Legal background: Certain employee benefit plans are specially regulated and subject to adapted tax and social regime.
Scheme in place: Certain groups propose to their managers certain non regulated employee benefit plans, such as “management packages” granting high leverage on shares of those groups. Those package may grant preferential conditions on acquisition and/or sale of the shares, indexed on the return of the investment.
Outcome of audit: When such preferential conditions are granted without any financial risk or with a modest investment, the FTA recharacterizes the gain (that would otherwise be treated as a capital gain that may enjoy certain tax advantageous treatment) as a salary income taxable as such. When in addition the managers have used strategies to avoid any taxation (e.g. use of PEA, or interposed structures), the FTA uses the abuse of law procedure, leading to 80% penalty.