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bigduckontax
bigduckontax, Accountant
Category: Tax
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I have 100 Shares in THALES that were purchased under an employee

Customer Question

I have 100 Shares in THALES that were purchased under an employee share purchase scheme in 2002. Thales is a French company and the shares are priced in euros. I understand that I have to sell them through a company nominated by Thales.
As I remember, and I'm not 100% sure at this distance the Shares were valued at about 13 Euros at the time and employees paid somewhat less, maybe about 9 euros
Are there any pitfalls that I should be aware of before I sell them? Will I have to pay Capital Gains Tax, if so at what rate?
I am of retirement age d.o.b. 27/05/1947 but am still working as a contractor and
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I'm Keith and happy to help you with your question.

This will be an employee share scheme not approved by HMRC. You would be liable to Capital Gains Tax (CGT) in the UK on the gain made on the sale. However, that gain is based on the price at vesting and in most of such schemes participants sell on vesting so there is no capital gain to tax. If there is a gain to be taxed then you can deduct your Annual exempt Amount of 11K and any surplus is taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the year of sale.

You will also have to think about the French taxation possibilities. French tax is so complex and so constantly changing that you are always advised to employ a local professional to guide you through the maze; indeed sometimes French Law makes this compulsory. If is far from simple as you will see if you have a look here:

http://uk.practicallaw.com/7-503-0017?source=relatedcontent

which is enough to make your head spin. The only consolation is that under the Double Taxation Convention between the UK and France you can only be taxed in one jurisdiction and this extends, as far as the UK is concerned, to CGT.

That is a very brief resume of your situation and a lot depends upon the detail, the devil is always in the detail. I do hope I have given you some food for thought with my answer.

Customer: replied 2 years ago.

" However, that gain is based on the price at vesting and in most of such schemes participants sell on vesting so there is no capital gain to tax."

What does the term 'Vesting' mean and why does it have an impact

The value of 100 shares at current prices and euro exchange rate is about £3600

Expert:  bigduckontax replied 2 years ago.
You do not actually own the shares until they vest within the scheme ie are available to you to do what you will therewith. Thus for CGT purposes if you sell on vesting you dispose on the same day as you acquire hence no CGT as far as the UK is concerned. If they vested earlier and cost 9 Euros a share than the gain would be say 3600 - 900 = 2700 less the 11K Annual Exempt Amount so there would be no UK CGT payable anyway.
I cannot comment on the French taxation situation as I explained. This is essentially an UK based tax information forum.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.