French General Tax Code
In forceI. - For the purposes of determining their taxable income, companies may deduct expenses incurred as a result of the exercise of share subscription or purchase options granted to their employees pursuant to Articles L. 225-177 to L. 225-184 and L. 22-10-56 of the French Commercial Code and as a result of the free allocation of shares pursuant to Articles L. 225-197-1 to L. 225-197-3 and L. 22-10-59 of the same code.
The provisions of Article 39 duodecies apply to capital losses arising from the difference between the subscription price of shares by employees and their original value.
II. - Companies may make a deduction in respect of the financial year during which they issued shares to their employees pursuant to a free allocation of shares to be issued or the exercise of stock options mentioned in the first paragraph of I or pursuant to a capital increase reserved for members of a company savings plan mentioned in article L. 3332-18 of the French Labour Code.
The first paragraph applies provided that:
1° The allotment or subscription options referred to in the same paragraph benefit all the employees of the company;
2° The shares or options are allotted or granted either uniformly, or in proportion to the length of time with the company during the financial year or to salaries, or by a combination of these different criteria.
The deduction referred to in the first paragraph is equal to the difference between the value of the shares on the date of the capital increase and their subscription price.
A decree sets out the terms and conditions for applying these provisions, in particular the reporting obligations.
