In a decision dated 28 April  2017, the French Constitutional Court ruled that employers can claim a refund of the employer social insurance contribution paid upon grant of French-qualified RSUs if the RSUs are subsequently forfeited. In reaching its decision, the court reasoned that the law cannot require an employer to pay tax on remuneration that is not actually paid.

This is potentially good news for companies that granted French-qualified RSUs under the pre-Macron regime, which required the payment of a non-refundable employer social insurance contribution of 30% at grant (due on the value of the shares underlying the RSUs at grant or the IFRS value of the awards, at the election of the employer). Such companies may now have a right to claim a refund of the previously-paid contributions if the French-qualified RSUs are subsequently forfeited and the underlying shares are not issued to the French employees. The right to a refund arises when the French-qualified RSUs are forfeited. However, it is likely that the refund can be claimed only if the contributions were paid within the last three years.

The decision does, on its face, not apply to employer social insurance contributions paid upon grant of French-qualified options. It is not certain if another court decision is necessary before companies can claim refunds for such contributions or if the French social security authorities will consider refund claims without a court decision.

We recommend that companies that have granted French-qualified RSUs under the pre-Macron regime or French-qualified options review their forfeiture records to determine whether they have a possible claim for refund.

Please contact your Global Equity Services attorney with any questions related to the availability of and timing of claiming a refund.

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