Dividend Premiums – Status Quo

Most companies close their accounts at the end of the fiscal year on December 31st. It is thus the moment to determine whether payment of a “dividend premium” to employees is required. Since January 1st, 2011, a decision to distribute dividends to shareholders generally requires payment of a dividend premium to employees. Although the French Prime Minister announced last July that this law would be repealed, it remains in place. Companies therefore must remain vigilant as to its application.

Which companies are eligible?

The obligation to pay a “dividend premium” applies to French commercial companies whose workforce is composed, on a regular basis, of at least 50 salaried employees. Employee count is made according to the same rules as for the existing compulsory profit sharing scheme as defined in the Labor Code.

Commercial companies controlled by the State are also subject to the dividend premium rule, under specific conditions.

Please see full alert below for more information.

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