Value-sharing obligation for French companies with 11 to 49 employees: what to set up from 2025

French Law No. 2023-1107 of 29 November 2023 on value sharing introduces, on an experimental basis for five years, a new obligation for French companies of a certain size. Since 1 January 2025, companies with 11 to 49 employees whose net taxable profit reaches a defined threshold over three consecutive financial years must put in place a value-sharing mechanism for their employees.

The reform is widely discussed but frequently misunderstood. The most common error we see in practice: assuming that any profitable company in that size bracket is automatically caught. The obligation is more targeted than that.

Three cumulative conditions#

The experimental obligation under Article 5 of the law applies only where all three conditions are met:

1. Corporate legal form: the company must be a société — a SAS, SARL, SA, SNC, or equivalent. Sole traders (entreprise individuelle), even if they employ staff, are explicitly excluded.
2. Headcount between 11 and 49 employees, calculated under Article L. 1111-2 of the Labour Code. Part-time employees count pro rata; fixed-term staff are included. Apprentices, interns, and non-salaried directors do not count.
3. Net taxable profit at or above 1% of revenue for three consecutive financial years immediately before the reference year.

The 1% threshold: a ratio, not an absolute amount#

This is where many summaries fall short. The law does not say "any positive profit". It sets a relative threshold: net taxable profit divided by revenue must reach or exceed 1%. A company generating €3 million in revenue with €25,000 of net taxable profit (0.83%) is not caught, even though it is profitable.

The net taxable profit used is the same figure as for the statutory participation reserve calculation under Article L. 3324-1 of the Labour Code — profit after tax, on a fiscal basis.

Reference years for the first application in 2025#

If all three reference years show a net taxable profit of at least 1% of revenue, the company must have a compliant mechanism in place for the 2025 financial year.

Exemption where a device already exists#

A company that already operates a profit-sharing agreement (participation), an intéressement scheme, an employer contribution to a savings plan, or that paid a value-sharing bonus (PPV) in the relevant period is not subject to the new obligation. The device just needs to exist — no minimum payment level is required.

The law offers freedom of choice. One device is sufficient.

1. Profit-related bonus scheme (intéressement)#

An intéressement scheme ties employee bonuses to results or operational performance. Since the 2023 law, companies with fewer than 50 employees can implement it via a unilateral employer decision (DUE) — no trade union or employee representative is required. The DUE is filed on the TéléAccords platform.

Social and tax treatment: bonuses are exempt from social contributions up to 75% of the annual social security ceiling (PASS), representing €36,045 per employee in 2026 (PASS 2026: €48,060). They are tax-deductible for the employer and income-tax free for the employee if invested in a company savings plan (PEE) or retirement savings plan (PER), subject to a five-year lock-up.

2. Voluntary profit participation (participation volontaire)#

Mandatory participation only applies to companies with 50+ employees. But since the 2023 reform, smaller companies can voluntarily set up participation under a derogatory regime (Article L. 3323-6 of the Labour Code), using a formula that may be more generous than the statutory one. It enjoys the same social and tax exemptions as mandatory participation.

3. Value-sharing bonus (PPV)#

The PPV is the simplest mechanism: no prior agreement, no negotiation, no minimum criteria linked to performance. The employer decides the amount unilaterally (with permitted modulation by salary, seniority, grade, or working hours) and can pay up to twice per calendar year.

Exemption caps (2026):

For companies with fewer than 50 employees, the PPV paid before 31 December 2026 is fully exempt from social contributions and income tax for employees whose pay is below three times the annual minimum wage (SMIC) over the preceding 12 months. Above that salary threshold, the PPV remains exempt from social contributions but is taxable as income.

Note: the enhanced exemption regime is confirmed through 31 December 2026. Conditions from 2027 onward have not been finalised at the date this article was last updated.

4. Employer contribution to a savings plan (PEE, Perco, Pereco)#

Employer matching contributions to employee savings plans satisfy the obligation. The contribution is exempt from social contributions up to 300% of the employee's own contribution, subject to an annual plan-specific cap (confirm current 2026 amounts with your adviser or at urssaf.fr).

Comparison table#

Law No. 2023-1107 contains no specific administrative fine or criminal sanction for failure to comply. This is deliberate within the experimental framework.

That said, real risks remain:

• Employee legal action: the Labour Code allows employee representatives, or employees directly where no representatives exist, to formally request compliance and bring the matter before an employment tribunal.
• Reputational risk: a company with consistently positive results that ignores its value-sharing obligation faces foreseeable retention and recruitment difficulties.
• URSSAF audit exposure: companies that pay informal bonuses to avoid the formal device without declaring them risk social contribution reassessment.

Our assessment: the absence of a direct financial penalty does not neutralise the obligation. In our experience with SME files, compliance is low-effort — particularly via a DUE intéressement — and the benefits (employee engagement, social exemptions, tax deductibility) comfortably outweigh the administrative cost.

1. Confirm scope: verify that the company is a société (not a sole trader) with between 11 and 49 employees.
2. Calculate the ratio for each of the three reference years (2022, 2023, 2024): net taxable profit divided by revenue, using the final tax return figures.
3. Check for an existing device: any profit-sharing, intéressement, savings plan contribution, or PPV payment already in place means no new obligation.
4. Choose the right mechanism based on the company's financial profile, HR objectives, and administrative capacity (see comparison table above).
5. Draft and file the DUE, collective agreement, or payment decision, as applicable.
6. Inform employees of their entitlements and any investment options.
7. File the documentation in the company's HR records.

A SAS providing professional services, 25 employees (one part-timer counted at 0.5 FTE), based in Paris. Annual revenue: €3 million. Tax results over the three reference years:

All three years exceed 1%. No prior intéressement or participation agreement is in place. The obligation applies for the 2025 financial year.

Decision: the employer opts for an intéressement DUE, with a formula tied to operating margin. The DUE covers three years. If the performance target is met for 2025, a bonus will be distributed before 31 May 2026. With a PEE opened simultaneously, employees can invest the bonus and benefit from income tax exemption. The employer deducts the amount from taxable profit.

Key takeaway: even a 1.07% ratio triggers the obligation. The €32,000 profit represents roughly €1,280 per employee — modest in absolute terms, which makes a performance-linked intéressement more logical than a flat PPV.

For guidance on drafting a compliant DUE or selecting the right mechanism for your company, our payroll and employment advisory team is available. Related reading: value-sharing bonus (PPV) guide, DSN 2026 overview, and payroll outsourcing.

Last updated: 26 May 2026. This article is intended to inform employers about the general framework of the value-sharing obligation under Law No. 2023-1107. It does not replace personalised legal or tax advice. For an analysis of your reference years and the choice of mechanism best suited to your company, consult a registered expert-comptable or an employment law adviser.

This English section is written for international readers who need to apply the French guidance to a real management decision. The key point for mandatory value-sharing mechanisms for French companies with 11 to 49 employees is not to memorise every technical rule, but to connect the rule to documents, deadlines, cash impact and governance. For employers, founders and HR-finance teams preparing payroll policy, the right approach is to identify the decision to be made, collect reliable evidence, and only then choose the accounting, tax, payroll or legal treatment.

The practical decision is which value-sharing tool is realistic for the company: profit-sharing, incentive agreement, value-sharing bonus or company savings plan. That decision should be documented before the year-end close, financing discussion, payroll run, transaction signing or tax filing concerned by the topic. When the matter is material, the file should include who decided, which assumptions were used, and which professional advice was obtained.

Evidence to keep#

• headcount history;
• profitability data;
• payroll calendar;
• draft agreement;
• employee communication record;

A value-sharing mechanism should not be copied from a template without testing cash impact, payroll treatment and employee communication. A clean file also helps the company answer questions from banks, investors, auditors, tax authorities, employees or buyers. It is usually cheaper to prepare that evidence during the process than to reconstruct it after a dispute, audit or urgent financing request.

Management checklist#

Before acting, management should run a short checklist. First, confirm that the entity, period and perimeter are correct. Second, compare the accounting treatment with the tax, payroll or legal consequence. Third, quantify the cash effect, because a technically valid option may still be unsuitable if it creates a short-term liquidity issue. Fourth, make sure the decision can be explained in plain English to a shareholder, lender, employee or buyer who is not familiar with French terminology.

For French subsidiaries of foreign groups, translation is also a control topic. A term that sounds familiar in English may not have the same legal meaning in France. The safer method is to keep the French source wording in the working file, then add a short English management note explaining the decision, the financial effect and the residual risk.

How Hayot Expertise would frame the work#

In a professional review, the starting point is the business objective. Is the company trying to reduce risk, close the accounts, prepare a filing, obtain financing, retain employees, sell a business or improve reporting? Once the objective is clear, the technical analysis becomes more useful because it is attached to a concrete decision. Hayot Expertise would generally separate the work into three layers: compliance, numbers and management judgement.

The compliance layer answers whether a rule applies and which documents are required. The numbers layer measures the effect on profit, tax, payroll, cash, equity, valuation or working capital. The management layer decides whether the option is consistent with the company's strategy and risk appetite. This separation avoids a common mistake: treating a French technical rule as if it were only an administrative formality.