BSPCE and Exit Tax: Common Pitfalls for Startup Founders

A growing category of securities, with specific rules

BSPCE (founder share subscription warrants) have established themselves over the past ten years as the preferred instrument for granting equity to employees and executives of French startups. They are subject to a specific tax regime (article 163 bis G CGI), distinct from the general regime applicable to stock options and free shares. When the beneficiary plans to move abroad after exercising them, two tax regimes come into collision: the specific BSPCE regime and the exit tax regime (article 167 bis CGI).

Scope of the exit tax on BSPCE-derived securities

Securities acquired through the exercise of BSPCE fall within the scope of the exit tax in the same way as any other security representing a shareholding, provided the taxpayer holds them on the eve of the transfer and the assessment thresholds are met (50% holding OR EUR 800,000 in aggregate value, after combining them with the other securities held).

The deemed-disposal fiction applies: on the eve of the transfer, the taxpayer is deemed to have sold their securities at their market value, and the corresponding unrealized capital gain is taxed. The optional deferral under paragraph V (for a move to Dubai) remains available.

Determining the acquisition price: the classic pitfall

This is where the most common mistake lies. Many BSPCE beneficiaries assume that the acquisition price to be used to compute the unrealized capital gain corresponds to the nominal exercise price of the warrants. That is not the case. For securities subscribed through the exercise of BSPCE, the acquisition price to be used to compute the unrealized capital gain is equal to the value of the security on the day the warrant is exercised (BOI-RPPM-PVBMI-50-10-20, para. 50) — not the exercise price actually paid to subscribe for the shares.

This clarification is essential: it avoids using an incorrect acquisition price that would overstate the unrealized capital gain by wrongly including in the exit tax base the exercise gain (the difference between the value of the security on the day of exercise and the subscription price set when the warrant was granted), which remains taxable under its own regime (article 163 bis G CGI).

Interaction with the exercise gain

The specific BSPCE regime provides that the exercise gain (the difference between the value of the securities on the day the warrant is exercised and the subscription price set when it was granted) is taxed under a particular regime at the time of the actual disposal of the securities (article 163 bis G CGI). For BSPCE granted up to 31 December 2017, this gain is taxed at 19% (raised to 30% where the beneficiary has worked in the company for less than 3 years at the date of disposal). For BSPCE granted from 1 January 2018, the 12.8% flat rate of article 200 A CGI applies to the exercise gain, the 30% rate remaining applicable where the activity period is less than 3 years.

For exit tax purposes, this exercise gain does not enter the base of unrealized capital gains: the administrative doctrine excludes from the regime the securities subscribed through the exercise of BSPCE for the portion corresponding to the exercise gain, in order to avoid double taxation, that gain remaining taxable under its own regime upon the actual disposal. The unrealized capital gain subject to the exit tax covers only the portion of the gain accruing after exercise — that is, the difference between the market value on the day of the transfer and the value of the securities on the day of exercise (which constitutes the acquisition price used — BOI-RPPM-PVBMI-50-10-20, para. 50).

Worked numerical example

Assumption: a senior executive received in 2020 a BSPCE entitling them to subscribe for 10,000 shares at a unit exercise price of EUR 2. In 2024, they exercise the BSPCE when the value of the securities is EUR 50 per share. In 2026, they transfer their residence to Dubai when the value of the securities is EUR 100 per share.

• Acquisition price (BSPCE): 10,000 × EUR 2 = EUR 20,000
• Value of the securities on the day of exercise: 10,000 × EUR 50 = EUR 500,000
• Exercise gain (outside the exit tax base; taxable under the BSPCE regime upon the actual disposal): 500,000 − 20,000 = EUR 480,000
• Market value on the day of the transfer: 10,000 × EUR 100 = EUR 1,000,000
• Unrealized capital gain subject to the exit tax: 1,000,000 − 500,000 = EUR 500,000

If the executive holds these 10,000 securities in addition to other significant shareholdings, and the thresholds are crossed, the exit tax on this unrealized capital gain will amount, for a 2026 transfer, to 500,000 × 31.4% (12.8% income tax, article 200 A CGI, plus 18.6% social levies, Law No. 2025-1403 of 30 December 2025, art. 12) = EUR 157,000.

Common mistakes

• Using the nominal exercise price (EUR 2) as the acquisition price instead of the exercise-date value (EUR 50) — result: an unrealized capital gain overstated by EUR 480,000.
• Re-including the exercise gain within the exit tax base — the administrative doctrine excludes it precisely to avoid double taxation.
• Forgetting to report BSPCE not yet exercised on the eve of the transfer — they are not within the scope of the exit tax but must still be monitored.
• Confusing BSPCE with standard stock options — the rules are not identical: for stock options, the acquisition price used is the exercise price increased by the option-exercise gain defined in article 80 bis CGI (BOI-RPPM-PVBMI-50-10-20, para. 50).

Practical recommendations

Preparing a move to Dubai for a BSPCE holder calls for a dedicated audit. Three points deserve particular attention: documenting the actual subscription price (invoices, bank certificates, proof of payment), retaining the BSPCE documentation (the initial warrant, the exercise terms, the company's communications), and documenting the value of the securities on the day of exercise, which will constitute both the acquisition price for exit tax purposes and the upper bound of the exercise gain taxable upon disposal.

For holders of BSPCE not yet exercised on the eve of departure, the strategy changes: these rights are not within the scope of the exit tax, but their subsequent exercise (from abroad) carries its own tax consequences, depending on the bilateral treaty and the tax regime of the taxpayer's state of residence on the day of exercise. For a UAE resident, the 1989 France-UAE treaty and the absence of a personal income tax in the UAE create a complex interaction that warrants a dedicated audit.

Frequently asked questions

Is the exercise price of my BSPCE the acquisition price used for the exit tax?

No. The acquisition price to be used is the value of the security on the day the warrant is exercised (BOI-RPPM-PVBMI-50-10-20, para. 50). This avoids combining the taxation of the exercise gain (which remains taxable under the regime of article 163 bis G CGI upon the actual disposal) with the taxation of the unrealized capital gain (exit tax).

Are my unexercised BSPCE within the scope of the exit tax?

No. The exit tax applies only to securities actually held on the eve of the transfer. Unexercised BSPCE are rights, not securities. Their subsequent exercise, from abroad, follows its own tax regime, which depends on the applicable bilateral treaty.

If I exercise my BSPCE shortly before departure, is this considered tax optimization?

Not in itself. Exercising before departure crystallises the exercise gain (taxable under the BSPCE regime upon the actual disposal, article 163 bis G CGI) and brings the securities into the potential taxable base of the exit tax. This may be preferable or disadvantageous depending on the figures: an individual audit is essential. Be mindful of timing: an exercise too close to departure may be analyzed from the standpoint of abuse of law (article L. 64 LPF).