TLDR: Stock options granted by foreign companies to employees or mandataires sociaux working in France benefit from the French special tax regime (Article 80 bis of the CGI) if the grant complies with the conditions of qualified plans (Articles L. 225-177 to L. 225-186 of the code de commerce). Since 28 September 2012, the gain on exercise is always taxed as salary and wages. Non-listed companies can only grant options to their own employees and mandataires sociaux.
Scope of foreign plans
The special tax regime applies to stock options granted by a foreign company to employees or mandataires sociaux working in France in a company of which it is the parent or subsidiary, provided that the grant complies with the same rules as French qualified plans (Articles L. 225-177 to L. 225-186 of the code de commerce).
Eligibility for the regime under Article 80 bis of the CGI is not called into question if the granting company is subject to rules offering guarantees equivalent to French legislation regarding shareholder protection and board transparency (e.g., companies subject to the Securities Exchange Act of 1934 with securities listed on the NYSE or NASDAQ).
Eligible beneficiaries
Foreign non-listed companies can only grant stock options to their own employees and mandataires sociaux, thus excluding employees and executives of parent or sister companies.
Executives of French companies receiving options granted by related companies (French or foreign) are not subject to the restrictions of Article L. 225-186-1 of the code de commerce (e.g., time limits on grants).
Specific limits for listed companies
Foreign companies granting stock options to executives of their French subsidiaries must comply with the grant limit provided for in Article L. 225-186-1 of the code de commerce. The condition relating to the implementation or improvement of employee share ownership and employee savings schemes is assessed with regard to the French subsidiaries and branches of the granting company.
Tax regime for the gain on exercise
For stock options granted up to 27 September 2012, if the conditions of Article 163 bis C of the CGI (repealed) are not met, the gain on exercise is taxed as salary and wages in the year the shares are converted to bearer, leased or transferred.
For stock options granted from 28 September 2012, the gain on exercise is always taxed as salary and wages, regardless of compliance with the conditions of qualified plans.
Special cases
Stock options granted by foreign companies not complying with the conditions of qualified plans do not benefit from the special tax regime.
Compensation received by employees resident in France as compensation for the loss of the benefit of stock options (e.g., following a tender offer or mandatory withdrawal) is taxable under the category of salaries and wages.