Currently the acquisitions gains realised on stock options and on RSUs may benefit from a flat taxation of 18 percent, 30 percent or 40 percent, depending on the gain realised and the holding period.

The draft of the French Finance bill for 2013 modifies completely the taxation of the acquisition gain. Although the proposal should be finalized and discussed before the French Senate before the end of the year, the modification, as already adopted by the French National Assembly December 14, 2012, should have a huge impact on the taxation of stock options and RSUs granted as from September 28, 2012.

The draft of the bill proposes to replace the flat taxation of these acquisition gains by the application, on the gain, of the income tax progressive rates (knowing that a new bracket of 45 percent has been created for the portion of net taxable income exceeding €150,000 per year and per person). The family quotient system will remain applicable for shares held for more than four years.

In addition, the capital gains on the sale of the related shares would also be subject to progressive rates of the income tax. However, the capital gains would benefit from a specific allowance, depending on the holding period with a maximum allowance of 40 percent (20 percent between two and four years of holding; 30 percent between four and six years of holding; and 40 percent after six years of holding).

Besides, from the social standpoint, such gains would be subject to the supplementary social security contribution (CSG) applicable to compensation income (instead of the CSG on investment income). Such CSG would be partially deductible from the taxable income for 5.1 percent. The specific employer’s and employee’s contributions will remain applicable.