French General Tax Code
In forceI. - 1. The benefits defined in I of Article 80 bis and in I of Article 80 quaterdecies from a French source, give rise to the application of a withholding tax on the sale of the corresponding securities when they are realised by persons who are not domiciled in France for tax purposes. The same applies to net gains from the sale of securities subscribed to in exercise of business creator share subscription warrants mentioned in II of Article 163 bis G realised by the aforementioned persons.
The benefit corresponding to the difference defined in II of article 80 bis, from a French source, is also subject to withholding tax when the options are exercised for persons who are not domiciled in France for tax purposes in respect of the year of said exercise.
2. The withholding tax referred to in 1 is also applicable to salary benefits, of French source, paid to the same persons in the form of the allocation of securities on preferential terms, in particular stock options or the allocation of free shares which do not meet the conditions laid down respectively in Articles L. 225-177 to L. 225-186 and L. 225-197-1 to L. 225-197-5, L. 22-10-56, L. 22-10-57, L. 22-10-59 and L. 22-10-60 of the French Commercial Code. The withholding tax is then due when the securities are subscribed or acquired.
II. - 1. When the net gain on the sale of securities subscribed in exercise of warrants for business creator shares benefits from the regime provided for in I of article 163 bis G, the basis for the withholding tax corresponds to its amount.
2. In situations other than those mentioned in 1, the basis for the withholding tax is the net amount of the benefits granted, determined in accordance with the rules of common law applicable to salaries and wages, excluding those which provide for the deduction of actual professional expenses.
III. - 1. When the net gain from the sale of securities subscribed in exercise of business creator share subscription warrants benefits from the regime provided for in I of article 163 bis G, the rate of withholding tax is 12.8% if it is realised by a person who has been working in the company in which he/she benefited from the allocation of the warrants for at least three years on the date of the sale and 30% if this is not the case. The deduction at source is then in full discharge of income tax.
2. In situations other than those mentioned in 1, the withholding is calculated in accordance with III of article 182 A and regularised under the conditions mentioned in the articles 197 A and 197 B.
IV. - The withholding tax is paid by the person who makes the payment of the sums from the transfer of the securities in the cases mentioned in 1 of I or who records the employee benefit in the cases mentioned in the second paragraph of 1 and in 2 of I.
V. - By way of derogation from III, the rate of withholding tax is increased to 75% when the benefits or gains mentioned in I are realised by persons domiciled in a non-cooperative State or territory within the meaning of article 238-0 A other than those mentioned in 2° of 2 bis of the same article 238-0 A, unless the debtor provides proof that these advantages or gains correspond to actual transactions which mainly have a purpose and effect other than enabling them to be located in an uncooperative State or territory. This withholding is in full discharge of income tax and is not refundable.
