Incentive

Verified 01 January 2026 - Public Service / Directorate of Legal and Administrative Information (Prime Minister)

Incentives are a device optional Employee savings plans which aim to associate employees with the performance of their company. We present you the applicable rules.

Incentives are an optional employee savings scheme. It allows for a premium to be paid to employees based on performance of their company.

Incentives are intended to encourage employees to get involved in the realization of the objectives to be achieved by the company.

FYI  

In companies or groups that already have an incentive agreement, an agreement may set up a project incentive for the benefit of all or part of the employees, around a internal project or a joint project with other companies.

Incentives are set up by means ofagreement between the company and the employees or their representatives or by Unilateral Employer Decision (UEL).

The agreement or unilateral decision lay down, in particular, the method of calculation of the profit-sharing scheme and the rules for allocating benefits among employees.

The document establishing the profit-sharing scheme shall have effect for the period specified therein.

Employees and salaried managers

The introduction of incentives is not mandatory.

But if a company decides to set it up, it concerns all employees, including company managers if they have signed an employment contract.

Employees may be required to have a period of service in the company (maximum 3 months).

Self-employed managers and their spouses

In companies with a number of employees included between 1 and 249, the incentive agreement may also include the following self-employed directors:

  • Head of a company that is not a legal person
  • Spouse or Civil partnership partner of the head of company who is not a legal person, if he has the status of collaborating spouse or associate spouse
  • Chairman, Chief Executive Officer, manager or member of the Executive Board of a company that is a legal person.

Warning  

A company whose staff is confined to a single employee who is also chairman or chief executive officer or manager or member of the management board may not sign an incentive agreement.

Any company may decide to set up an incentive scheme, regardless of its legal form or sound area of activity.

Incentive is always optional regardless of the size of the company.

Two experiments in progress since 1er december 2023, and for a period of 5 years, impose a value-sharing obligation on certain companies which may take the form of profit-sharing:

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Companies from 11 to less than 50 employees

Companies having at least 11 employees and less than 50 employees, which performed for 3 exercises consecutive net tax profit at least equal to 1% of turnover, shall henceforth, in respect of the following financial year:

This obligation applies to financial periods beginning on or after 1er January 2025. Individual undertakings are not subject to this obligation.

The financial years 2022, 2023 and 2024 are taken into account for the assessment of compliance with the condition concerning the realization of the net tax profit.

Employers of the social and solidarity economy with at least 11 employees

Employers of the social and solidarity economy (EESS) ofat least 11 employees and with no maximum headcount limit, which do not declare a net tax profit and which have realized for 3 exercises a surplus result at least equal to 1% of their revenue, shall henceforth, for the following financial year:

Where permitted by a branch agreement, this obligation shall apply to financial years beginning on or after 1er January 2025.

The financial years 2022, 2023 and 2024 are taken into account for the assessment of compliance with the condition concerning the achievement of the surplus result.

In principle, the introduction of incentives requires the conclusion of a collective agreement after negotiation. As an exception, the profit-sharing may result from a unilateral decision by the employer.

Collective bargaining

Each company is free to define its own profit-sharing agreement, provided that it concludes a collective agreement with the employees' representatives containing the mandatory clauses.

But the company can also use an incentive agreement of its professional branch or a standard incentive agreement.

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Company Agreement

The agreement is concluded for a period of between 1 and 5 years.

The incentive agreement may be concluded in one of the following ways:

  • Collective labor agreement or agreement
  • Agreement between the employer and representatives of representative trade union organizations
  • Agreement within the CSE
  • Draft agreement proposed by the employer and adopted by referendum by a majority of 2/3 of the employees. This referendum must be organized at the joint request of the employer and the CSE: titleContent or a trade union organization present in the company.

The company can use the online route offered by Urssaf:

My turnkey incentive

Branch Agreement

Any company may make application to an incentive scheme concluded at industry level, provided that the industry agreement has been approved by the administrative authority.

In order to implement the approved branch agreement, the company must conclude its own agreement in accordance with one of the collective bargaining procedures. This agreement incorporates the provisions of the branch agreement.

Branch agreements are available online:

Incentive agreement of the professional branch

In companies with fewer than 50 employees, as an exception and if the branch agreement so provides, the employer may join on its own initiative (but after informing the CSE: titleContent and employees) to the incentive scheme using a unilateral accession document. In this case, the branch device provides a standard agreement indicating different choices left to the employer with options whose content is predefined.

The employer will have to file the unilateral document containing the chosen choices on the teleprocedure platform.

Unilateral decision of the employer (less than 50 employees)

As an exception, the employer of a company with fewer than 50 employees may set up an incentive scheme, on its own initiative, by a unilateral decision, only if the following two conditions are met:

  • There is no approved industry agreement that would allow adherence to a standard incentive agreement
  • The company cannot enter into its own collective agreement because either it has no union representative, or CSE: titleContent (the employer will have to provide a record of a lack of candidacies in professional elections), or collective bargaining has failed with the unions or with the CSE (the employer will have to prepare a record of disagreement).

If the employer does not have an interlocutor to negotiate, he informs the employees by any means of his incentive plan.

If the unilateral decision follows the failure of the negotiations, he shall submit his proposed profit-sharing scheme to the ESC for its opinion, at least 15 days before it is submitted to the teleprocedure platform.

Incentives set up by unilateral decision may last between 1 and 5 years. It must be submitted on the teleprocedure platform.

Deadline for conclusion

The agreement must be concluded before the first day of the 7th month after the effective date.

Otherwise, the incentive payments will be treated as salary and no exemption will be applicable on these payments.

Example :

An agreement supposed to take effect on 1er January with a calculation period on the year must be concluded before the 1er July.

The agreement concluded or submitted after the deadline shall be effective. But social and tax exemptions will only be granted for calculation periods after the deposit.

The incentive agreement must include the following elements:

  • Introduction setting out the reasons for the agreement, the choice of method of calculating the incentive and the justification for the allocation criteria
  • Staff information and verification system for the implementation of the agreement
  • Period for which the agreement is concluded (possible duration between 1 and 5 years)
  • Establishments concerned
  • Selected forms of incentive
  • Methods of calculation of the incentive and criteria for allocation
  • Payment Dates
  • Conditions under which the Social and Economic Committee (ESC) or a specialist committee has the necessary information on the conditions of application of the terms of the contract
  • Procedures for settling any disputes in the application of the Agreement or in its review.

FYI  

The company can design its profit-sharing agreement (or the system put in place by unilateral decision) thanks to a fully dematerialized procedure. By using only standard formulas, this procedure makes it possible to develop a pre-validated agreement, in accordance with the legal provisions.

Social and tax exemptions are then guaranteed for the duration of the scheme, as soon as it is submitted, provided that it has been entirely written on the Urssaf website:

My turnkey incentive

Mandatory deposit

The negotiated agreement (or unilateral decision) must be deposited on the platform of the Ministry of Labor:

TeleAgreements - company Collective Agreement Filing Service

Control

Following the deposit of the agreement and the documents on the platform “TeleAccords”, the competent service of the Ministry of Labor issues the company with a receipt and transmits the agreement and its annexes to the Urssaf.

The Urssaf has a period of 3 months to 5 months to request the modification of the provisions of the agreement that are contrary to the law.

The Urssaf can request additional documents from the company to carry out its control. In this case, the period of 3 months runs from the date of receipt of these documents.

The course of action varies depending on whether Urssaf has submitted an amendment request or not:

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Request for amendment made

If the Urssaf requests the modification of certain clauses within the initial period of 3 months, the company must make the modifications before being able to benefit from the social and fiscal advantages of the agreement for the current fiscal year.

Within an additional 2 months, the Urssaf may make requests for changes that will have to be applied for subsequent years.

No change request

If the Urssaf does not request any changes during the 3-month period, the company can benefit from the social and tax benefits of the agreement for current or previous fiscal years.

If the Urssaf does not request any modification of the agreement after the 3 months and until the end of the 5eme Monthly, the agreement is validated and the social and tax benefits are also secured for subsequent accounting years.

Upon arrival in the company, the employee must receive a employee savings account which presents the devices put in place in the company.

In addition, the incentive agreement must provide for a system of informing employees and verifying the implementation of the agreement.

With each payment related to the incentive, the employee receives a individual sheet, separate from the pay slip. This sheet shall specify in particular the amount of the rights granted. In the annex, the sheet includes a note to recall the calculation and distribution rules provided for in the incentive agreement. Unless the employee objects, this form can be submitted electronically.

When the employee leaves the company, he receives a summary report of all sums and securities saved or transferred. This document shall specify whether the custody account keeping are covered by the company or by a levy on assets.

FYI  

If the employee is a beneficiary of the incentive agreement (or can benefit from the incentive agreement after leaving the company), he must continue to be informed of his rights.

Incentives are based on the achievement of objectives or performance. These findings are examined either at the overall level of the company or within one of its establishments or work unit.

The formula for calculating the profit-sharing premium may be different for different establishments or work units. The result of the calculation formula is not known in advance, it is random.

The formula can take into account, for example, the increase in operating income, the improvement of delivery times, the implementation of new procedures, the completion of a project.

Incentive premium

The incentive agreement indicates the calculation formula and the allocation criteria between employees.

The distribution can be 

  • uniform, i.e. all employees receive the same amount,
  • proportional to the salary or attendance time of each employee,
  • or combine several of these criteria.

The amount of the premium is capped.

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For an employee

The employee profit-sharing premium may not exceed 75% the annual social security ceiling, or €36,045 for 2026.

For a company executive and his collaborating or associate spouse

Officers and spouses of salaried officers

The profit-sharing premium for company managers and their spouses or partners in salaried Civil partnerships may not exceed 75% the annual social security ceiling, or €36,045 for 2026.

Directors and spouses of self-employed directors

The profit-sharing premium for company managers and their spouses or partners of self-employed Civil partnerships may not exceed the highest annual salary paid in the company during the previous year.

Spouses of unpaid executives

The incentive agreement may provide that the unpaid spouses and Civil partnership partners of directors who have the status of collaborating or associate spouse shall also receive the incentive allowance.

In this case, the amount of the premium may not exceed one quarter of the annual social security ceiling, i.e. €12,015 for 2026.

Extra incentive

If the incentive premium calculated under the company agreement is less than the annual cap, the company may pay you an additional incentive.

The amount of this supplement is free, but the sum of this supplement and the incentive premium must not exceed the individual annual ceiling.

The incentive payment may be paid in advance or at the time when the company informs the employee of its amount.

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Advance payment (advance on profit-sharing)

If the incentive agreement so provides, the company may make quarterly advances on the annual incentive payment, after obtaining the employee's agreement.

The employer must inform the employee of the possibility of receiving an advance on profit-sharing and of the time available to him to give his consent.

If the incentive agreement does not provide for any time limit, the employee must give his response within 15 days of the date of receipt of the letter informing him of the possibility of receiving an advance.

In the event that the employee does not agree to receive an advance on his incentive pay, the company must not pay him in advance.

If the employee agrees to receive an advance on his incentive pay, the company must issue him a individual sheet, separate from the pay slip, which shall state the following:

  • Amount of entitlements awarded as an advance on the incentive premium
  • Deductions made for the Generalized Social Contribution (CSG) and the Social Debt Repayment Contribution (CRDS)
  • Information on the obligation to repay the overpayment to the employer, in the event that the annual incentive payment is less than the amount of the advances received, and the terms of the repayment
  • Information on the inability to request the early release of the overpayment, when it was paid into an employee savings plan
  • Unavailability periods for employee savings plans and exceptional early release cases authorized by law
  • Information on whether an overpayment on an employee savings plan is considered a voluntary payment that is not tax deductible
  • Procedure for default payment of advances on incentive payments to the company savings plan
  • Agreement of the employee to receive the advance.

If the total of the advances paid exceeds the amount of the annual profit-sharing premium, the company is entitled to recover the overpayment by means of a payroll deduction.

Payment when the company informs the employee

The employee can choose to collect the amount of the bonus or to place it.

Immediate payment

If the employee wishes to obtain immediate payment of the premium (in whole or in part), he must request it within 15 days from the date on which he is informed of the amount awarded.

The sums are paid no later than the last day of the 5the month after the close of the exercise. For example, if the fiscal year ends on December 31, 2024, the payment must be made by May 31, 2025.

After this period, interest on late payment is paid by the employer.

Placement

The incentive bonus can be placed in an employee savings plan or in a time savings account:

Investment in a savings plan

If the employee does not request immediate payment of the bonus, it will automatically be placed on a PEE: titleContent if it exists, or on a PEG: titleContent or a IEP: titleContent.

The employee may also choose to place all or part of the sums received on the Perco or the Collective company RIP if it exists.

The sums are placed no later than the last day of the 5the month after the close of the exercise. Thus, for example, at May 31, 2024 if the fiscal year is ended at December 31, 2023.

After this period, interest on late payment is paid by the employer.

The sums are then unavailable until the end of the blocking period for the plan concerned (5 years for the PEE: titleContent, until retirement for the Perco: titleContent or the Pereco: titleContent) except in the case of early release applicable to the plan.

Investing in a time savings account

The employee may choose to place all or part of the amounts received on a time savings account.

The amounts that can be paid to employees as part of the incentive scheme vary according to the criteria used.

But there are 2 cumulative limits not to be exceeded:

  • The total of the incentives paid to all the employees receiving them may not exceed 20% of the total gross wages paid.
  • The amount received by an employee per year in respect of the profit-sharing may not exceed €36,045.

Benefits

Social contributions

All companies are exempt from social security contributions on the amounts paid to employees as part of the incentive scheme.

Social Package

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Company with less than 250 employees

A company with less than 250 employees is exempt from social package on the sums paid as part of the incentive scheme.

Company of 250 or more employees

A company with 250 or more employees must pay a social package 20% of the sums paid as part of the incentive scheme.

However, a reduced rate of 16% applies subject to conditions payments to a Perco: titleContent or a Father: titleContent.

Contribution to vocational training and apprenticeship tax

The sums earmarked for the payment of incentives are exempt from contributions to vocational training and apprenticeship tax.

Tax benefits

Companies that set up the incentive benefit benefit from the following tax advantages:

  • Deduction of taxable profit from amounts paid in the context of the incentive scheme
  • If the company is a Scop: titleContent, and if the sums are paid under an employee savings plan, the right to set aside a provision for investment. This provision must not exceed 50% of the sums paid by the company to supplement the incentive, when it is below the legal limit.

Amounts received as part of the incentive are exempt from employee contributions, except the CSG and CRDS.

Amounts derived from the profit-sharing scheme are subject to income tax if they are collected immediately.

If the employee places these sums on a PEE: titleContent, one IEP: titleContent or a company retirement savings plan Pereco: titleContent or Pero: titleContent within 15 days of their payment, they are exempt of income tax, up to €36,045 in 2026 (€35,325 in 2025).