In a Law on emergency economic and social measures dated 24 December 2018, the French government has unveiled a package of measures to curb the "yellow jackets" crisis after several weeks of anti-government protest. Among these measures is a non-mandatory new bonus, called the "Exceptional Purchasing Power Bonus".

What is it and can it be implemented in your company?

A non-mandatory tax-free bonus

This one-time purchasing power bonus will be exempt from all social contributions (including CSG/CRDS levies, apprenticeship tax and professional training contribution). It will also be exempt from income tax for its beneficiaries.

The payment of this bonus is non mandatory and relies on the goodwill of companies. However, the bonus may under no circumstances replace salary increases or bonuses provided for in a collective agreement, employment contract or company policy, nor may it replace any items of remuneration.

Conditions

For the tax exemptions to apply, the following conditions must be met:

  • The bonus can only benefit to employees who were employed by the company on December 31st, 2018;
  • The bonus can only benefit to employees whose annual remuneration is inferior to 3 annual minimum wages (or € 53.944,80);
  • The bonus cannot exceed €1.000 (= the share exceeding €1.000 cannot benefit from tax exemptions);
  • The bonus must be paid before March 31st, 2019.

Implementation

The Purchasing Power Bonus can be implemented:

  • either by an unilateral decision of the employer taken no later than January 31st, 2019;
  • or by a collective agreement negotiated at company or group level.

The unilateral decision or the collective agreement shall determine the amount of the bonus and can decide to restrict the scope of beneficiaries and/or modulate its amount.

Bird & Bird will be happy to help you around the assessment or implementation of this bonus.