Stock Options in France

An option de souscription d'actions gives the right to subscribe for newly issued shares, while an option d'achat d'actions gives the right to buy existing shares, typically held in treasury. Both are granted at a fixed exercise price, vest over time, and are exercised by the employee paying the strike price to receive shares, unlike BSPCE, where the warrant is cheaper to exercise.

These plans are more commonly used by larger or listed French companies than by early stage startups, since startups that qualify for BSPCE generally prefer it due to the better equity tax treatment for the employee on eventual gains.

The gain on exercise, the difference between market value and the exercise price, is generally taxed as employment income subject to progressive income tax rates and social contributions, though the specific regime depends on the plan's structure and grant date. Further gains after exercise, when shares are eventually sold, are typically taxed as capital gains, which can be subject to the flat tax or, in some cases, an election for the progressive scale.

French stock option taxation has been through several regime changes over the years. The applicable rules depend heavily on when the plan was set up and whether it follows the qualifying French legal framework, so this should be checked case by case with a tax adviser.