Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USAFrancefavourable if the employee's marginal income tax rate is lower than30%) 40 .The acquisition gain is also subject to a 2.5% employee social securitycontribution calculated on the basis of the fair market value of the shareson the acquisition date (date of transfer of the shares to the employee).The 2.5% contribution is due at the time of the disposal of the shares(free shares granted prior to 16 October 2007 are not subject to thischarge) 41 .As regards the employer, French tax law provides that a Frenchcompany issuing free shares to its employees can deduct the differencebetween the value of the free shares on the date of the increase in sharecapital and the subscription price (being zero in the case of free shares),if the following conditions are met:• the free shares benefit all employees of the company; and• the free shares are granted on a uniform basis, either in proportionto the length of presence in the company during the relevantfinancial year or in proportion to wages, or by virtue of acombination of these criteria.5.2.3 Disposal: The disposal gain, which is equal to the difference betweenthe sale price and the market value of the shares at the time of vesting istaxed at a flat rate of 18% plus employee social contributions amountingto 12.1%. 42404142The income tax rates range from 0% to 40% for 2010 income, increased by additional contributions of12.1%.The 2.5% contribution was introduced by Article 13 of the 2008 French Social Security Financing Billand applies to free shares granted since 16 October 2007. It applies to free shares granted tobeneficiaries whose remunerations or gains are subject to a compulsory French social security regime.Under the provisions of a law dated 30 December 2006 for the development of employees' participationand shareholding, the employees will have the possibility of transferring their free shares into anemployee savings plan at the end of the vesting period subject to conditions (in particular, that all of theemployees benefited from the free shares grant). In such a case, at the end of the five-year holdingperiod as from the transfer, the employee will be exempt from personal income tax on the disposalgain.UK/1729295/03 69 September 2010