How RSUs Are Taxed in France for American Employees

An American working in France with unvested RSUs faces a problem that neither their French payroll department nor their U.S. CPA is likely to raise with them, because it only becomes visible when the two systems are looked at together.

The United States taxes RSUs when they vest. France, for plans that qualify under its own rules, taxes the same gain only when the shares are sold. If those two events fall in different calendar years, the foreign tax credit that is supposed to prevent double taxation becomes difficult to claim on either side. The income has already been taxed in one country in a year in which the other country recognizes nothing.

This is not a marginal drafting point. On a tranche worth several hundred thousand euros, the cost of getting it wrong is measured in six figures.

Two gains, two regimes

French tax law splits the economic result of an RSU award into two separate items, taxed under different rules and reported separately.

The acquisition gain (gain d'acquisition) is the value of the shares on the vesting date. It represents the compensation element: what the employer transferred to the employee for free.

The disposal gain (plus-value de cession) is the difference between the sale price and the value at vesting. It represents the investment return earned after the shares became the employee's property.

Confusing the two, or reporting the whole sale proceeds as a single capital gain, is the most common error we see on returns prepared without advice. It produces the wrong tax, the wrong social levies, and the wrong treaty treatment.

Whether your plan is "qualified" determines everything ‍

France operates a preferential regime for free share awards under Article 80 quaterdecies of the French Tax Code, available to French and foreign companies whose plan complies with the conditions of the French Commercial Code. The conditions are cumulative and cover, among other things, shareholder authorization of the award, minimum vesting and holding periods, and, for a foreign granting company, a parent-subsidiary relationship of at least 10% with the French employing entity.

Where the conditions are not met, the plan is non-qualified and the entire acquisition gain is taxed as ordinary employment income, at progressive rates, with no allowance and no deferral. The same result follows where qualifying shares are sold during the holding period set by the plan.

In our experience, the two conditions that most often fail are the parent-subsidiary link and the holding period. Most large U.S. employers with French headcount have adopted a compliant French sub-plan. Do not assume yours has. The plan documents need to be read.

The acquisition gain is taxed when you sell, not when you vest

Under the qualified regime, the acquisition gain is taxed in the year the shares are disposed of, not the year they vest. This deferral is the central feature of the French regime and the source of the cross-border problem described below.

The gain is measured at the vesting date: for listed shares, the opening price on the day of definitive acquisition, converted into euros at that day's exchange rate where the price is in dollars. So the amount is fixed at vesting. Only the taxation is deferred.

The €300,000 threshold splits the gain in two

For shares awarded under a shareholder authorization given on or after 1 January 2018, Article 200 A, 3 of the French Tax Code taxes the acquisition gain in two layers.

Up to €300,000 per year, the gain is taxed in the employment income category, at progressive rates, after a 50% allowance, and bears social levies on investment income at 18.6%.

Above €300,000, the excess is taxed at progressive rates with no allowance, plus social levies on earned income at 9.7% and a specific 10% employee contribution.

The threshold applies per calendar year. Because the taxable event is the sale rather than the vesting, an employee who lets several tranches accumulate and then liquidates them together can push a large amount above the threshold in a single year, when spreading the sales over two years would have kept both within the 50% allowance. The sale calendar is a planning variable, not an afterthought.

The disposal gain

The rules changed for disposals made on or after 15 February 2025. The question is now whether the gain represents a normal investment return or consideration for the holder's functions as an employee or executive. For a standard corporate RSU sub-plan with no performance mechanisms, lock-ups or leaver clauses beyond the statutory holding period, the gain is a normal investment return, taxed under the ordinary regime at the 31.4% flat tax (12.8% income tax plus 18.6% social contributions), with an option for the progressive scale where more favorable. Plans that tie the gain to the holder's functions fall under the management packages regime and require a case-by-case analysis.

One point works in the employee's favor. Where shares are sold below their value at vesting, the resulting loss offsets the acquisition gain, up to the amount of that gain, and the offset is applied before the €300,000 threshold is tested. In a falling market, this can move a large part of the gain back below the threshold. ‍

The timing mismatch with the United States

Here is where the analysis stops being a French tax question.

The acquisition gain is employment income for treaty purposes, taxable in France under Article 15 of the France–U.S. income tax treaty of 31 August 1994. The saving clause allows the United States to continue taxing its citizens regardless of their French residence. Double taxation is then eliminated by the United States crediting the French tax against U.S. federal income tax.

That mechanism works, but only if both countries recognize the income in the same year.

They frequently do not. Subject to confirmation on the U.S. side, the gain is generally recognized in the United States at vesting, whereas France defers taxation to the year of disposal. A tranche that vests in November of one year and is sold in March of the next is taxed in the United States in year one and in France in year two.

The French tax is not paid until year two. The U.S. tax was due in year one. Claiming a credit for a tax that has not yet arisen, in a year that has already been filed, is not straightforward, and there is no guarantee that relief is complete. The exposure is genuine unrelieved double taxation on the same income.

The fix is unglamorous and effective: sell each tranche in the same calendar year in which it vests. That single discipline brings the French and U.S. taxable events into the same fiscal year and removes the mismatch. For a November vesting, the sale window runs from the vesting date to 31 December.

This should be confirmed with U.S. counsel before being adopted as a policy, because the conclusion depends on the U.S. treatment of the specific plan. But for most American employees holding qualified French RSUs, matching the sale year to the vesting year is the difference between a treaty that works and a treaty that does not. ‍

The disposal gain raises no equivalent problem. Both countries tax it in the year of sale, and France grants a credit equal to the French tax, conditional on the taxpayer demonstrating compliance with their U.S. federal income tax obligations. The gain remains reportable in France and enters the effective rate calculation, but bears no net French income tax.‍ ‍

The contribution your treaty credits will not touch

Americans in France often discover that, once treaty credits have run, their French income tax bill on investment income is close to zero. They then assume the same is true of everything else. It is not.

The exceptional contribution on high income (CEHR) applies at 3% on the portion of reference income between €250,001 and €500,000 for a single taxpayer, and 4% above €500,000, with thresholds doubled for joint filers. The contribution follows the treaty characterization of each underlying income category. Income that benefits from a treaty credit bears no net CEHR. But employment income and RSU acquisition gains carry no credit, so they become the main drivers of the CEHR charge, precisely because the rest of the portfolio has been neutralized.

On a year in which a large tranche is sold, the CEHR is a net cash cost that needs to be provisioned in advance, alongside the income tax on the acquisition gain. Where the sale proceeds have been reinvested rather than set aside, the liquidity problem is real and arrives with the following year's tax assessment.

Reporting, briefly ‍

The two gains are reported separately, in dedicated boxes of the French return, in the year of disposal. Two annexes catch almost every American out: Form 2047, which is the mandatory support for claiming treaty credits, and Form 3916-3916 bis, which reports each foreign account, including the brokerage account holding the shares, at €1,500 of fine per undeclared account per year. Vesting statements must be retained for production on request until three years after the year of sale.

Omitting the acquisition gain exposes the taxpayer to late payment interest and penalties. Where past returns are incomplete, an amended return filed before the tax authorities act materially reduces the exposure.

Planning points

Read the plan documents before assuming the qualified regime applies.

Confirm the U.S. treatment with your CPA, then set a sale policy. For most qualified French plans, selling within the calendar year of vesting eliminates the mismatch.

Model the €300,000 threshold before you sell, not after. Splitting disposals across two calendar years can preserve the 50% allowance on the whole amount.

Provision cash for the CEHR ahead of each disposal event. The credits that neutralize your investment income will not reduce it.

If you have not yet moved to France, most of these questions are still open, and several have better answers than they will have once you arrive. See Before you move.