French Economist Highlights Complexity and Taxation Paradox of Corporate "Sub-Currencies"

Sylvain Catherine, a distinguished Assistant Professor of Finance at The Wharton School, recently drew attention to the intricate and often paradoxical nature of certain corporate payment systems in France. Through a pointed social media post, Catherine criticized the practice of compensating employees with restricted "sub-currency" that is subsequently subject to taxation in standard euros, highlighting a perceived disconnect in the financial system.

"J'adore la compléxité de ces dispositifs. Franchement, c'est super. T'es payé en sous-monnaie flêchée vers telle ou telle corporation plutôt qu'en euros, et puis tu payes des impôts (en euros véritable cette fois) sur ta sous-monnaie," Catherine stated in his tweet. This translates to, "I love the complexity of these schemes. Frankly, it's great. You get paid in sub-currency directed towards this or that corporation rather than in euros, and then you pay taxes (in real euros this time) on your sub-currency."

Catherine's remarks likely target common French employee benefits such as "titres restaurant" (meal vouchers) and "chèques cadeaux" (gift vouchers). These benefits, while designed to enhance employee purchasing power and offer tax advantages to employers, come with specific usage restrictions, limiting where and how they can be spent, often directing funds towards a network of affiliated businesses.

Under French regulations, particularly those enforced by URSSAF, these benefits can be exempt from social security contributions and income tax up to certain thresholds. For instance, meal vouchers have an employer contribution exemption limit, which was €7.26 per voucher for 2025, provided the employer contributes between 50% and 60% of the voucher's total value. Gift vouchers are tax-free up to €193 per employee per year for specific events.

However, the core of Catherine's critique lies in the dual nature of these systems: employees receive a non-euro benefit, yet any portion exceeding exemption limits, or the benefit's inherent value, contributes to their taxable income, which is then settled in conventional euros. This creates a scenario where the value of a restricted "sub-currency" directly impacts an individual's euro-denominated tax burden, fostering a sense of administrative convolution.

The economist's observations align with broader criticisms he has previously voiced regarding the "jungle" of French administrative and fiscal regulations, including the complexity of understanding payslips and various tax niches. His tweet underscores an ongoing debate about the transparency and fairness of modern compensation packages, particularly as companies increasingly diversify employee benefits beyond traditional monetary salaries.