After much debate, a new regime for tax-approved options in France has been settled by the French Parliament. In summary, the rules are as follows.
The "Discount" is the difference between the market value of the shares on the day an option is granted and the option exercise price. Under French corporate law, a Discount can only be granted where the shares are listed. Any Discount not exceeding 5% of the market value of the shares is free from income tax and social security contributions upon exercise of the option. Any Discount exceeding 5% is taxed, upon exercise of the option, as salary chargeable to income tax at a rate of up to 52.75% for 2001 and is liable to employee (around 20%) and employer (around 40%) social security contributions.
