Management Packages and Securities Held in a PEA: Practical Issues Raised by the 2025 Finance Act

The 2025 Finance Act has profoundly reformed the tax regime applicable to management packages (new Article 163 bis H of the French General Tax Code). Among the new measures is the prohibition of holding management package securities within a PEA or PEA-PME. This rule raises a major issue: what happens to securities already placed in a PEA before the reform came into force?

Analysis by Arnaud Nicolaou, Partner at Chaintrier, and Melissa Loncarevic, Attorney at the Paris Bar.

The treatment of securities held in a PEA before the reform

A prohibition without transitional provisions

The reform has applied since 15 February 2025 to existing management packages, without any transitional measures. No legislation clarifies the treatment of securities already held in a PEA, raising several questions:
– Does the exclusion apply to the entire gain, or only to the portion taxed as employment income?
– What risks of double taxation arise when withdrawing from a PEA more than five years old (given that the bank must withhold 17.2% in social contributions, while the gain is taxed as employment income)?
– Does the withdrawal of non-eligible securities from a PEA less than five years old lead to the closure of the plan?
– How will the tax authorities treat reinvestments made through a contribution in kind of ineligible securities withdrawn from a PEA?

Lack of administrative guidance

The BOFiP (Official Tax Bulletin) published on 23 July 2025 provides no clarification on how to treat securities held in a PEA, leaving account holders and taxpayers facing a legal vacuum.

During an IACF conference on 4 November 2025, representatives from the Tax Legislation Directorate (DLF) provided the following clarifications:
– The entire gain will be excluded from the PEA regime, without distinguishing between the portion taxed as employment income and that taxed as capital gains.
– Social contributions overpaid on PEAs older than five years may be refunded upon claim.
– The withdrawal of securities from a PEA less than five years old will trigger the plan’s closure.
– Senate amendment no. 114 to the 2026 Finance Bill provides that the withdrawal of securities held in a PEA before the reform will be tax-neutral, provided it occurs before any taxable event.

Regarding reinvestments made through a contribution in kind, the administration has confirmed that a tax-neutrality mechanism should apply if the PEA is closed before the management package matures. Amendment no. 114 also introduces a deferral of taxation in the event of an intermediary transaction.

Securities acquired after 15 February 2025

Securities acquired on or after 15 February 2025 can no longer be held in a PEA. However, many uncertainties remain concerning the notion of securities “acquired in consideration of functions performed.”

The BOFiP offers an analytical framework based on several indicators: achievement of performance targets by the company or investment vehicle, and the existence of contractual obligations on the part of the manager (such as non-compete, lock-up, or tag-along clauses).

According to the DLF, these indicators are cumulative, though not all must be simultaneously met. Still, the presumption of a management package is irrebuttable where ratchet or sweet equity instruments are involved.

The classification remains uncertain for ordinary shares without financial leverage but subject to contractual commitments. The DLF indicated that such securities should be treated as acquired in the capacity of shareholder, and not as a management package.

Member of Parliament Jean-Pierre Taite has recently asked the Minister of the Economy to confirm that securities acquired in such capacity, with gains taxed under the capital gains regime, should remain eligible for inclusion in a PEA.

A clarification on this point appears essential to provide legal certainty and prevent numerous potential disputes.