PEE – Company Savings Plan

The PACTE law has reformed employee savings schemes: profit-sharing, participation, Collective Retirement Savings Plan (PERCO), and the Company Savings Plan. The aim of this reform is to promote the use of these schemes and increase employee shareholding.
Implementing a PEE in a company is optional. It allows employees to build savings under advantageous social and fiscal conditions. Company leaders, spouses who collaborate or are partners, and corporate officers of small and medium-sized enterprises with a workforce between 1 and fewer than 250 employees can also benefit from it under certain conditions.

Which Companies Can Implement a Company Savings Plan?
If a company has no union representative or works council, the PEE can be established unilaterally. Otherwise, its implementation must be negotiated with employees to reach an agreement, which can take various forms:

• By collective work agreement
• Between the company manager and representatives of recognized trade unions
• Within the works council
• By ratification by a two-thirds majority of employees

Who Can Benefit from the Company Savings Plan?

• The PEE is open to all employees; however, a maximum seniority condition of 3 months may be included in the agreement.
• For companies with a workforce between 1 and fewer than 250 employees, the company manager, their spouse (married or in a civil partnership) if they have the status of collaborating or associated spouse, and corporate officers can also benefit.
• Retirees or pre-retirees who have made at least one contribution before leaving the workforce,
• Under certain conditions: commercial agents, employees of employer groups.

What Amounts Can Be Contributed to the Company Savings Plan?Contributions to the Company Savings Plan are voluntary. Unless otherwise stipulated in the agreement, the frequency and amounts of contributions are flexible. The following can be contributed to the PEE, in accordance with the provisions in the agreement:

• Voluntary contributions from employees
• Unilateral contributions from the company exclusively for the purchase of shares or investment certificates issued by the company or an affiliated company
• Profit-sharing bonuses or participation bonuses, which benefit from an exemption from income tax in these cases
• Amounts from other employee savings plans (excluding Collective Retirement Savings Plans)
• Rights from a Time Savings Account (CET), if available in the company
• The company’s matching contributions, when provided for: it cannot exceed three times the amount contributed by the employee and must respect the limit of 8% of the Annual Social Security Ceiling, which amounts to €3,709.44. The individual annual contribution limit is 25% of the gross annual salary.
  The amounts invested in a PEE are allocated across various financial assets: shares of the company, shares in mutual funds or FCPE, and a portion of the funds must be allocated to socially responsible enterprises.

When Can the Saved Amounts Be Withdrawn?
Funds invested in the PEE are locked in for a period of 5 years, except in cases of early withdrawal as specified by law (detailed list of reasons and conditions for implementing withdrawal). The PACTE law now stipulates that the 5-year lock-in period does not apply if the funds are intended to purchase shares in the company. 

What Tax Benefits Exist for the Company?
A company that chooses to make a matching contribution can deduct it from its taxable profit (subject to conditions), and it is also exempt from employer social security contributions. Since January 2019, matching contributions made by companies with fewer than 50 employees are exempt from social contribution. The social contribution is 20% for companies with more than 50 employees or 10% when it concerns contributions to invest in company shares. 

What Tax Benefits Exist for Beneficiaries?
Contributions Made:

• Profit-sharing or participation bonuses, as well as matching contributions (if applicable), are exempt from income tax and employee social security contributions (excluding CSG and CRDS) within the limits of regulatory ceilings.
• Voluntary or mandatory contributions may be deducted from income tax within the limits of deductibility ceilings.

At Withdrawal:

• Capital gains and income are exempt from income tax (excluding social levies) after the legal 5-year period or in cases of authorized withdrawal.