How French Stock Options Work
A stock option plan grants selected employees and/or corporate officers the right to subscribe to a capital increase (options de souscription) or to purchase existing shares (options d'achat) at a price fixed at attribution, for a limited period. The exercise price cannot in principle be modified once set. If the share price rises above the exercise price during the option's life, the holder may acquire shares at the lower fixed price and either sell immediately to realise a profit or hold for further appreciation.
The plan is purely voluntary. In listed companies, the board's power to attribute options to executive officers (dirigeants) is subject to a condition: the company must either distribute options or free shares to all employees and at least 90% of French-subsidiary employees, or implement or improve a participation or intéressement scheme (C. com. Art. L 22-10-58). Where options are granted to executive officers, the board must additionally either prohibit them from exercising the options before leaving their functions or require them to hold resulting shares in registered form until their functions end.
Three key dates
- The attribution date: when the board grants the options — the reference point for most fiscal consequences, including which regime applies (pre- or post-28 September 2012) and the benchmark share price used to measure the maximum permitted discount.
- The legal availability date: the earliest date on which the holder may exercise the option, as set in the plan rules. Plan rules often include a vesting schedule or a continued employment condition.
- The fiscal availability date: applicable only to options attributed before 28 September 2012 — the date from which the holder could sell the resulting shares without losing access to the preferential tax rates. For options attributed from 28 September 2012 onwards, this concept no longer exists.
The continued employment condition (clause de présence)
Many plans include a clause requiring the beneficiary to remain employed at the date of exercise. A beneficiary who leaves before exercising loses the right to do so, even if the exercise deadline has not yet passed — provided the clause was brought to their knowledge (Cass. com. 23-3-2010). Dismissal without genuine and serious cause does not revive the right to exercise but entitles the employee to damages for loss of chance — capped at the value of the chance lost and taxed as salary income. A forfeiture clause triggered specifically by gross-misconduct dismissal is treated as a prohibited financial sanction and is deemed non-written, so the employee retains the right to exercise in that circumstance.
The Three Components of the Financial Gain
1 — The discount (rabais)
The exercise price may be set below the market price at attribution. The maximum permitted discount is 20% of the average quoted price over the 20 trading sessions preceding the attribution date. Only the excess beyond 5% of the share's value at attribution (rabais excédentaire) is taxable — as salary income in the year of exercise, plus CSG at 9.2% and CRDS at 0.5%, withheld at source by the employer. Social security contributions also apply from 1 January 1995. The already-taxed fraction reduces the acquisition gain base at eventual disposal.
Average price over 20 sessions before attribution: €30. Exercise price: €24. Actual discount: €6 (= 20%). 5% threshold: €1.50. Taxable excess discount: €4.50 per share — declared as salary income in year of exercise, subject to CSG/CRDS and social security contributions.
If the holder then sells at €45, the acquisition gain for tax purposes is: €45 − €24 − €4.50 = €16.50, not €21.
2 — The acquisition gain (avantage tiré de la levée de l'option)
The acquisition gain is the difference between the share's real value at the date of exercise and the exercise price (net of any already-taxed excess discount). It represents the benefit the holder receives from exercising the option: the right to buy a share worth €33 for €24 creates an acquisition gain of €9 per share. This is the central element of the stock option fiscal regime — and the one whose tax treatment changed most dramatically in 2012.
3 — The disposal gain (plus-value de cession)
The disposal gain is the further appreciation between the share's value at the date of exercise and the price achieved on eventual sale. If the share was worth €33 at exercise and is sold at €45, the disposal gain is €12. If sold at €31, there is no disposal gain — but the acquisition gain is partially clawed back by the fall.
Options Attributed from 28 September 2012: The Current Regime
For all options attributed from 28 September 2012, the acquisition gain is taxed as salary income in the year of disposal of the shares — not the year of exercise (CGI Art. 80 bis II bis). The taxable event is the disposal (sale, gift, bearer conversion, or securities lending transfer). There is no minimum holding period, no fiscal availability date, and no preferential rate.
The acquisition gain is added to the holder's other income and taxed under the progressive scale in the category of employment income (traitements et salaires). The 10% professional expense deduction does not apply. No income-splitting quotient mechanism may be invoked. Tax is due for the year of disposal. CSG at 9.2% + CRDS at 0.5% apply as employment income, plus the 10% specific employee contribution (CSS Art. L 137-14) on the net acquisition gain. The capital gain (difference between sale price and share value at exercise) is taxed at PFU 12.8% + 17.2% social charges, with the €500,000 SME director retiring abatement available (CGI Art. 150-0 D ter).
Disposal loss offsetting the acquisition gain
If the shares are sold for less than their value at the date of exercise, the resulting disposal loss is deductible from the acquisition gain up to the amount of that gain (CGI Art. 80 bis IV al. 2). Any surplus disposal loss not absorbed may be offset against other securities capital gains in the same year or carried forward over the following ten years.
1,000 options attributed 1 March 2013 at an exercise price of €50. Exercised 1 April 2022 when the market price is €75. All 1,000 shares sold 15 September 2024 at €10 each.
Disposal: sale price €10,000 − value at exercise €75,000 = disposal loss of −€65,000
Net acquisition gain after offset: €25,000 − €65,000 = €0 — fully absorbed
Residual disposal loss to carry forward: −€40,000 (€65,000 − €25,000)
Offset against other securities capital gains in 2024 or over the next 10 years
Options Attributed Before 28 September 2012: The Old Regime
Options attributed before 28 September 2012 remain subject to the regime in force at their attribution date. These are held by many executives in long-running plans and may not yet have been exercised or sold, making the legacy rules still practically relevant.
Options attributed before 20 September 1995
The acquisition gain is taxed as an ordinary capital gain on securities at PFU 12.8% or, on global election, at the progressive scale, plus 17.2% social charges.
Options attributed 20 September 1995 to 26 April 2000
The acquisition gain is taxed at a specific rate of 30% for disposals made after meeting the then-applicable fiscal availability conditions, or on global option as salary income (without the quotient mechanism), plus 17.2% social charges.
Options attributed 27 April 2000 to 27 September 2012
The most complex group. The preferential rates apply only if the shares are sold at least four years after the attribution date. The rate depends on whether the holder also observed a further two-year holding period after exercise (the période de portage) (CGI former Art. 200 A, 6):
- Without the two-year portage period: 30% on the portion of the acquisition gain not exceeding €152,500; 41% on the surplus. Combined with 17.2% social charges: global rates of 47.2% and 58.2%.
- With the two-year portage period: 18% on the portion not exceeding €152,500; 30% on the surplus. Combined with 17.2% social charges: global rates of 35.2% and 47.2%.
On global election, the acquisition gain may alternatively be taxed as salary income (without the quotient mechanism), plus 17.2% social charges. Where a share exchange occurs during the two-year portage period, it is treated as an opération intercalaire — the portage clock is not restarted.
Disposal loss for pre-2012 plans
For options attributed before 20 June 2007, ordinary capital gains losses from other securities may additionally be offset against the acquisition gain. For options attributed from 20 June 2007, this cross-offsetting is not available because the acquisition gain is taxed under an autonomous regime (CGI Art. 200 A, 6) outside the ordinary securities capital gains framework.
Summary Table by Attribution Date
| Attribution period | Acquisition gain: income tax | Acquisition gain: social charges | Capital gain on disposal |
|---|---|---|---|
| Before 20 September 1995 | Capital gains regime (PFU 12.8% or progressive scale) | 17.2% PS (revenue from assets) | Capital gains regime + 17.2% PS |
| 20 September 1995 – 26 April 2000 | 30% flat rate or salary (no quotient); after fiscal availability | 17.2% PS (revenue from assets) | Capital gains regime + 17.2% PS |
| 27 April 2000 – 19 June 2007 | 18% or 30% (with portage); 30% or 41% (without portage); or salary on election. Fiscal availability: 4 years from attribution | 17.2% PS (revenue from assets) | Capital gains + duration abatements (if acquired before 1 January 2018) + 17.2% PS |
| 20 June 2007 – 27 September 2012 | Same preferential rates as above. Ordinary capital gains losses cannot offset this gain | 17.2% PS (revenue from assets) + 10% specific employee contribution on net gain | Capital gains + duration abatements (if pre-2018) + 17.2% PS |
| From 28 September 2012 | Salary income (progressive scale; no quotient; no 10% deduction); taxed in year of disposal | 9.2% CSG + 0.5% CRDS as employment income; 10% specific employee contribution on net gain | PFU 12.8% or progressive scale + 17.2% PS (no abatements for shares acquired from 1 January 2018) |
Indemnities for Non-Exercise: Salary Income
When options are not exercised — for example, because a public tender offer is followed by a mandatory squeeze-out — the company often pays an indemnity to option-holders in exchange for their renunciation. The Conseil d'État has consistently held that such indemnities, and any advantage received in exchange for deferring exercise, are taxable as salary income rather than as capital gains, because they compensate for the non-exercise of a right granted in consideration of the beneficiary's employee status (CE 23-7-2010; CE 1-10-2013; CE 5-11-2014). This rule applies to both employees and corporate officers, and to options attributed both before and after 28 September 2012.
Identifying Which Shares Were Sold
Where the holder's portfolio contains shares in the same company acquired through multiple routes and some shares are sold without being individually identifiable, the sold shares are treated as drawn from each category in proportion to that category's share of the total portfolio at the date of sale. This proportionate attribution is applied to compute the acquisition gain and the capital gain for each tranche. Holders wishing to optimise taxation across different plans should consider holding shares from each exercise in separate designated accounts at different custodians, allowing them to choose which tranche is being sold for each disposal.
Key Planning Observations
Early exercise when the share price is low (pre-2012 options)
For plans still subject to the old proportional rates, exercising the option when the share price is near or below the expected long-term level minimises the acquisition gain (taxed at higher preferential rates) and maximises the capital gain (taxed at PFU 12.8% + 17.2% social charges = 30% total). The strategy also starts the two-year portage clock running earlier, potentially accelerating access to the reduced rates.
Round-trip when the share price has fallen since exercise (pre-2012 options)
Where shares from option exercise have fallen in price since exercise, the holder may sell and repurchase (aller-retour) to crystallise the acquisition gain at the current (lower) price — triggering the preferential rate on a smaller amount — while reclassifying expected future appreciation as a capital gain taxable at PFU 30% total. Since 1 January 2020, this structure carries a theoretical abuse-of-law risk under LPF Art. L 64 A; to mitigate this, the round-trip should be accompanied by genuine portfolio diversification rather than an immediate like-for-like repurchase.
International Taxation: The Reference Period and Apportionment
When a stock option beneficiary has worked in more than one country during the period between attribution and vesting, the acquisition gain cannot simply be taxed in its entirety by France. It has the nature of a salary supplement in French domestic law and is subject to the employment income provisions of bilateral tax treaties, generally Article 15 of the OECD model convention.
The starting point is identifying the reference period (période de référence): the period during which the beneficiary performed the services that the option was intended to reward. Under OECD guidance (Commentary on Article 15, §§12.7–12.13), the reference period ordinarily runs from the attribution date to the date on which the beneficiary definitively acquires the right to exercise the option — i.e. the end of the vesting schedule. Where the beneficiary owns the option unconditionally from attribution, the option is treated as rewarding past service and the reference period is simply the attribution date itself.
The French portion of the gain is the fraction corresponding to the proportion of days worked in France during the reference period. The same apportionment applies where the beneficiary is a French tax resident selling shares that relate partly to work performed in another treaty country: only the French-sourced fraction is taxable in France (CE 17-3-2010 n° 315831).
Residence assessed at exercise, not at disposal
A critical practical point: French residence for purposes of the acquisition gain is assessed at the date of exercise, not the date of sale (CE 4-6-2019 n° 415959; CE 16-7-2021 n° 448500). A beneficiary who was a French tax resident when they exercised cannot invoke a subsequent change of residence to avoid French taxation of the acquisition gain when the shares are eventually sold. The applicable treaty is the one in force between France and the beneficiary's country of residence at the date of exercise. The Conseil d'État has also clarified that whether the gain is taxed as a plus-value or salary in French domestic law, it is always employment income under treaty Article 15 (CE 1-4-2015 n° 369586).
No vesting delay: Options granted unconditionally on day one. Reference period = attribution date only. 100% taxable in the country of employment on that day.
Three-year vesting: Options granted 1 January 2020 with a three-year vesting; beneficiary legally entitled to exercise from 1 January 2023. Employee worked 18 months in France and 18 months in Germany during the reference period. French-source fraction = 50% of the acquisition gain, regardless of where the employee lives when they eventually sell.
Withholding Tax for Non-Residents
For gains arising from 1 April 2011 onwards, non-French-resident beneficiaries are subject to a specific withholding tax on the French-source portion of their acquisition gain and on the excess discount, under CGI Art. 182 A ter. The disposal gain falls under the general capital gains withholding regime.
The excess discount is subject to withholding at the time of exercise, if the beneficiary is not domiciled in France at that date. The withholding is calculated by applying the salary withholding scale of CGI Art. 182 A (0%, 12%, 20%) to the net amount of the excess discount.
The acquisition gain for options attributed from 20 June 2007 is subject to withholding at the date of disposal (not exercise), applied only to the French-source fraction. For pre-28 September 2012 options, withholding rates are those of the old preferential regime: 30%/41% without portage; 18%/30% with portage. For post-28 September 2012 options, withholding is calculated on the salary scale basis. Both are non-liberatory (creditable against income tax). The rate rises to 75% (liberatory, non-refundable) for domiciliaries in a non-cooperative territory (ETNC, CGI Art. 238-0 A). Options attributed before 20 June 2007 are not subject to the specific acquisition-gain withholding.
Exit Tax: Considerations for Departing Holders
French residents who transfer their fiscal domicile abroad must consider CGI Art. 167 bis. The exit tax applies to latent capital gains on securities held by individuals who have been French tax residents for at least six of the ten years preceding departure, provided they hold either a participation of at least 50% in a company's profits or a portfolio whose total value exceeds €800,000 at departure.
However, gains attributable to the exercise-price advantage on unexercised options are expressly excluded from the exit tax base. The exit tax therefore applies only to the appreciation in the value of shares already acquired through prior exercises (the disposal gain component). For employees whose compensation consists primarily of unvested or unexercised options, this exclusion is materially significant.
For employees approaching departure who hold both exercised and unexercised options, the practical planning question is whether to exercise before or after leaving France. Exercising before departure captures all French-source days during the vesting period, and the acquisition gain will be taxable in France when the shares are eventually sold (assessed at the residence at exercise). Exercising after departure means the country of new residence will be the primary taxing state for the post-attribution fraction, subject to treaty allocation.
Donation Before Sale: Purging the Acquisition Gain
Options attributed before 20 June 2007
A donation made after the fiscal availability period does not constitute a disposal for the purposes of the acquisition gain or the disposal gain — both are permanently purged. The donee takes over the shares at their donation value. Two exceptions narrow the purge: (1) where the donation triggers an IFI reduction under CGI Art. 978, the purge is extinguished for the fraction of the gift that generated the reduction; (2) for exit tax deferred gains, non-EU/EEA donors must demonstrate the donation was not made primarily for tax purposes.
Options attributed from 20 June 2007 to 27 September 2012
Donation triggers the acquisition gain at the donor's level in the year of donation (CGI former Art. 200 A, 6), taxed at the preferential proportional rates (18%/30% with portage, or 30%/41% without). The disposal gain — the appreciation from exercise value to donation value — continues to be purged. This creates a planning opportunity: exercising when the share price is low and donating when the price has risen substantially generates the most efficient outcome.
Options attributed from 28 September 2012
Donation triggers the acquisition gain as salary income in the year of donation. No preferential rate applies. The disposal gain (from exercise value to donation value) remains purged.
The démembrement (split-ownership) strategy
Where the donor gives only the nue-propriété and retains the usufruit, the purge applies only proportionally to the fraction of the acquisition gain attributable to the nue-propriété transferred. The acquisition gain on the retained usufruit is not purged. The Conseil d'État confirmed that the bare owner is solely liable for tax on both portions where there is a subsequent sale of full ownership (CE 17-4-2015 n° 371551).
Thomas, aged 62, holds 10,000 shares from options attributed 1 March 2007. Exercise price €70. Share value at exercise in 2022: €110. Current value per share in 2023: €120. Marginal income tax rate: 45%.
Sale price: €1,200,000
Acquisition gain (portage respected): €400,000 → tax = (€152,500 × 47.2%) + (€247,500 × 58.2%) = €71,980 + €144,045 = €216,025
Disposal gain: €100,000 → PFU 30% = €30,000 | Total tax: €246,025
Gift duty on donation of sale proceeds (nue-propriété): €63,250
Total fiscal cost: €309,275 (25.77% of gross asset value)
Option B — Give the shares, children sell:
Donation triggers no acquisition gain (pre-20 June 2007 → purged)
Gift duty on share value at donation (nue-propriété): €111,832
Children sell at €120; disposal gain reduced by duty paid → total tax on disposal gain ≈ €28,150
Total fiscal cost: €139,982 (11.67% of gross asset value)
Option B saves approximately €169,000 — a 14% improvement on gross value.
Contributing Shares to a Holding Company
Options attributed before 20 June 2007
Where the fiscal availability conditions were satisfied, the full gain can benefit from the roll-over on contribution to a corporate-tax company: automatic deferral under CGI Art. 150-0 B (sursis d'imposition) or elective deferral under CGI Art. 150-0 B ter (report d'imposition). An important limitation: contributing the shares to a holding company does not have intercalary status for the portage period — if portage had not yet run, the reduced rates (18%/30%) will not be available on the subsequent disposal of the receiving company's shares. Transmission by inheritance of the receiving company's shares definitively purges both the deferred gain and any additional appreciation.
Options attributed from 20 June 2007
Contributing shares from these options to a holding company triggers the acquisition gain at the contributor's level. Only the disposal gain component benefits from the automatic roll-over under CGI Art. 150-0 B. The exception is a contribution to a société de rachat d'entreprise par les salariés (RES) constituted under CGI Art. 220 nonies: this specific buyout vehicle has intercalary status and does not trigger the acquisition gain.
Funding the Exercise Price Through a PEE
C. trav. Art. L 3332-25 allows employees to use their blocked savings within a plan d'épargne entreprise to fund the exercise of options — treated as a change of investment within the plan, not an early release. The resulting shares must remain in the PEE for a minimum of five years from the date of exercise.
The key fiscal consequence: after the full five-year holding period, the entire net gain on disposal — including the acquisition gain — is exempt from income tax. Only social charges remain due. The 10% specific employee contribution (CSS Art. L 137-14) applies at the time of disposal. This exemption makes the PEE route materially advantageous for post-2012 options, where the acquisition gain would otherwise be taxable as salary income at the progressive scale.
Stock Options and Divorce
Under French matrimonial property law, the rights resulting from the attribution of options during a marriage are biens propres par nature — personal property of the holder — regardless of whether the couple is subject to a community property regime. This position rests on C. com. Art. L 225-183 al. 2, which provides that the rights arising from options are non-assignable until the option is exercised. The Cour de cassation confirmed this as a matter of principle in 2014 (Cass. 1ère civ. 9-7-2014 n° 13-15.948).
Once the option is exercised during the marriage, the resulting shares enter the community — in kind and in value. The settlement value is the price achieved on their disposal during the post-community indivision period — not the value at dissolution or exercise. The practical consequence: options need never be valued for the purpose of the community settlement, though their economic value is very real.
Because unexercised options are personal property and the community only captures shares after exercise, a holder facing divorce who wishes to keep the full benefit of unvested or unexercised options should consider whether the timing of the divorce relative to the exercise schedule is relevant to the overall settlement negotiation. Options that vest after a final divorce judgment will not enter the community, and their subsequent exercise will generate gains that belong solely to the holder.
Stock Options and Death
Unexercised options at death
Options that have not been exercised at the date of the holder's death do not form part of the estate and are not subject to inheritance tax. Despite the fiscal exclusion, heirs do inherit the right to exercise. Under C. com. Art. L 225-183 al. 3, the heirs must exercise within six months of death — a strict forfeiture deadline that runs even against legally incapacitated heirs and minor children (Cass. com. 10-12-2013 n° 12-17.724). If the deadline passes without exercise, the options lapse entirely.
Shares already acquired through exercise before death
- Options attributed before 20 June 2007: Transmission by death definitively purges both the acquisition gain and the disposal gain. The heirs take over the shares at death value; any subsequent gain they realise is taxed as a capital gain from that value.
- Options attributed from 20 June 2007: Death is a taxable event for the acquisition gain — triggered at death and taxed in the estate. However, any further appreciation between the exercise value and the death value remains purged. If the value of the shares at death is below their value at exercise, the difference reduces the taxable acquisition gain.
Inheritance tax applies to the value of the shares in the estate under ordinary succession rules regardless of whether the acquisition gain is also triggered. Inheritance tax and income tax on the gain are entirely separate — one does not reduce the other.
Whether you are analysing the timing of exercise and sale, planning a donation before sale, assessing cross-border apportionment, or navigating the interaction with divorce or succession, our guides cover the full French employee share compensation framework.
Book a ConsultationThis article covers options de souscription ou d'achat d'actions attributed to individuals from 1 January 1990. Free share plans (actions gratuites) and BSPCE follow different rules not covered here. The international apportionment rules follow the OECD commentary as applied by French administrative doctrine and case law; specific bilateral treaty provisions may vary and specialist advice is required for any cross-border situation. The exit tax thresholds are subject to change; readers should verify current figures. References are correct to the best of the author's knowledge as of the date of publication.
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Key Legal References
Listed company board conditions for attributing options to executive officers: must distribute options or free shares to all employees (at least 90% of French-subsidiary employees), or implement/improve a participation or intéressement scheme.
Options are personal property (biens propres par nature) of the beneficiary until exercise — the rights arising from attribution are non-assignable until the option is exercised; entering the community requires exercise during the marriage.
Heirs of a deceased option-holder must exercise within six months of death — strict forfeiture deadline that runs against legally incapacitated heirs and minor children; options lapse entirely if deadline passes without exercise.
Excess discount (rabais excédentaire): the fraction of the discount above 5% of the share’s value at attribution is taxable as salary income in the year of exercise, subject to the progressive scale and social charges; the already-taxed excess reduces the acquisition gain base at disposal.
Post-28 September 2012 options: acquisition gain is taxed as salary income (traitements et salaires) in the year of disposal of the shares; no minimum holding period; no preferential rate; no 10% professional expense deduction; no quotient mechanism.
Disposal loss offset: if shares are sold for less than their value at the date of exercise, the resulting disposal loss is deductible from the acquisition gain up to the amount of that gain; any surplus may be offset against other securities capital gains in the same year or carried forward over 10 years.
Pre-28 September 2012 options (27 April 2000–27 September 2012): preferential rates of 18%/30% (with two-year portage period after exercise) or 30%/41% (without portage), applicable to options held for at least four years from the attribution date. On global election: salary income without the quotient mechanism.
Duration abatements for capital gains on securities, calculated from date of exercise for stock option shares: available only for shares acquired before 1 January 2018; apply to income tax base only, not social charges base.
€500,000 fixed abatement on the capital gain component for retiring SME directors: available for the disposal gain on stock option shares; does not apply to the acquisition gain for any attribution period.
10% specific employee contribution on the net acquisition gain (reduced by any disposal loss on the same shares): applies to all options attributed from 16 October 2007, payable at the date of disposal, collected by the tax authorities as if income tax.
Withholding tax for non-residents on French-source acquisition gain and excess discount from options attributed from 20 June 2007, for gains arising from 1 April 2011. Excess discount withheld at exercise at salary scale; acquisition gain withheld at disposal at preferential or salary-scale rates. 75% rate for ETNC domiciliaries (liberatory). Non-liberatory withholdings are creditable against income tax.
Exit tax on departure from France: applies to latent capital gains on securities where the taxpayer held French residence for at least 6 of the 10 preceding years and holds a participation of at least 50% or a portfolio worth over €800,000. Unexercised options are expressly excluded from the exit tax base.
Acquisition debt on option shares deductible from the taxable gift base under direct-line donation rules, reducing the inheritance/gift tax charge.
IFI reduction for gifts to qualifying public-benefit foundations (CGI Art. 978): incompatible with the acquisition gain purge — the 75% IFI reduction extinguishes the purge entitlement for the fraction of the gift that generated the reduction.
Automatic sursis d’imposition (roll-over) on contribution of shares to a corporate-tax company: the entire gain for pre-20 June 2007 options is automatically deferred until disposal of the receiving company’s shares.
Elective report d’imposition (deferral) on contribution of shares to a controlled company; conditions and purge on subsequent transmission by inheritance or donation (with 5-year retention requirement).
Société de rachat d’entreprise par les salariés (RES): contribution of shares to this specific buyout vehicle has intercalary status and does not trigger the acquisition gain for options attributed from 20 June 2007.
Démembrement of stock option shares before donation: the purge of the acquisition gain applies only proportionally to the nue-propriété transferred; the bare owner of the transferred nue-propriété is solely liable for tax on both portions on a subsequent sale of full ownership.
PEE exercise financing: employees may use blocked PEE savings to fund the exercise of stock options without triggering an early release; shares must remain in the PEE for 5 years from exercise; after 5 years the entire net gain including the acquisition gain is income-tax-exempt.
Reference period and apportionment of stock option acquisition gain between France and treaty states: where no vesting delay, attribution country has exclusive taxation rights; where vesting delay, pro-rata apportionment by calendar days in each state from attribution date to vesting date.
The domestic characterisation of the acquisition gain (capital gain or salary) does not affect its treaty classification: the acquisition gain is always employment income under treaty Article 15 regardless of its treatment in French domestic law.
French residence for purposes of the acquisition gain tax is assessed at the date of exercise of the options, not at the date of disposal: a beneficiary who was French-resident at exercise cannot avoid French taxation of the acquisition gain by subsequently changing residence.
Unexercised options are personal property (biens propres par nature) of the holder under French matrimonial law regardless of the matrimonial regime: only shares resulting from exercise during the marriage enter the community.
The six-month forfeiture deadline for heirs to exercise stock options after the holder’s death runs against legally incapacitated heirs and minor children — options lapse entirely if not exercised within six months.
Social Charges: The Complete Picture
Excess discount: CSG and CRDS apply as employment income from exercise from 1 January 1995. Social security contributions also apply from 1 January 1995, withheld at source by the employer on the pay slip following exercise.
Acquisition gain: CSG and CRDS apply as revenue from assets at 17.2% in the year of disposal. Post-2012 options: assessed as employment income at 9.2% + 0.5% instead. No social security contributions apply to the acquisition gain for properly compliant plans. Where a company fails its mandatory URSSAF filing obligations, the acquisition gain becomes subject to social security contributions — but the employer bears the entirety of those contributions, including the employee's share.
10% specific employee contribution (CSS Art. L 137-14): For options attributed from 16 October 2007, a dedicated 10% contribution is due by the employee on the net acquisition gain (reduced by any disposal loss on the same shares), payable at the date of disposal. Not assessed on the capital gain component.
Capital gain: 17.2% social charges as revenue from assets, assessed on the full capital gain without abatement, regardless of any duration abatement reducing the income tax base.