Are free share awards (“attributions gratuites d’actions” – AGA) eligible expenses for the research tax credit (RTC) ? The judgment handed down by the Administrative Court of Montreuil on 28 November 2025 in the SA Legrand case provides an unprecedented answer, confirming that, under certain conditions, free share awards may be included in eligible staff costs.
SA Legrand included, in the basis of its 2012 and 2013 research tax credit, expenses arising from the free allocation of shares to certain members of its staff, as well as the amount of the employer’s contribution provided for in Article L. 137-13 of the French Social Security Code (CSS).
Following a tax audit, the tax authorities challenged the inclusion of these amounts in the RTC base.
The key question, therefore, is whether free share awards granted to research staff are part of the remuneration and related benefits to be included in the RTC base.
In the Legrand case, the parent company had acquired its own shares and then re‑invoiced to its subsidiary Legrand France the capital loss incurred in connection with the free allocation of shares to certain employees, including research staff. Having first noted that this re‑invoiced expense is deductible for corporate income tax purposes, the Montreuil Administrative Court held that the free grant by a company to its employees of shares whose capital loss has been deducted constitutes staff expenses that may be included in the RTC base, provided that the gains arising from the free share awards are taxable, in the hands of the beneficiaries, either in the “wages and salaries” category or under a flat‑rate regime, thereby constituting for the employees an ancillary component of their remuneration within the meaning of the CIR.
This unprecedented solution is fully in line with the case law of the Conseil d’État (CE, 12 March 2014, no. 365875, Sté Diana), which accepted that profit‑sharing and incentive schemes constitute ancillary elements of researchers’ remuneration and are eligible for the CIR when the amounts:
- give rise to the recognition of expenses deductible from the profit of the financial year in which they are incurred,
- constitute, for the researchers and technicians who benefit from them, an ancillary component of their remuneration,
- as a rule, these amounts are subject to personal income tax in the hands of the employee beneficiaries in the “wages and salaries” category.
It should be noted that the Research Tax Credit Guide issued by the Ministry of Higher Education and Research (MESR) already regarded free share awards and stock options as supplementary remuneration which may be included, for RTC purposes, in the remuneration base of the beneficiary staff.
However, and as could be expected, the Montreuil Administrative Court held that the employer contributions relating to these options, as provided for in Article L. 137-13 of the CSS, cannot be regarded as compulsory social security contributions for CIR purposes.
- Administrative Court of Montreuil, 28 Nov. 2025, no. 2300721, SA Legrand