);
• 25% of the shares acquired at the end of the 1st year;
• then 1/36e per month for the following 3 years.

This type of clause is very common in startups and encourages beneficiaries to stay for the long term.

The added value of acquisition (acquisition gain)#

The acquisition gain is defined as the market value of the shares on the day of definitive allocation (end of the vesting period). This is the wealth that the beneficiary receives "for free" at that time.

Tax regime applicable in 2026:

The favorable regime of the acquisition gain is based on articles 80 quaterdecies and 200 A of the CGI. It covers shares whose award was authorized by an EGM from January 1, 2018 (the 2018 finance law, law no. 2017-1837 of 30 December 2017, not the PACTE law):

• The fraction of the acquisition gain less than or equal to €300,000 per year is taxed in the salaries and wages category according to the progressive IR scale, after application of a 50% reduction. This reduction applies regardless of the retention period of the shares.

• The fraction greater than €300,000 is taxed at the IR scale without deduction (like a salary), plus CSG/CRDS on earned income of 9.7% and the specific employee contribution of 10% (article L. 137-14 of the CSS). The gain from a qualifying plan is, however, exempt from ordinary social security contributions.

Social levies: the fraction of the acquisition gain up to €300,000 is subject to social levies on wealth income, raised to 18.6% in 2026 (CSG 10.6%, CRDS 0.5% and solidarity levy 7.5%, including 6.8% CSG deductible), following the increase introduced by article 12 of the 2026 Social Security Financing Act (law no. 2025-1403). The fraction above €300,000 is instead subject to CSG/CRDS on earned income at 9.7%.

Specific employee contribution (article L. 137-14 of the CSS): it is due at the rate of 10%, but only on the fraction of the acquisition gain exceeding €300,000 per year. The fraction up to €300,000 is not subject to it, and there is no reduced rate of 7.5% linked to retention.

Example: At the end of his vesting, an employee receives shares worth €120,000. This gain is below the €300,000 threshold.

• Acquisition gain: €120,000 (below €300,000)
• 50% deduction (no retention condition): taxable base reduced to €60,000
• These €60,000 are taxed on the IR scale (salaries and wages category)
• Social levies on wealth: 18.6% × €120,000 = €22,320 (including 6.8% CSG deductible)
• Specific employee contribution: none (it only targets the fraction above €300,000)

The capital gain on sale (gain at the time of sale)#

When the beneficiary decides to sell his shares after the final allocation, a capital gain may arise between:

• Sale price of the shares;
• Tax cost price = market value of the shares on the vesting date (which constitutes the acquisition price used to calculate the capital gain on sale).

This capital gain on sale is subject to the regime of capital gains:

• Single flat-rate levy (PFU) of 31.4% (12.8% IR + 18.6% social security contributions), except global option for the progressive IR scale;
• If you opt for the scale, certain reductions for holding period may apply (previous regimes) but are now very limited for securities acquired after 2018.

Example (continued): If the employee sells his shares for €150,000 while the vesting value was €120,000, the capital gain on the sale is €30,000, taxed under the PFU of 31.4% (2026), i.e. €9,420.

Tax summary table 2026#

Employer contribution to AGMs#

The allocating company is liable for a specific employer contribution (article L. 137-13 of the Social Security Code) at the time the shares are definitively allocated to the beneficiaries (end of vesting).

Rate in effect in 2026:

• 30% of the value of the shares on the definitive acquisition date, for the general case. This rate, raised from 20% to 30% by law no. 2025-199 of 28 February 2025, applies to shares acquired from 1 March 2025, hence to the whole of 2026;
• an exemption for SMEs and mid-caps (within the meaning of Annex I of the EU regulation) that have made no dividend distribution since their creation, within the limit, per employee, of 1 PASS (€48,060 in 2026) assessed over the current year and the three preceding years. This is not a reduced rate of 10%: either the company meets these conditions and the award is exempt within that limit, or the 30% rate applies.

When due, this employer contribution is deductible from the company's taxable income, which reduces its effective cost.

Payment timing: the employer contribution is due at the time of the final allocation of shares, regardless of when the beneficiary decides to sell. Example: An SME with 80 employees (turnover = €12 million) that has never paid dividends since its creation definitively grants shares to its employees.

• Applicable regime: exemption from the employer contribution, within the limit of 1 PASS per employee (€48,060 in 2026) assessed over the current year and the three preceding ones.
• Beyond that per-employee limit, or if the company has already paid dividends, the 30% rate applies to the value of the shares on the acquisition date.
• Any contribution due remains deductible from taxable income.

Salary contributions for the beneficiary#

The beneficiary is subject to a specific employee contribution (article L. 137-14 of the CSS), distinct from the social levies:

• 10%, but only on the fraction of the acquisition gain exceeding €300,000 per year;
• no employee contribution on the fraction up to €300,000 (there is no reduced rate of 7.5%).

Added to this are the social levies: the fraction ≤ €300,000 falls under social levies on wealth (18.6% in 2026), the fraction > €300,000 under CSG/CRDS on earned income (9.7%, including 6.8% CSG deductible the following year).

Specific exemption for SMEs and mid-caps#

The Social Security Code provides a favorable regime to encourage SMEs and mid-caps to use AGAs as a loyalty tool:

This regime makes AGMs significantly more attractive for SMEs wishing to attract and retain talent without necessarily increasing payroll in the short term.

Key steps#

The implementation of an AGM plan follows a several-step process, which involves the company's corporate bodies and requires the assistance of professionals (lawyer, chartered accountant, auditor if necessary):

1. Authorization by the Extraordinary General Meeting (EGM) The EGM must authorize the board of directors (or the management board) to allocate free shares. This authorization sets the maximum number of shares that can be allocated and the validity period of the plan (maximum 38 months).

2. Decision of the board of directors or management board The management bodies decide on the identity of the beneficiaries, the number of shares allocated to each, and the vesting conditions (duration, possible performance criteria).

3. Drafting of plan regulations This legal document details: the conditions of acquisition, the cases of departure (good and bad exit), the acceleration clauses (change of control), the restrictions on transfer, and the reporting obligations of the beneficiaries.

4. Acquisition of shares to be allocated The company must have the shares to be allocated, either by:

• Redemption of own shares (program previously authorized by the AGM);
• Reserved capital increase (issue of new shares).

5. Individual notification to beneficiaries Each beneficiary receives an allocation letter specifying the number of shares, the vesting schedule, and a copy of the plan regulations.

6. Accounting (IFRS 2 charge) The IFRS 2 standard (and its French equivalent CRC 2008-15) requires that the fair value of the shares on the grant date be recognized as expenses, spread over the duration of the vesting. This charge does not generate immediate disbursement but reduces the accounting result and, for companies falling under French standards, can impact the tax result.

7. Final attribution and reporting obligations At the end of the vesting period, the company must:

• Proceed with the registration of shares in the name of the beneficiary;
• Declare and pay the employer contribution to URSSAF;
• Inform the beneficiary of their reporting obligations (declaration 2042 C, form 2074 for capital gains).

Legal points of attention#

Good leaver / bad leaver clauses The rules of the plan must distinguish the starting cases:

• Good leaver: retirement, disability, death, redundancy. In general, acquired shares are retained and a pro rata share of shares currently vesting may be maintained.
• Bad leaver: resignation, serious or serious misconduct. Shares not yet acquired are lost. Sometimes, shares already acquired are subject to a forced repurchase option by the company at par value.

Acceleration clause (Change of Control) In the event of a sale of the company, it is usual to provide for a total or partial acceleration of the vesting ("single trigger" or "double trigger"). This clause is particularly expected by beneficiaries in companies in the growth phase where an acquisition is possible.

Role of the auditor In companies with an auditor (CAC), the latter must draw up a report on the allocation of free shares, verifying in particular compliance with legal ceilings and the regularity of the procedure.

Retention of key talents in startups and scale-ups#

In a context of the war for talent, particularly in the technology sectors, AGMs constitute a major attraction and retention tool. They make it possible to offer significant deferred compensation without immediately impacting cash flow, and to align the interests of employees with those of shareholders.

Interest on capital in transfer SMEs (MBO)#

During a management buyout (purchase of the company by its managers), an AGM plan can support the process by allowing managers to gradually increase their capital, in addition to traditional financial instruments. This also reassures the seller by maintaining the keys to management over time.

Supplement remuneration without increasing the payroll#

For a growing company whose cash flow is constrained, AGMs make it possible to reward performance without immediate disbursement. The accounting charge (IFRS 2) is very real, but the cash flow only occurs upon final allocation (employer contribution) and not during the vesting period.

Alignment of management-shareholder interests#

By directly involving key directors and managers in the company's valuation, AGMs reduce classic agency conflicts between shareholders and managers. The more the value of the company increases, the greater the potential gain for beneficiaries : creating a powerful incentive mechanism for collective performance.

1. Forgetting the employer contribution in the business plan The employer contribution (30%, unless the SME exemption applies for a company with no dividends, within the limit of 1 PASS/employee) can represent a significant cost for the company, especially if the plan is large and the valuation has increased significantly. Not anticipating it in financial forecasts is a classic mistake.

2. Do not include good/bad leaver clauses A plan without a good/bad leaver clause exposes the company to costly litigation upon departures : and can create inequities between beneficiaries.

3. Confusing AGA and BSPCE These two instruments have very different eligibility conditions, tax and social treatments. Allocating BSPCEs to a company that is not eligible (more than 15 years old, capital majority held by institutional investors, etc.) renders the operation void, with a risk of tax reclassification for the beneficiaries.

4. Omit social disclosures at attribution URSSAF closely monitors the allocation of free shares. Failure to declare and pay the employer contribution exposes the company to adjustments, increases and penalties.

5. Not informing beneficiaries of their reporting obligations Each beneficiary must declare the acquisition gain on their income tax return (form 2042 C) and, where applicable, the capital gain on sale (form 2074). The absence of information on the part of the company may incur moral or even legal liability.

6. Neglecting the impact of dilution on existing shareholders Any capital increase reserved for AGMs dilutes existing shareholders. It is essential to model this impact and communicate it clearly to all partners before implementing the plan.

AGMs are legally and fiscally complex instruments, the implementation of which justifies the use of several professionals:

The lawyer specializing in corporate law intervenes to:

• Draft the plan regulations, the good/bad leaver clauses and the acceleration clauses;
• Ensure compliance of the authorization procedure by the EGM;
• Handle complex shareholding cases (holding companies, private equity funds).

The accountant brings its value to:

• Financial modeling of the impact of the plan (employer contribution, IFRS 2 charge, dilution);
• Simulation of different tax scenarios for beneficiaries (impact of conservation on taxation, PFU vs. scale comparison);
• Accounting in accordance with IFRS 2 or CRC 2008-15;
• Supporting beneficiaries in their annual reporting obligations.

The auditor is involved in the companies subject to his control to establish the legal report on the allocation and validate the regularity of the process.

When to consult first?

• From the design of the plan, to arbitrate between AGA, BSPCE and stock options depending on the company's situation;
• Before the authorization EGM, to secure the procedure;
• As the end of the vesting approaches, to optimize the allocation date with regard to the overall benefit of the beneficiary (tax calendar, possible tax deferral);
• In the event of a sale or IPO affecting the existing plan.

Quick decision guide: common situations in 2026#

These pointers do not replace a case review: a decision to award or sell requires examining the situation, the documents and the law in force.