You receive RSUs, stock options, ESPP shares or free shares from a US group while working in France, or you run the plan for French employees. The French tax and social security cost depends on how the plan is drafted and on when the shares vest and are sold.
Tax is decided at four moments. What happens at each one depends first on a single question: is the plan qualified under French law?
No tax for the employee. The plan rules in force on that date decide whether the French conditions are met, and the tax regime follows the date of the decision authorising the award.
Non-qualified plan: the value of the shares is taxed as salary, with social security contributions. Qualified plan: no tax yet, the value becomes the acquisition gain; the employer pays a 30% contribution.
Qualified plan: vesting and holding together last at least two years, with a vesting period of at least one year.
The capital gain since vesting bears the 31.4% flat tax. Qualified plan: the acquisition gain is taxed in the same year, with a 50% allowance up to €300,000.
Donoé, a French tax law firm, reviews the plan rules, drafts the French sub-plan, quantifies the cost for the group and for the beneficiaries, and advises employees on the taxation of their shares, including where the shares vested partly while they worked abroad.
Where the plan meets the French conditions for free share awards (articles L. 225-197-1 et seq. of the French Commercial Code), the vesting gain qualifies for a 50% allowance up to €300,000. Otherwise, each vesting is taxed as salary and bears social security contributions.
An addendum to the global plan, for French beneficiaries only, sets the minimum vesting and holding periods and provides for settlement in shares. It is put in place before the grant, and secures the deduction of the cost in France where the shares are bought back and recharged (article 217 quinquies of the French Tax Code).
For stock options, the exercise gain is taxed as salary and the later capital gain under the rules for securities. For an ESPP, the discount on the purchase price is in principle taxed as salary when the shares are bought; the treatment of each plan is checked against its terms.
The gain is French-source in proportion to the time worked in France between grant and vesting (article 164 B of the French Tax Code), subject to the tax treaty. Reviewing the plan before the move allows withholding and reporting to be organised.
Before the grant, to draft the French sub-plan; before vesting or a sale, to quantify the net proceeds; before a move to or from France, to allocate the gain between the countries.
| Item | Value | Reference |
|---|---|---|
| Allowance on the vesting gain, qualified plan | 50% up to €300,000 | Art. 80 quaterdecies et 200 A CGI |
| Social charges on that portion | 18.6% | Art. L. 136-6 CSS |
| Employee contribution above €300,000 | 10% | Art. L. 137-14 CSS |
| Employer contribution, at vesting | 30% | Art. L. 137-13 CSS |
A global RSU plan applied to France with no addendum: every delivery taxed and charged as salary. Five ancillary clauses stood in the way of qualification; a French addendum removed them, without touching the global plan.
An employee holding RSUs and shares ahead of a liquidity event: distinction between acquisition gain and capital gain, article 163 bis H, net simulation and contribution to a holding.
A private equity professional moving to France with carried-interest and co-investment rights in foreign funds: eligibility for the regime (articles 150-0 A and 163 quinquies C of the CGI) and coordination with mobility.
An exceptional dividend for one client, a sale of shares from RSUs for the other: scope of the CDHR, characterisation of exceptional income, calculation of the December instalment and documentation of the positions taken.
A 30-minute video call, in English or French, to review your situation and identify the points that need advice.
A written analysis of the applicable rules, with the tax cost quantified under each option.
Drafting, filings and coordination with your other advisers, with annual follow-up where needed.
Cassandre Nogues
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It depends on whether the plan meets the French conditions for free share awards. Under a qualified plan authorised since 1 January 2018, the vesting gain benefits from a 50% allowance up to €300,000 and bears the social charges on investment income; the excess is taxed as salary. Under a non-qualified plan, the gain at vesting is salary, subject to income tax and social security contributions.
An addendum to the global plan that adapts it, for French beneficiaries only, to the conditions of articles L. 225-197-1 et seq. of the French Commercial Code: a vesting period of at least one year, a combined vesting and holding period of at least two years, and delivery in shares rather than cash.
The gain is French-source in proportion to the time worked in France between grant and vesting (article 164 B of the French Tax Code), subject to the applicable tax treaty.
Under a qualified plan, the vesting gain is outside the French withholding system and is taxed through the annual income tax return. Under a non-qualified plan, the gain is salary and goes through French payroll, including withholding.
Before the grant. The tax regime of the gain follows the date of the decision authorising the award, and the plan rules in force on that date determine whether the French conditions are met.
A first meeting identifies the questions raised by your situation and the work they call for.