French General Tax Code
In forceI. - The employee benefit corresponding to the value, at their acquisition date, of the shares allocated under the conditions defined in articles L. 225-197-1 to L. 225-197-5, L. 22-10-59 and L. 22-10-60 of the French Commercial Code is taxed in the hands of the beneficiary in the category of salaries and wages according to the procedures set out in article 200 A, 3, up to an annual limit of €300,000. The fraction of the benefit that exceeds this limit is taxed in the hands of the beneficiary according to the rules of ordinary law for salaries and wages.
II. - The tax is due in respect of the year in which the beneficiary disposes of his shares, sells them, converts them to bearer form or leases them.
III. - In the case of an exchange of shares without a balancing payment resulting from a public offer, merger, demerger, split or reverse split carried out in accordance with the regulations in force, the tax is due in respect of the year in which the shares received in exchange were disposed of, sold, converted to bearer form or leased.
The same applies in the case of share contribution transactions carried out under the conditions provided for in the second paragraph of III of Article L. 225-197-1 of the Commercial Code by a person holding, directly or indirectly, less than 10% of the capital of the issuing company when the allotment has been made to all the employees of the company and the company receiving the contribution holds, directly or indirectly, less than 40% of the capital and voting rights of the issuing company.
IV. - I to III apply when the allotment is made, under the same conditions, by a company whose registered office is located abroad and which is the parent company or subsidiary of the company in which the allottee carries on its business.
The reporting obligations then fall to the French subsidiary or parent company.
V. - The net gain, equal to the difference between the sale price and the value of the shares on their acquisition date, is taxed under the conditions set out in Article 150-0 A.
If the shares are sold for a price lower than their value on the date of acquisition, the capital loss is deducted from the amount of the benefit mentioned in I, up to the limit of this amount.
