RSUs are foreign mechanisms similar to free share awards (attributions gratuites d'actions), which in principle give rise to two distinct gains in France: the "acquisition gain" (gain d'acquisition) on the date the shares definitively vest, and the "capital gain on sale" (plus-value de cession) upon sale, under tax rules modelled on those governing free shares under the French Commercial Code (Code de commerce) and the French General Tax Code (Code général des impôts, CGI).
In brief
- RSUs (restricted stock units) are rights to receive shares free of charge; under French law, they in principle fall under the free share award regime where the plan is qualified.
- For a French tax resident, the acquisition gain is in principle taxed in the year the shares are sold; for plans authorised since 2018, at the progressive scale after a 50% allowance up to €300,000, and like a salary above that.
- The capital gain on sale in principle falls under the 31.4% flat tax for disposals made since 2025.
- For a non-resident, a withholding tax is in principle due in France on the part of the acquisition gain linked to work performed in France during the vesting period.
- The date of authorisation of the plan, the value of the shares at vesting and the working days in France are the key elements of the analysis, ideally carried out with a lawyer.
Contents
- What is an RSU? A simple definition
- 1) French tax residents: treatment of the acquisition gain
- 2) Non-residents of France for tax purposes: withholding tax
- 3) Determining the French source for mobile employees and foreign plans
- 4) Additional technical points
- 5) Summary table
- 6) Practical examples
- 7) Points to clarify in order to secure your position
- What I see in my cases
What is an RSU? A simple definition
RSU stands for “restricted stock units” (in French, « unités d’actions restreintes »). An RSU is a promise made by a company, often the group’s foreign listed parent company, to some of its employees or executives: to deliver shares to them free of charge at the end of an acquisition period, known as “vesting”. These shares are called “restricted” because their delivery is subject to conditions: most often, still being with the group at the end of the vesting period, sometimes meeting performance targets.
An RSU generally goes through three stages:
- The grant: the employee receives rights, but no shares yet.
- Vesting (final acquisition): if the conditions are met, the shares are delivered to the employee and belong to them; their value on that date determines the acquisition gain.
- The sale of the shares, where applicable, which may produce a capital gain or a capital loss on sale.
RSUs differ from other forms of employee share ownership:
| Mechanism | What the employee receives | Price to pay |
|---|---|---|
| RSUs | The right to receive shares free of charge at the end of a vesting period | None, except sometimes a token contribution |
| Stock options | The right to buy shares at a price set in advance (exercise price) | The exercise price |
| Employee share purchase plan (ESPP) | The right to buy shares, often at a discount | The purchase price, after the discount |
Under French law, one distinction drives the taxation of RSUs: where the plan meets the conditions laid down by the French Commercial Code for free share awards (a so-called “qualified” plan), RSUs in principle follow the tax regime of free shares; otherwise (a “non-qualified” plan), the acquisition gain is in principle taxed as salary as soon as the shares vest. The following sections detail these rules. An overview article also compares RSUs, stock options and free shares, and a guide is devoted to employee share purchase plans (ESPP).
1) French tax residents: treatment of the acquisition gain
Principle and timing of taxation
- In principle, for a qualified plan (one meeting the conditions of the French Commercial Code), the acquisition gain (value of the shares on the date of definitive vesting, net of any nominal contribution) is taxed in the year in which the shares are sold, converted to bearer form or leased, and not in the year of definitive vesting; for a non-qualified plan, it is taxed as salary on definitive vesting.
- Intermediate transactions (exchanges without cash adjustment in a takeover bid, merger, demerger, share split or reverse split) do not, in principle, trigger taxation of the acquisition gain, which is deferred until the subsequent sale of the securities received in exchange.
Regime depending on the date of authorisation by the extraordinary general meeting (AGE) (or equivalent qualified plan)
- Authorisations after 30 December 2016: the gain, or the portion of the gain up to €300,000, is in principle taxed at the progressive income tax scale with application, where relevant, of the holding-period allowances applicable to capital gains on securities (AGE up to 31 December 2017) or of a fixed 50% allowance (AGE after 31 December 2017); the portion exceeding €300,000 is taxed as salary, without any allowance
- Authorisations between 8 August 2015 and 30 December 2016: the gain is in principle taxed in full at the progressive scale after application, where relevant, of the holding-period allowances for capital gains on securities.
- Authorisations before 8 August 2015 (awards from 28 September 2012): the acquisition gain is in principle taxed as wages and salaries (alignment introduced by the 2013 Finance Act).
Social security contributions and split treatment below/above €300,000
- For plans after 31 December 2017, the international analysis specifies: up to €300,000, the progressive scale with a 50% allowance (independent of the holding period) and social security contributions on "investment income" (revenus du patrimoine) (overall rate of 18.6% since the taxation of 2025 income, 17.2% previously); and above €300,000, taxation as salary at the progressive scale, with social security contributions on "earned income" (revenus d'activité) (9.7%) and a 10% employee contribution; a 20% employer contribution for AGE decisions taken after the law (2018 Finance Act reform), increased to 30% by the 2025 Social Security Financing Act (LFSS 2025) from 1 March 2025.
- Any capital loss realised on sale may be offset against the corresponding acquisition gain, up to the amount of that gain, before the allowances are applied, and losses on other securities can in principle not be offset against the acquisition gain.
Capital gain on the sale of shares derived from RSUs (ordinary regime)
- The capital gain on sale (sale price minus value on the date of definitive vesting) is taxed under Article 150-0 A of the CGI, in principle under the 31.4% flat tax (prélèvement forfaitaire unique, PFU) (12.8% income tax + 18.6% social security contributions; 30% before the LFSS 2026), subject to options and special cases.
- Holding-period allowances may apply for income tax purposes, depending on the periods concerned and the applicable terms, but do not apply to social security contributions.
2) Non-residents of France for tax purposes: withholding tax
Principle of withholding tax
- French-source benefits derived from free share awards (including qualified RSUs) give rise, upon the sale of the shares, to withholding tax where the beneficiary is not domiciled in France for tax purposes in the year of the sale.
- This withholding tax in principle also applies to stock options and similar instruments, under the same provisions, with nuances regarding excess discounts.
Tax base and terms depending on the award date
- The tax base in principle corresponds to the French-source portion of the acquisition gain (value on the date of definitive vesting net of any nominal contribution), determined in accordance with income tax rules, with an adjustment so that only the French-source portion is taxed according to the period of activity in France during the "vesting" periods.
- For shares awarded from 28 September 2012, the tax base is, as a general rule, equal to the French-source portion of the value on the date of definitive vesting, less the 10% standard deduction for professional expenses (no deduction of actual expenses is allowed).
- Holding-period allowances are, where applicable, taken into account in determining the withholding tax base for plans authorised by an AGE between 8 August 2015 and 30 December 2016, and for decisions after 30 December 2016 up to a gain of €300,000, according to the administrative doctrine cited.
Rate and collection
- For awards before 28 September 2012, the withholding tax may, in certain cases, be levied at a flat rate of 30% on the amount of the benefit, with a discharging effect (régime libératoire) if the lock-up period is observed and no option for wages and salaries treatment has been exercised; otherwise, the "wages and salaries" withholding tax rules apply (detailed references referring to the stock option regime).
- The withholding tax must in principle be paid by the person making payment of the sums arising from the sale of the shares, with specific rules applying in the case of a non-cooperative State or territory.
3) Determining the French source for mobile employees and foreign plans
- Benefits under equivalent foreign plans ("qualified plans") granted by a foreign parent company or subsidiary qualify for the French regime if the conditions are similar to those under French law (shareholding link of at least 10% between the companies).
- In the event of international mobility, if the person concerned is a non-resident in the year of sale, only the French-source "pro rata" portion of the acquisition gain is in principle taxable in France and serves as the base for withholding tax, in accordance with the clarifications of the administrative doctrine. For a French resident, such a limitation could, in some cases, result from the applicable treaty, which only an analysis of the situation by a lawyer can confirm or rule out.
- The tax authorities also point out that accounts opened abroad to receive the shares under these plans, for example with a foreign broker, are in principle declared every year on form no. 3916-3916-bis (see which foreign accounts to declare).
4) Additional technical points
Breakdown of gains and interaction between income tax and social security contributions
- The system draws a strict distinction between the acquisition gain (specific regime depending on periods and thresholds) and the capital gain on sale (ordinary rules of Art. 150-0 A), which determines the base for the corresponding social security contributions (earned income for the salary portion above €300,000, investment income for the balance).
- As a reminder, holding-period allowances do not, in principle, apply to the base for social levies, which is determined before allowances; this may create differences between the income tax base and the social levies base.
Characterisation under employment law and security of the plan
- The Cour de cassation confirmed in 2025 that, except in the case of fraud, failure to vest before the transfer of the employment contract (Art. L. 1224-1 of the French Labour Code) does not justify compensation, since the distribution of free shares is not consideration for work but a retention tool subject to the conditions of the plan.
5) Summary table
| Situation | Acquisition gain (main rule) | Social security contributions | Capital gain on sale |
| Resident – AGE > 30/12/2016 | ≤ €300,000: progressive scale with holding-period allowances (fixed 50% allowance if AGE after 31/12/2017); > €300,000: progressive scale as salary without allowance [CGI Art. 200 A, 3] | ≤ €300,000: investment income 18.6% (17.2% before 2025 income); > €300,000: earned income 9.7% + 10% employee contribution; 20% employer contribution (under the 2018 Finance Act; 30% from 1 March 2025, LFSS 2025) | Ordinary rules of Art. 150-0 A, in practice 31.4% PFU subject to option |
| Non-resident | Withholding tax under Art. 182 A ter on the French-source portion of the acquisition gain, base adjusted according to the plan date (10% standard deduction post-28/09/2012) | According to withholding tax rules and international coordination, with older variants for plans < 28/09/2012 | In principle not taxable in France |
Note: the applicable rules depend in particular on the date on which the plan was authorised; the details above are given subject to changes in administrative doctrine and case law.
6) Practical examples
- RSUs granted by the French subsidiary of a foreign group in 2019 (AGE > 30/12/2016), definitive vesting in 2022, sale in 2025: the acquisition gain would be taxed in 2025, with application of the progressive scale after a fixed 50% allowance on the portion up to €300,000 and taxation as salary above that amount, plus the PFU on the capital gain on sale.
- An employee who became a non-resident in 2025 and sells their RSU shares in 2025: in principle, withholding tax in France in the year of sale on the French-source portion of the acquisition gain only, according to the tax base rules (including the 10% standard deduction post-28/09/2012), collected by the payer of the sums.
- Capital loss on resale below the value at vesting: in principle, offset first against the corresponding acquisition gain, up to the amount of that gain, before allowances.
7) Points to clarify in order to secure your position
To apply these rules precisely to your case, it is important to know, ideally with the help of your lawyer:
- Your tax residence in the year of sale of the RSU shares and, where applicable, your periods of activity in France during the vesting period.
- The date on which the plan was authorised by the AGE (or its equivalent date for a qualified foreign plan), in order to identify the correct regime (before 08/08/2015, between 08/08/2015 and 30/12/2016, or after 30/12/2016).
- The value of the shares on the date of definitive vesting, the existence of any "nominal contribution" and the sale price, in order to split the acquisition gain and the capital gain on sale.
- The existence of capital losses realised on the sale of the RSU shares, so that they are correctly offset against the corresponding acquisition gain.
- The identity of the payer of the sale proceeds if you are a non-resident, since the payer is liable for the withholding tax in France.
- The group structure (parent/subsidiary, 10% threshold) in order to qualify the foreign plan as an "equivalent plan", and any exposure to practices considered abusive in 2025 (undeclared accounts).
Useful questions for analysing a situation:
- What is your tax residence in the year of sale of the RSU shares, and did you have periods of work in France during the vesting period?
- What is the authorisation date (AGE) of the plan under which your RSUs were granted or, for a foreign plan, the date and nature of its equivalence to the French regime?
- What were the value of the shares at definitive vesting and the date of that vesting, and the sale price and date of sale?
- Have you incurred capital losses on the sale of the RSU shares and, if so, against which amount of acquisition gain should they be offset?
- If you are a non-resident, who pays you the sale proceeds, and did that payer apply the withholding tax provided for by Article 182 A ter of the CGI?
- Was the plan set up by a related company (parent/subsidiary) meeting the 10% threshold, and are there any foreign accounts involved that must be declared in accordance with the 2025 anti-abuse reminders?
Any questions? As a tax lawyer, I can help you.
What I see in my cases
The RSUs I see in my cases almost always involve very high stakes, and the transactions are rarely handled properly at employer level: I often have to correct payroll or reporting errors. In the event of mobility, which is very common, removing from the French tax base the portions of the gain that, depending on the applicable treaty and the situation, may not be taxable in France changes the tax considerably; only an analysis of each case by a lawyer can identify them.
When the plan is qualified, several regimes may apply: each grant needs to be analysed separately, and optimisations exist, in particular linked to how long the shares are held. As the tax authorities have a poor grasp of these subjects, clear returns limit their questions, and a well-prepared file makes it possible to answer them simply.
The payroll error I come across most often is overlooking non-qualified plans entirely: nothing has been taken into account in payroll. On the employee’s side, the most common error is applying the qualified-plan regime to a plan that is not qualified. In the event of mobility, the gain is in principle split according to the part of the vesting period worked in France, with often complex judgement calls when teleworking or travel in several countries is also involved. As for the question of whether to sell or keep the shares, it involves weighing the tax impact of a sale against the risk of holding securities whose price may fall: a personal decision, which benefits from being made after analysis.
FAQ
What does RSU mean?
RSU stands for “restricted stock units”: rights, granted by a company to some employees or executives of its group, to receive shares free of charge at the end of an acquisition period (“vesting”), subject to conditions (presence, sometimes performance). In France, they in principle follow the free share regime where the plan is qualified, and the acquisition gain is in principle taxed as salary otherwise (see the definition).
What is the difference between the acquisition gain and the capital gain on sale?
The acquisition gain corresponds to the value of the shares on the day they vest; it in principle follows the specific free share regime. The capital gain on sale corresponds to the difference between the sale price and that value; it follows, as a general rule, the regime for gains on securities.
Can a foreign RSU plan be “qualified”?
Yes, in principle, where its conditions are similar to those of French law and the issuing company and the employing company are linked (in principle by a holding of at least 10%). A French sub-plan is often set up for this purpose.
What happens on an exchange of shares in a merger or a public offer?
These so-called intermediate transactions in principle do not trigger taxation of the acquisition gain, which is deferred until the later sale of the shares received in exchange.
Is a non-resident who sells their shares taxed in France?
In principle yes, through a withholding tax on the part of the acquisition gain corresponding to work performed in France during the vesting period, subject to treaties; it is in principle paid by the institution that pays out the sale proceeds.
Do social security contributions apply before or after the 50% allowance?
In principle before: social security contributions are calculated on the amount of the acquisition gain before the allowance.
