Higher rates of tax and social tax on qualified stock option and qualifying free share awards apply for grants made on or after 1 January 2011.
Social tax rate increase
Employees who receive French-qualified stock options and/or French-qualified free shares are subject to French social tax (calculated at exercise (options) or vesting (free shares) but payable on the sale of the underlying shares). New legislation has increased this employee social tax rate from 2.5% to 8%.
The employer social tax contribution (calculated and payable at grant) has also been increased from 10% to 14%.
However, for free share awards valued under 17,616 euro per beneficiary, the 2.5% and 10% rates will continue to apply.
Income tax rate increase
With respect to qualified stock options, provided the 4 year holding period between option grant and share sale is complied with, the basic income tax rate arising on the portion of the option exercise gain above 152,500 euro has been increased from 40% to 41%.
Capital gains tax exemption
The exemption from capital gains tax on gains (including option gains) when sale proceeds for a calendar year remain under 25,830 euro no longer applies.