Incentive plan

  1. Company savings
  2. Top up your plans
  3. Incentive plan
PEE
PERCO
PERECO
PEROB
PERU

The incentive plan is a legal and optional mechanism based on targets, with bonuses granted to employees when these targets are reached. By paying out incentive bonuses, your employer involves you financially in your company’s results and/or performances on the basis of common goals. This bonus is not a guaranteed salary supplement. 
How does it work? What are the advantages of paying this bonus into an employee and retirement savings plan?
Explanations.

Key information

Get a boost from your company

In addition to granting you the bonus, your company will pay your account administration fees1 if you save it and may, depending on the agreements signed by your company, also combine your bonus with an employer contribution.

Take advantage of a favourable tax regime by saving it

Any incentive bonus saved is exempt from income tax and subject only to CSG (social security contributions) and CRDS (social debt repayment contributions)2.

Benefit from a flexible bonus

You can opt to receive payment of your bonus and/or save it, in which case it will be inaccessible for a period of time depending on the type of scheme involved. And the amounts saved may be released early under specific circumstances permitted by law.

How does it work?

The incentive plan is an optional mechanism set up through an agreement between the company and its employees or employee representatives.  It must be arbitrary and non-guaranteed in nature and based on a calculation formula that must appear in the incentive plan agreement. This calculation formula must in turn be based on valuation criteria and trigger thresholds that can be measured objectively and are tied to your company’s results or performances (such as revenue growth) to which you have contributed. 

The bonus must not exceed 75% of the Plafond Annuel de la Sécurité Sociale (PASS, or annual social security ceiling) per year and per employee, i.e. €32,994 in 2023.

You have three options:

  • Save your incentive bonus, in other words place it in an employee or retirement savings scheme offered by your company (PEE, PERCO, PERECO, PERU or PEROB)3. Your bonus will then be inaccessible for a duration that will depend on the type of scheme involved (except in legally permitted circumstances allowing for early release).
  • Receive payment of your incentive bonus immediately, in which case it will be subject to income tax.
  • Combine saving and payment of the bonus


If you opt to save your incentive bonus, you will, depending on the scheme(s) set up by your company, be able to invest it in:

  • a PEE for your medium-term projects (the bonus will be inaccessible for 5 years);
  • and/or a PERCO/PERECO/PERU/PEROB in order to build up additional income for your retirement (the bonus will be inaccessible until then).
  • In this case your bonus will be invested in the investment vehicles offered by your company, which you will have selected based on your risk profile and investment horizon. 

When the incentive bonus is about to be paid out, you will be asked beforehand what you wish to do with it and you will have at least 15 days during which to decide.
If you have not expressed your wishes within the given timeframe, your incentive bonus will be invested in the PEE (company savings plan) if the company has set up such a scheme. 

If your company does not have a PEE, your incentive bonus will be paid immediately into your bank account. In this case, it will be incorporated into your taxable income and you might be subject to income tax; you might move up into a higher marginal tax bracket as a result. 

Worth noting: you may release the amounts saved from your incentive bonus early under specific circumstances permitted by law.

How are your savings invested?


Your company offers various investment vehicles covering different investment objectives and risk levels.  

These investment vehicles (and the associated documentation) can be found in the documents available on each of your company’s schemes.

In principle, you may modify the way in which your savings are distributed at any time in order to optimise your savings, without prolonging the period of unavailability; this is referred to as fund switching or a change in financial management, depending on your scheme. However, certain restrictions may apply to your scheme. You are therefore advised to read the documents available on each scheme beforehand (i.e. its rules and corresponding information brochure).

 What is the tax regime applicable?


The amounts saved from your incentive bonus enjoy the following tax benefits:

  • An incentive bonus invested in an employee or retirement savings plan is exempt from income tax and subject only to CSG (social security contributions) and CRDS (social debt repayment contributions)2.
  • You may receive an employer contribution from your company3 (optional) which is exempt from income tax and subject to CSG and CRDS1 on income from gainful employment.
  • If savings are released from your PEE/PERCO/PERECO/PEROB/PERU as a lump sum, any capital gains on the amount of savings from your incentive bonus will be exempt from income tax and subject only to social contributions4.

 

1 The company pays the account administration fees of its Current and Retired employees (as per the PEE agreement) over the year. The employee begins to pay these administration fees from the moment they leave the company.
2 At a rate of 9.7%, of which 6.8% deductible CSG, at 01/01/2023; contributions deducted by your employer.  
3 Plan d'Epargne Entreprise (PEE, or company savings plan) / Interentreprises (PEI, or intercompany savings plan); Plan d'Epargne pour la Retraite COllectif (PERCO, or collective retirement savings plan) / Interentreprises (PERCOI, or intercompany collective retirement savings plan); Plan d'Epargne Retraite d'Entreprise COllectif (PERECO, or collective company retirement savings plan) / Interentreprises (PERECOI, or intercompany collective retirement savings plan); Plan d'Epargne Retraite Unique (PERU, or single retirement savings plan); Plan d’Epargne Retraite Unique (PERU, or single retirement savings plan); Plan d’Epargne Retraite d’Entreprise Unique (PERU, or single company retirement savings plan); Plan d’Epargne Retraite Obligatoire (PEROB, or mandatory retirement savings plan; the profit-sharing bonus   may be invested in this plan under certain conditions)
4 The employer contribution is optional and may be added to your incentive bonus under the following schemes: Plan d'Epargne Entreprise (PEE, or company savings plan) / Interentreprises (PEI, or intercompany savings plan); Plan d'Epargne pour la Retraite COllectif (PERCO, or collective retirement savings plan) / Interentreprises (PERCOI, or intercompany collective retirement savings plan); Plan d'Epargne Retraite d'Entreprise COllectif (PERECO, or collective company retirement savings plan) / Interentreprises (PERECOI, or intercompany collective retirement savings plan). 
5 At a rate of 17.2% rate at 01/01/2023. 
6 Assuming a marginal rate of 11%. Calculated from the amount net of tax-deductible CSG and including the flat-rate allowance of 10% for business expenses. 
7 Amount net of withheld income tax (the company or the employee must declare the bonus amount net of deductible CSG to the tax authorities).