Preamble
Profit-sharing is an optional scheme that consists of paying each employee a bonus linked to the company’s performance or results.
A real tool for employee remuneration and retention, profit-sharing offers a very advantageous tax and social framework for both the employer and the employee.
1. Scope
The implementation of profit-sharing is optional regardless of the number of employees in the company, its nature or its legal form.
The profit-sharing scheme must be of a collective nature, i.e. all employees included in the scope of a profit-sharing agreement must be able to benefit from it. Only a condition of seniority is provided for (3 months maximum).
In companies with fewer than 250 employees that usually employ at least 1 employee (even part-time) in addition to the manager himself, managers may be eligible for profit-sharing.
2. Setting up
2.1 The profit-sharing agreement
The implementation of profit-sharing is done by means of a collective agreement.
The profit-sharing agreement is concluded for a period of 1 to 5 years and can be tacitly renewable.
The deadline for conclusion is the last day of the first half of the calculation period following the date on which it takes effect, under penalty of sanction.
As an exception, companies with fewer than 11 employees, without a union delegate or elected member of the CSE, may set up a profit-sharing scheme by unilateral decision for a period of between 1 and 5 years. This possibility of setting up a profit-sharing scheme by unilateral decision of the employer has been extended to companies with fewer than 50 employees under certain conditions.
2.2 Filing and checking agreements
The profit-sharing agreement must be submitted on the TéléAccords platform within 15 days of the deadline for conclusion.
A system for securing the tax and social security exemptions attached to sums paid in respect of employee savings schemes is exercised on the basis of an audit by the administration.
3. Calculation of profit-sharing
3.1 The profit-sharing bonus
The profit-sharing scheme must be random and must be the result of a free calculation formula, included in the agreement, but linked to the company’s results and/or performance. The calculation formula can be supplemented by a multi-year objective.
The distribution of the profit-sharing bonus can be:
- Uniform, i.e. all employees receive the same amount.
- Proportional to the salary or time of presence of employees.
- Combination of 2 or 3 of these criteria.
Since the profit-sharing law of 29 November 2023, for the distribution proportional to salaries, the administration admits that the company applies a floor and a ceiling to the salary withheld. The salary taken into account is capped at 3 PASS.
3.2 Matching contributions
The matching contribution is an optional payment made by the employer in addition to the profit-sharing scheme when the beneficiary chooses to pay the sum into a savings plan. Its amount is freely determined by the employer within a certain limit. Thus, the matching contribution cannot exceed 3 times the amount that the beneficiary has to pay into the savings plan, nor be more than 3,768 euros in 2025.
3.3 The profit-sharing supplement
The employer may grant a profit-sharing supplement that it freely determines in addition to the payment of the profit-sharing and the matching contribution. It is a tool for motivation and reward for employees.
The profit-sharing supplement benefits from the same tax and social security exemptions as the profit-sharing scheme.
The distribution of the supplement is identical to that of the payment of the profit-sharing bonus, in the absence of a separate agreement.
3.4 The overall ceiling
The total amount of bonuses distributed to beneficiaries, including, where applicable, the profit-sharing supplement, must not exceed 20% of the total gross salaries paid to all employees of the company annually.
The amount received by an employee per year as profit-sharing cannot exceed 75% of the annual social security ceiling, i.e. €35,325 in 2025.
4. The social and tax advantages of profit-sharing
On the company’s side, a number of social and tax advantages exist:
- The sums allocated as profit-sharing are exempt from social security contributions.
- For companies with fewer than 250 employees, the social package has been abolished.
On the employee side, the sums received as part of the profit-sharing scheme are subject to the CSG and CRDS but are exempt from employee contributions and income tax.
NB: if the employee has opted for the immediate receipt of the profit-sharing scheme, these sums will be subject to income tax.
Example of a cost comparison of the classic bonus payment and the profit-sharing bonus:
Classic bonus: 100 euros: -25% of social contributions and + 40-45% of employer contributions = total received by the employee 75 euros – income tax.
Profit-sharing bonus : €100: no employer contributions and social security contribution = total paid by the employer €100 and total received by the employee €91 + x% of investment interest.
5. Project profit-sharing
Project profit-sharing can be set up in companies or groups that have a profit-sharing agreement and that have characterized and coordinated activities. This is an additional profit-sharing linked to a project common to several companies in the group or to an internal project of the company.
Thus, it is a question of interested employees, not in the results or performance of the company, but in those of a project in which several companies participate. Project profit-sharing can also be set up in a single company (if, for example, the other companies involved in the project do not wish to set up such an agreement).
The project profit-sharing agreement may be concluded to provide that all or some of the employees benefit from a profit-sharing scheme related to this project.
The implementation of project profit-sharing presupposes that the companies involved in the project are themselves already covered by a traditional profit-sharing agreement.
The sums paid under the project profit-sharing scheme follow the same social regime as those paid under a traditional profit-sharing scheme.
The cumulative amount of the profit-sharing paid under the basic agreement and under the project profit-sharing must be less than or equal to 20% of the total gross remuneration paid. On the other hand, the amount of premiums paid for the same financial year must be less than or equal to 75% of the PASS.
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This fact sheet contains summary information. Please contact us for advice tailored to your situation. We cannot be held responsible for misinterpretation.
Contact
Claire APPELGHEM
Hear of HR/Employment Law
Claire.appelghem@groupe-aplitec.com
01 40 40 38 38