The value-sharing or purchasing power premium: a good idea, or just an illusion?

As of 1 July 2022, the Purchasing Power Law introduced a new purchasing power premium, the “PPV” similar to the previous "PEPA“ (or “Macron Bonus”) and which like its predecessor is exempt from social security contributions. Far from being adopted on a large scale, it seems that companies have in fact waited for further information from the October issue of BOSS (the French Social Security Information Bulletin) before implementing the measure, and many questions have been raised.

As a new purchasing power premium, the PPV retains the main characteristics of its predecessor, the exceptional PEPA, differing however in its long-term nature and in the maximum amount that is exempt from tax and social security contributions (increasing from €3,000 to €6,000).
The employer is under no obligation to pay the PPV, however in order to be eligible for the tax and social security exemptions provided for, certain legal conditions must be respected.

Although the PPV helps to improve the purchasing power of employees, it is not strictly speaking included in a company's wage policy.

Prohibition to compensate the PPV for salary

In no instance whatsoever can the PPV be compensated for:

• as a part of remuneration paid by the employer or which is statutory in the application of legal, contractual or standard rules;
• as an increase in remuneration or as a bonus provided for in a wage agreement, an employment contract or an application in force within the company.

Neither can the PPV be paid to an employee in the form of a profit-sharing or participation supplement.

The payment of the PPV cannot be paid monthly but can be paid in instalments on a maximum basis of once per quarter in the calendar year.

Questions on the amount of the PPV premium

To benefit fully from the preferential social and tax regime, the amount of the PPV must not exceed, irrespective of the employee’s salary level:

• €3,000 per beneficiary and per calendar year, or;
• €6,000 per year where a profit-sharing agreement is in place for companies eligible for participation, or where a voluntary participation scheme or a profit-sharing agreement is in place for companies with less than 50 employees which do not have the obligation to set up a participation plan.

It should be noted however, that the amount of the bonus is freely determined by the employer who can pay a higher or a lower premium amount. The employer can pay the PPV to some employees only and can exclude employees whose remuneration exceeds a certain limit. The same employer can pay different amounts of the premium to different establishments within the company, or even allocate it to certain employees in one or more establishments of their choice.

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