BSPCE: The gain resulting from the contribution of shares subscribed in exercise of BSPCE is ultimately eligible for tax deferment

In a ruling dated 25 May 2023 published in BOI-RES-RSA-000127 (see our news of 15/06/2023), the tax authorities considered that the gain resulting from the contribution of securities received in exercise of BSPCE (business creator share subscription warrants) could not benefit from the tax deferment mechanism provided for in Article 150-0 B of the French General Tax Code (CGI), which makes it possible to defer the taxation of the gain to the subsequent sale of the securities received in exchange for the contribution, and should therefore be taxed in respect of the year of the contribution, in accordance with the provisions of Article 163 bis G of the CGI, subject to meeting the conditions of application thereof.
 
The Council of State, in a judgment handed down on 5 February 2024 (petition n°476309) in connection with an appeal for an abuse of power, invalidated this position by cancelling the administrative comments published in the aforementioned BOI as well as the comments associated with it. 
 
The Council of State considers that "it follows from the provisions of Article 163 bis G of the French General Tax Code, informed by the preparatory work on the 1998 Finance Act of 30 December 1997 from which it originated and the 2000 Finance Act of 30 December 1999 reforming the regime for capital gains on the sale of securities, that the legislator intended to subject the net gain realised on the sale of securitiessubscribed in exercise of BSPCE to the ordinary law regime for capital gains on the sale of securities provided for in Articles 150-0 A et seq. of the same code, subject only to the special rate rules that it enacts.
 
Thus, in particular, in the event of a contribution to a company not controlled by the contributor of securities subscribed in exercise of such warrants, the gain resulting from this contribution is not immediately taxable but benefits from the tax deferment provided for by the provisions of Article 150-0 B of the French General Tax Code".