Management packages carried interest France fail in the same place family term sheets fail: someone calls a bonus “capital” because it is paid in shares, or calls a ratchet “carried interest” because a private-equity slide used the word. French tax law still asks a prior question. Is the gain the fruit of an investment that took real downside, or is it the fruit of employment or a mandate? Wage and capital are not a branding choice. They are different statutes, different social-security paths, and different audit files. This article does not invent a 2026 rate for packages or for carried interest. It describes the design tests the BOFiP comments and the CGI already use.
This note is general information for education. It is not an opinion on a specific term sheet, a mandate, or personalised tax advice. Qualification depends on the instruments, the funding of the subscription, the leaver provisions, and counsel who can read the grant documents against the CGI and the doctrine in force.
Vellum Finance is a fee-only multi-family office. Entrepreneurs, family-backed management teams, and fund principals meet the same fork. Either the package is a labelled statutory tool (BSPCE, free shares, a qualifying carried-interest unit), or it is a free-form sweet-equity story that will be read through wage, capital-gains, and abuse-of-law lenses at once.
Management packages carried interest France: wage versus capital
Employment income is taxed as salaries (traitements et salaires), with social-security contributions on the employer and the employee. Capital gains on shares, when they truly are capital gains, follow the securities regime: PFU or barème, as the administration publishes for individuals. A third path exists for qualifying carried interest in designated funds, under conditions in the CGI (notably the 163 quinquies C / 150-0 A architecture). Mixing the three in one spreadsheet column is how a package becomes a reassessment.
The economic intuition is allowed. A manager who writes a cheque, ranks behind the investor, and can lose that cheque if the company fails, looks like a shareholder. A manager who receives units for a euro, with a put at a guaranteed multiple, a bonus if a hurdle is hit, and a repurchase at par if the manager is dismissed, looks like deferred pay. French tax law has spent a decade putting that intuition into case law and into comments. The label on the SPA does not complete the analysis.
Official comments sit on BOFiP. The statutory carried-interest path is in the CGI on Légifrance, including articles 150-0 A and 163 quinquies C. AMF product rules for FCPR, FPCI, and neighbouring vehicles sit with the fund’s legal form, not with the family’s term sheet. Read those texts. Do not read a 2026 blog that prints a fake combined rate for “management packages this year.”
Sweet equity is not a slogan
Sweet equity, ratchets, preferred shares that flip, and waterfalls inside a family SAS are common. Some of them are ordinary share classes. Some of them are pay. The facts that tend to pull toward wages, in the case law families already know conceptually, are: no genuine subscription price relative to value; financing of the subscription by the company or by the controller with no recourse; downside protection (puts, guaranteed IRR, indemnity if the project fails); a compulsory leaver repurchase that looks like a bonus calculation; and a grant that is only explicable by the employment or the mandate.
The facts that tend to pull toward capital are the opposite: a subscription at a value that can be defended, funded with the manager’s own money or with a loan the manager actually bears; ranking that can go to zero; no indemnity if the plan misses; and a holding period that is a shareholder holding period, not a vesting schedule dressed as a lock. None of those sentences is a safe harbour this article invents. They are the questions a tax memo has to answer. A family office that cannot answer them should not close the round as if the tax file were closed.
Abuse of law, conceptually
French abuse of law (abus de droit), in the versions the tax procedure code still uses, catches instruments that either have no substance other than avoiding tax, or that are given a legal qualification that disguises their true character. Management-package litigation in the Conseil d’État and in the lower courts has, conceptually, been about that second branch: instruments presented as share gains that, in substance, remunerated work. The administration does not need a cartoon. It needs the term sheet, the leaver grid, the financing of the subscription, and the comparison with what an outside investor would have subscribed.
This article does not recap individual judgments, and it does not assign a 2026 percentage to “the risk.” The practical point for families is dull. If the only person who would have signed that ratchet is the CEO, the file already looks like pay. If a third-party minority investor would have signed the same share class at the same price without a job, the file looks more like capital. Counsel applies the current doctrine to the documents. A slide that says “market standard package” is not doctrine.
Statutory carried interest: conditions, not a nickname
Carried interest in the French statutory sense is not any promote. It is a gain on specific units or shares issued by designated venture and private-equity vehicles (the FCPR / FPCI family and their statutory neighbours), under conditions the CGI lists. The usual published conditions, which families should verify in the article in force rather than in a pitchbook, include: an eligible fund vehicle; a personal investment by the manager of at least the statutory fraction of the fund (the classic presentation is 1% of subscriptions, with a degressive scale for larger funds as the text provides); a minimum holding period of five years from the relevant starting point; and an absence of features that turn the carry into a disguised salary (including financing of the investment by the fund itself in ways the comments reject).
Miss one condition and the favourable capital-gains path does not apply. The gain can fall back into wage treatment, or into ordinary securities treatment without the carried-interest characterisation, depending on the facts. That is not a 2026 reform this article invents. It is why term sheets that copy a US “20% carry” onto a French SAS, without an eligible fund and without a 1% cheque, are using an English word as a costume. A family that backs a fund as LP, and also employs the GP team through a French management company, must separate the LP return, the management fee (wage or corporate income of the manCo), and the qualifying carry. Three lines. One waterfall slide is not three lines.
Adjacent to that separation is how families actually access private funds. Tickets, feeders, and secondaries are a different operational file; see Vellum’s 2026 note on private equity for families: access, fees, and secondaries. Carry tax is not access. Access is not carry tax.
Labelled tools: BSPCE, free shares, options
France already wrote statutory tools for start-up and company packages: BSPCE, attributions gratuites d’actions, and stock options, each with their own grant conditions, holding periods, and exit tax bases as the CGI and the BOFiP comments publish them. Using a labelled tool does not make the gain “free.” It puts the gain in a defined box, with employer reporting and, often, a social levy specific to that box. Using an unlabelled ratchet because the labelled tool’s headcount or SME conditions were missed is how the abuse-of-law file starts. The design choice is: change the facts so a labelled tool fits, or accept wage treatment, or redesign the investment so it is a genuine share subscription. Pretending the unlabelled instrument is BSPCE in spirit is not a fourth choice.
Holdings add a layer. A package issued by a holding that only owns the operating company can still be capital if the subscription is real. It can still be wages if it is not. Interest on a loan used to buy the package sits in yet another statute; family HoldCos already live under ATAD interest limitation in 2026. Deductibility of the manCo’s interest is not characterisation of the manager’s gain. Two files.
What a 2026 term sheet should not invent
It should not invent a combined “package rate” for the year. PFU’s income-tax component, social levies, salary marginal rates, and any specific contribution on free shares or BSPCE are published on different official pages and can move in different finance bills. This article will not print a fake 2026 blended number. The term sheet should print the instrument, the subscription price, the funding source, the leaver grid, the holding period, and which CGI article the drafter claims. If the drafter cannot name the article, the package is not designed. It is hoped.
US or UK equity-plan templates imported into a French employment contract are a frequent source of the hope. Vesting, 409A, and EMI are not CGI categories. A French employee granted foreign-parent stock can face wage withholding in France on the benefit, plus a later capital-gains question, plus a reporting annex. The foreign plan’s tax memo does not bind Bercy. Translate the facts into French boxes before anyone signs.
The Vellum Finance services model is fee-only coordination among employment counsel, tax counsel, and the family office: one inventory of who is an employee, who is an investor, which vehicle issues the paper, and which official page the exit will use. That inventory is dull. The reassessment that follows an undull term sheet is not.
Conclusion
Management packages carried interest France are a wage-versus-capital design problem, not a 2026 rate problem. Sweet equity without downside is read conceptually through abuse of law as pay. Statutory carried interest exists for designated funds when the CGI’s investment, vehicle, and five-year conditions hold. Labelled tools exist for a reason. Read BOFiP and Légifrance, name the article on the term sheet, and do not import a nickname from a foreign waterfall. Families who keep three lines (salary, genuine share gain, qualifying carry) will still need counsel. Families who keep one line will meet the auditor with a costume.
Discretion. Stability. Prosperity.
Team Vellum
A team of passionate professionals who combine their expertise to bring knowledge through Vellum Finance & Patrimoine blog articles. Each member writes about their own field of expertise, cross referencing with our colleagues own fields to ensure the highest quality of information possible in all our content.
