France Eases Option Taxation

Stock options qualified under requirements of French law are now eligible for improved tax treatment. The spread on shares sold within four years of the grant date continue to be subject to ordinary income tax and employer and employee social and other taxes, all of which can add up to most of the gain. Shares sold between four and six years after grant or more than six years after grant but less than two years after exercise are subject to a lower income tax on the spread and no social taxes. Shares held longer than six years after grant and more than two years after exercise are taxed at an even lower rate (26% on the first one million French francs and 40% on the amount above that). Capital gains taxes are due on gains after exercise regardless of the holding period.