The PPV “Prime de Partage de la Valeur” (Value Sharing Bonus) and the PER “Plan Epargne Retraite” (Retirement Savings Plan) are two employee savings schemes designed to link employees to the performance and success of their company.
The PPV allows employers to pay a bonus exempt from income tax and social security contributions, within certain limits, thus offering a more attractive net gain for employees.
The PER, on the other hand, encourages the accumulation of individual or group retirement savings, while also benefiting from a tax advantage on voluntary contributions.
These mechanisms promote employee motivation, loyalty, and engagement, while optimizing the company’s compensation policy.
I. VALUE SHARING PREMIUM (PRIME DE PARTAGE DE LA VALEUR – PPV):
1- PPV definition:
This is a system which allows the employer to pay a bonus to the employee. It was first called the “Macron bonus” and had an exceptional character. It was made permanent on August 16th 2022 by Law No. 2022-1158 relating to emergency measures for the protection of purchasing power.
Any employer can decide to pay a PPV, if he wishes, and the payment of a bonus in a given year does not require him to put one back in place the following year. However, an exception has been in effect since January 1st 2025, which we will examine later, and which concerns companies with 11 to 49 employees.
The amount of the premium, which can be modulated according to certain criteria, is freely set by the agreement or unilateral decision which puts it in place.
Precision: Under any circumstances, the PPV cannot, replace the employee’s remuneration, nor remuneration increases or bonuses provided for by a salary agreement, by the employment contract or by the practices in force in the company.
2- Setting up the PPV:
There are two implementation methods:
- Either by company or group agreement concluded according to the terms of a profit-sharing agreement (accord d’intéressement);
- Either by unilateral decision, after consultation with the CSE if one exists.
However, in companies with fewer than 11 employees implementing the PPV by unilateral decision, in the absence of a CSE, employers must inform, by any means, their employees of their decision to pay a bonus.
Paying a profit-sharing bonus (PPV) is not mandatory. However, since January 1st 2025, companies with 11 to 49 employees must implement a profit-sharing scheme, which can be a PPV, a profit-sharing plan, an employee shareholding plan, or a matching contribution to an employee savings plan.
This applies to companies that are not required to implement an employee shareholding scheme and that have achieved a net taxable profit of at least 1% of their turnover for three consecutive fiscal years.
The agreement or unilateral decision of the employer may have a duration of one year or more than one year or for several financial years, but it will generally be planned for the duration of one financial year.
The PPV concerns employees linked to the company by an employment contract on the date of payment of the bonus, or on the date of filing of the agreement with the DDETS or of the signing of the unilateral decision implementing the prime. The agreement or unilateral decision must specify the date of assessment of the presence of employees which is retained.
It is possible to reserve the payment of the PPV to employees whose remuneration is below a certain ceiling, which must then be set in the agreement or unilateral decision.
Company managers holding an employment contract benefit from the PPV under the same conditions as the company’s employees with the same exemptions. On the other hand, when a bonus is paid to a manager who does not have an employment contract, this does not give rise to exemptions.
3- Premium amount:
The decision which establishes the bonus provides for the amount which can be modulated according to a limited number of criteria (provided for by law) which are as follows:
- Remuneration;
- Classification level;
- Seniority in the company;
- Duration of effective presence during the past year;
- Working time stipulated in the contract in the case of part-time work.
Modulation can be established on the basis of a single criterion, or a combination of all or part of the authorized criteria.
Clarification: The criteria of remuneration, duration of effective presence and duration of work are assessed over the 12 rolling months preceding payment of the bonus. The criteria of classification level and seniority are assessed at the time of payment of the bonus.
4- Exemption limit:
The maximum amount of the premium likely to be exempt of social security contributions is €3,000 per year and per beneficiary.
As an exception, the exemption limit is set at €6,000 per year and per beneficiary for the following companies:
- Companies which implement a profit-sharing scheme on the bonus payment date;
- Companies not subject to the obligation to implement legal participation in results (essentially, companies with fewer than 50 employees) which voluntarily apply a participation system on the date of payment of the bonus;
- Associations and foundations recognized as being of public utility or general interest;
- ESAT for their disabled workers under work support and assistance contracts.
On the other hand, the bonus is subject to income tax as well as the CSG/CRDS and the social package of 20% on the fraction exempt from contributions (only in companies with more than 250 employees).
In addition, since the adoption of the PPV improvement bill (December 1st 2023), it is possible to place the PPV on an employee savings plan or company retirement savings plan, and thus exempt it from income tax.
Note 1 – reinforced exemption: In addition to the basic social exemption (see above), the premium is also exempt from income tax, CSG/CRDS (and therefore from the social package), when it is paid to employees who received remuneration less than 3 times the annual SMIC during the 12 months preceding payment of the bonus.
This reinforced exemption regime is applicable from 2024 to 2026 for companies with fewer than 50 employees.
Note 2 – Since January 1st 2025, the PPV has been included in the calculation basis for the general reduction of employer contributions.
5- Payment of the PPV:
The payment of the premium can be made in one or more installments up to once per quarter during the calendar year. The employer can therefore pay the bonus in 4 maximum splits. When the premium is paid in several installments, it is the same single premium. Therefore, the criteria for awarding the bonus cannot be defined differently for each deadline.
Since the adoption of the PPV improvement bill (November 22nd 2023), the employer can pay two PPV for the same calendar year, with always the possibility of splitting the payment of each bonus, in the limit of 4 fractions (one per quarter). When two bonuses are paid during the same calendar year, their cumulative amounts will be exempt up to the same overall limit of €3,000 or €6,000 per year depending on the case.
The bonus must appear on the pay slip for the month(s) of payment, “if possible” on a specific line.
6- Company Value Sharing Plan (PPVE):
This is an optional scheme that allows employees to receive a bonus when the company’s value increases during the three years following the plan’s implementation.
All company employees with at least 12 months of service are eligible (unless more favorable provisions are stipulated in a collective agreement).
The amount of the company valuation sharing bonus is determined by taking into account a reference amount set for each employee (which varies according to their salary, job classification, and the working hours stipulated in their employment contract) and the rate of change in the company’s value (calculated between the company’s value on the date specified in the PPVE implementation agreement and the company’s value three years later).
The bonuses paid in 2026, 2027 and 2028 under these plans are exempt from social security contributions and the employer’s social levy. They are subject to the CSG-CRDS tax and the specific social contribution payable by the employer.
II. RETIREMENT SAVINGS PLAN (PER):
1- PER definition:
This is a long-term savings product which allows to save during working life in order to obtain, from retirement age, a capital or annuity paid over a fixed period of time by contract or until death.
The PER replaces old retirement savings products such as the PERP or Madelin. Its main objective is to offer a flexible and attractive solution to prepare for retirement while benefiting from tax advantages. It aims to encourage long-term savings by offering opportunities adapted to different professional and personal situations.
2- Subscription to the PER:
- PER categories:
- An individual PER (PERIN) subscribed individually and funded by voluntary payments from the holder, which succeeds the old PERP and “Madelin” contracts;
- Corporate PER who are:
- Collective PER: it can include employer contributions in the form of matching contributions, which makes it an attractive tool for employees.
- Mandatory PER: intended for certain employees, this type of plan provides for payments imposed by the company. It is often reserved for executives or specific categories of employees.
- Set up: The individual PER may result in the opening of a securities account with a company which is an approved service provider to carry out the investment advisory activity (credit institution, investment firm, financial investment advisor). It can also give rise to membership in a group insurance contract. This is an association subscribing to group life insurance contracts (insurance companies, mutual societies and provident institutions) or an additional professional capitalized retirement fund.
The corporate PER must be set up in a company. They can be created at the initiative of the company’s managers or by an agreement with employee representatives (or an agreement by the majority of employees for the mandatory PER).
3- Functioning:
- Payments: In principle and unless you request otherwise, the management of sums
paid into the PER is done according to the principle of payment management.
- Additional payments: The individual PER is funded by voluntary payments but it is possible to transfer a company PER to an individual PER, it is also possible to transfer:
- Amounts from profit-sharing, participation and employer contributions;
- Amounts from a time savings account (CET) and allocated to the company PER;
- Amounts from PPE or PPVE;
- Mandatory payments made to a mandatory company PER.
There is no ceiling for voluntary cash payments to the individual PER, but the amount for which one can benefit from a tax advantage is capped (see below).
Payments on the corporate PER operate substantially according to the same rules but payments by the employer are added.
The collective company PER can be funded by additional payments from the company, called contributions. They cannot exceed 3 times the amount paid by the employee nor be greater than €7,536 in 2025 year.
4- The end of the contract:
- Early release: The amounts paid into the PER are blocked until retirement, however it is possible to recover the capital savings early in the following cases:
- Disability (of the insured, children, husband or wife or PACS partner);
- Death of his or her husband or wife or PACS partner;
- Expiration of rights to unemployment benefits;
- Over-indebtedness;
- Cessation of self-employed activity following a judicial liquidation judgment;
- Acquisition of the main residence.
- Holder’s death: The sums saved will be transferred to his or her heirs or beneficiaries.
- At the time of retirement: For individual and collective company PER, when the employee has reached retirement age and has not previously opted for the life annuity, he can request that the savings accumulated in the PER be paid either in capital, or in an annuity, or partially in capital and annuity. the capital can be paid in several installments.
Concerning the mandatory company PER, the rights arising from compulsory payments are necessarily liquidated in the form of a life annuity. The rights arising from other payments (voluntary payments, participation, profit-sharing, CET days, etc.) can be liquidated as an annuity, in capital, partly in annuity and in capital.
5- Taxation:
- Individual PER: Amounts paid into an individual PER during a year are deductible from taxable income for that year, within the limit of an overall ceiling set for each member of the tax household. This ceiling is different depending on whether you are an employee or a self-employed person (contact us if you would like to know the various deduction limits).
The tax regime for annuity or capital received is different depending on whether or not the person concerned has deducted the voluntary payments from their taxable income (contact us if you would like to know the various tax rates on annuity or capital).
- Collective company PER and mandatory company PER:
- Taxation on payments: Voluntary and compulsory payments made into a company PER during a year are deductible from taxable income for that year. This deduction must not exceed an overall ceiling amount set for each member of the tax household. This ceiling is equal to the greater of the following 2 amounts:
- Or 10% of professional income net of social security contributions and professional expenses, with a maximum deduction that is reassessed each year;
- Or a certain amount reassessed each year.
- Tax regime for annuity or capital: Annuities or capital are taxed according to various flat rates or according to the income tax rate, or even, in certain cases, exempt depending on the various payments that have been made:
- Voluntary tax-deductible payments;
- Voluntary payments not tax deducted;
- Payments from company employee savings;
- Mandatory payments.
You can contact us to find out the tax regime applicable to these types of payments.
In conclusion, the PPV and the PER (Retirement Savings Plan) are two complementary tools for strengthening long-term financial planning. The PPV offers an immediate solution to purchasing power challenges, while the PER is a true wealth management strategy tool.
However, its operation and tax advantages are subject to specific rules for taxpayers residing outside of France. Please feel free to contact us if this applies to you.
