Employee Share Plans in Europe and the USA - Sorainen

More documents

Recommendations

Info

Employee Share Plans in Europe and the USAFrancelist of such requirements was published in a revenue ruling. The scope of thisruling is not clearly defined but further guidance in particular cases could besought from the tax authorities if required.If the conditions apply, the following tax regime applies:5.1.1 Grant: French employers are subject to a 10% employer social securitycontribution payable on the grant date of qualified stock options (optionsgranted prior to 16 October 2007 are not subject to this charge) 27 .The amount subject to this social security charge is 25% of the fair marketvalue of the underlying shares on the grant date. However, companieswhich report on a consolidated basis under international accountingstandards 28 may instead choose to determine the amount of the employer(b) if the underlying shares are not listed on a stock exchange, the rules are the same asmentioned above under (a) subject to the following exceptions: (i) in the case of anoption to purchase existing shares, the options should be granted only to employees ofthe issuing company, or to employees of a French company at least 10% of whoseshare capital is held by the issuing company and (ii) only executive officers of the issuingcompany may benefit from stock options;• the option holders must not hold more than 10% in total of the issued share capital of the foreignparent company;• if the shares subject to the option are listed on a stock exchange, the price payable under theoption must not be less than 95% of the average share price over the 20 stock exchange dealingdays immediately preceding the date the option is granted;• in the case of options to purchase existing listed shares, the company must acquire the sharesbefore the date on which the options become exercisable. However, the shares cannot be held formore than one year before the grant of the options. The exercise price cannot be less than 95% ofthe average purchase price of the shares owned by the company at the date the options aregranted. Therefore it is advisable to operate French approved plans over newly issued shares only;• if the shares subject to the option are not listed, the option exercise price must be determined inaccordance with objective stock valuation methods;• if the shares of the company issuing the options are listed, no option may be granted duringspecific black-out periods;• the options are not transferable;• the options must be granted for nil consideration.2728The 10% contribution was introduced by Article 13 of the 2008 French Social Security Financing Billand applies to options granted since 16 October 2007. It applies to options granted to beneficiarieswhose remuneration or gains are subject to a compulsory French social security regime.Consolidated financial statements in accordance with Regulation (EC) No 1606/2002 of the EuropeanParliament and of the Council of 19 July 2002.UK/1729295/03 63 September 2010
Employee Share Plans in Europe and the USAFrancesocial security contribution on the basis of the fair value of the optionsunder IFRS 2. The choice made by a company is irrevocable for all optionsgranted in the same year.The above employer social security charge is triggered on grant,regardless of whether the exercise of the options is subject to anyconditions.5.1.2 Exercise: Where an approved option relates to shares quoted on astock exchange, tax and social security contributions only arise onexercise if the option exercise price was set at a discount exceeding, inbroad terms, 5% of the average price of the shares over the 20 dealingdays before grant 29 .The part of the discount which exceeds 5% is subject to income tax atthe time of exercise at the employee's marginal rate which, for the 2010tax year varies from 0% to 40%. In addition, employer and employeesocial security contributions (at a combined rate of approximately 20%-30% for employee contributions and 45%-50% for employercontributions) are due.For the employer, the costs incurred in relation to the exercise of theoptions are deductible from its taxable income. A deduction would alsobe available for a capital loss realised in respect of (i) the differencebetween the value of the treasury shares and the exercise price in thecase of options to acquire existing shares or (ii) the difference betweenthe value of the stock on the date of the share capital increase and theexercise price in the case of options to subscribe for newly issuedshares, provided, in the latter case, that the following conditions are met:• the options to subscribe for shares benefit all of the employees of thecompany; and• the options are granted on a uniform basis, either in proportion to thelength of presence in the company during the relevant financial year29To fall within the exemption from tax, for options to subscribe for new shares, the discount must notexceed 5% of the average quoted price of the shares over the 20 dealing days preceding grant. Foroptions to purchase existing shares, the discount must not exceed 5% of the highest of:• the average purchase price of the shares held by the company at the date of grant of the options;and• the average quoted price of the shares over the 20 dealing days preceding grant.UK/1729295/03 64 September 2010
Page 1 and 2:
Employee Share Plansin Europe and t
Page 3 and 4:
Employee Share Plans in Europe and
Page 5 and 6:
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19: Employee Share Plans in Europe and
Page 22 and 23: Employee Share Plans in Europe and
Page 69: Employee Share Plans in Europe and
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Page 207 and 208:
Page 209 and 210:
Page 211 and 212:
Page 213 and 214:
Page 215 and 216:
Page 217 and 218:
Page 219 and 220:
Page 221 and 222:
Page 223 and 224:
Page 225 and 226:
show all

Employee Share Plans in Europe and the USA - Sorainen

Create successful ePaper yourself

Delete template?

Save as template?