An employer's contribution levied at the date of grant
The "free shares" mechanism can be broken down into three steps:
- the grant of the award (stating the vesting conditions);
- the vesting of the shares (at the end of the vesting period if the conditions set forth are met); and
- the disposal of the shares (the taxable event).
Until amendments introduced by the «Macron» law, "qualified" free shares were subject to an employer's contribution (of 10% to 30%) which was due within a month following the date of grant.
The event giving rise to the employer's contribution (the grant of the award) did not take into account the shares' vesting (or the absence of vesting). Therefore, the employer's contribution was due even if shares were not issued to the beneficiary.
A new possibility to obtain restitution of the employer's contribution paid for non-issued shares.
In such situations, the French social authorities (URSSAF) systematically rejected any claim for the restitution of the employer's contribution (supported by numerous case law stated by the French Social Supreme Court).
By a decision dated April 28, 2017 (QPC N°. 2017-627 / 628), the French Constitutional Council opened a possibility to claim back the employer's contributions in cases where the employer is taxed "on the basis of remunerations not actually paid", i.e. cases in which shares have not been effectively issued to the beneficiary (which can cover many situations).