The valuation date of social security contributions based on BSAs: a reversal of case law.
Redeemable share subscription warrants (bons de souscription d’actions « BSA ») enable excutive managers to buy shares from their company at a predefined price under conditions, such as the length of time they have to be retained or employed by the company.
Eventually, BSAs can either executed, enabling the employee to become the owner of the share, or be sold.
The Cour de cassation already ruled that BSAs can constitute an advantage which need to be subjected to social security contributions:
- when the BSAs are offered in return for or in connection with work
- On preferential terms
Hence, the following question emerges: How to and when to value BSAs for the purpose of calculating social security contributions?
By a judgment of the 4th of April 2019, the Cour de cassation ruled that the date to take into consideration was the date on which the BSAs were executable by the employee, i.e., the end of the “vesting” period.
The Cour de cassation overturned its position and ruled in a judgment of the 28th of September 2023, that the advantage must be valued on the date of execution or sale of the BSA.
It rules that social contributions must be based on either:
- The savings made by the beneficiary who, thanks to the BSA, acquires shares at a lower price than the market price
- The gain obtained by reselling the BSA at a higher price than that at which it was acquired.
While this solution makes it possible to determine the most accurate basis for social security contributions, in our view it raises a large number of questions when the BSA is issued or sold by a holder who is no longer an employee of the company.