2014 Draft French Finance Bill introduces employer-paid tax on employee compensation in excess of €1 million

The French government released its draft 2014 Finance Bill (the “Draft Bill”) on September 25, 2013. Among other proposals that will impact individual income taxation in France, the Draft Bill provides for an exceptional employer-paid tax at a rate of 50% on compensation and other benefits paid to employees and officers who earn more than €1 million.
The Draft Bill provides that the 50% tax will be due on compensation paid by entities taxable in France (i.e., generally, French employer entities). Compensation includes salary, bonuses and benefits in kind paid to employees or officers by such French entities, as well as the value of equity awards issued by the French entity.
It appears that the value of equity awards issued by a non-French entity, such as a U.S. parent company granting equity awards to employees of its subsidiary in France, will be subject to the 50% tax only if the French entity bears the cost of such awards.
The timing of the payment of this new tax differs for French-qualified as opposed to non-qualifed awards. If applicable, the Draft Bill proposes that the new tax will apply to French-qualified equity awards at grant, based either on the value of the award determined under IFRS valuation rules or as a percentage of the value of the shares underlying the awards. For non-qualified awards, if applicable, general rules will apply and the new tax will apply to the spread at exercise of non-French-qualified options and the fair market value of the shares at vesting of non-French-qualified RSUs.
If adopted, the new tax will apply to qualifying compensation paid in the 2013 and 2014 calendar years. The tax will be due by April 30 of the following year (subject to adjustments for certain types of income and capped at 5% of the employer entity's sales revenue in France).