Introduction
Direct employees
Can receive NSO?
✅ Yes!
General taxation
Depends on type of share scheme.
For BSPCE: no taxation before the shares are sold.
General tax, reporting & legal paperwork difficulty score
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Tax advantages
Several local tax-favored schemes available, including BSPCE (bons de souscription de parts de créateur d’entreprises) and “free shares” (actions gratuites), subject to conditions.
For BSPCE: Subplan to the main plan to be adopted, monitoring of eligibility criteria required + specific formalities apply at exercise.
With BSPCE, if the employee stays for 3 years with the company, taxation will be even more favorable, a good incentive for them to stay longer!
Set-up your French BSPCE subplan and grant equity to your French team members in a few clicks with Easop Try Easop
EoR employees
Can receive NSO?
✅ Yes!
General taxation
🛎 The tax treatment of stock options offered to contractors is not clear: it’s difficult to tell how and when stock options are going to be taxed by the French tax authorities.
Taxation could theoretically occur only at the time of sale (on the difference between the price at which the contractor sells his/her shares and the exercise price paid by the contractor to buy the shares) as a capital gain (which is taxed favourably).
The problem is that if stock options have been offered outside of an existing legal framework - which is the case when stock options have been granted to contractors -, then the tax authorities have the right to requalify the gains and treat them as either (i) employment income, or (ii) non-commercial business income or distributed income, depending on the nature of the business relationship between the grantee and the company.
Personal tax advisor assistance is highly recommended.
General tax, reporting & legal paperwork difficulty score
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Tax advantages
No particular tax advantages, and overall taxation is unclear.
Contractors
Can receive NSO?
✅ Yes!
General taxation
Tax treatment outside of regulatory framework is not entirely clear.
There should be no taxation at grant.
The stock options should be taxed at the time of exercise, as salary income (which is taxed at progressive income tax rates that can go up to 45%).
Once the grantee sells the shares, he/she will be taxed on the sale gain, at a flat tax rate of 12.8% (plus a “general social contribution” of 17.2%).
General tax, reporting & legal paperwork difficulty score
🤯 🤯
Tax advantages
No tax-favored scheme available for EoR employees. In certain circumstances, early exercise may reduce the tax burden, but it has certain downsides as well.
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