At the end of December 2013, the French government enacted the 2014 Finance Bill, which provides for a 50% employer-paid tax on compensation paid to employees which exceeds 1 million EUR during 2013 and 2014. This tax replaces the former 75% tax previously introduced by the government but declared unconstitutional by the French Constitutional Court (Conseil Constitutionnel).

The 50% tax is based on the portion of an individual's gross remuneration exceeding 1 million EUR and includes common fixed and variable payments, including salary, profit sharing, stock options/equity awards, and retirement payments. For purposes of the new tax, equity awards are valued at the time of grant under a specific formula.

The tax is capped at 5% of the company's turnover during the year of the payment to the employee. In addition, the new tax also applies to non-French companies which have subsidiaries or stable establishments (établissement stable) in France and also to French companies which have employees abroad.

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