The French Finance Act 2013 (the "Finance Act") has
made important amendments to the treatment of social security
contributions paid in respect of stock options and supplementary
Stock Options and Allocation of Free Shares. The
Finance Act implements new conditions that must be met in order for
the proceeds of stock options and share sales (where the stock
option or free share awards were granted on and after 28 September
2012) to benefit from an exemption from social security
Before the Finance Act, such stock awards benefited from an
exemption from social security contributions when the options or
shares were held for a period of four years before the options were
exercised or the shares sold. Under the Finance Act, this four-year
"holding" period has been abolished. For the exemption to
operate, the employer must notify the French Social Security
Administration of the name of the beneficiaries as well as the
number and the value of shares allocated to each of them.
The Finance Act also now classifies the proceeds of stock options
and share sales as salary income that is subject to the income tax
regime. It further treats stock options and free share allocations
as regular salary income for the purpose of CSG/CRDS contributions.
The contribution rate is 8 percent. (CSG/CRDS contributions are
specific contributions that are usually deducted from
employee's remuneration and which finance, in particular, state
health, welfare and retirement schemes.)
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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