Taxation of startup options

Taxes
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I’m evaluating an offer to join a startup. The company in the question is based in France rather than Switzerland in case that has any implications.

Suppose as part of my compensation i get a grant of 4000 options upon joining, with a strike price of 10€ and company valuation of 20€ at the time of grant. Each year 1000 options vest.

How are these taxed? Do I pay income taxes on the difference between the strike price and valuation as they vest? ie 1000*(20-10)=10k.

Or is it deferred and treated as income only when they are actually effected?

What happens if they raise a new round and the company valuation increases, do I pay a different amount of taxes in that case?

This is a very noob question so thanks in advance. I’m coming from a background with RSUs in big tech where it’s much simpler (you pay income taxes when your stock vests)

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See eg ESOP Guide: Taxation & Implications Explained | LEXR

Afaict unless the company gets a tax ruling up front, it’s a pretty bad deal since in the (unlikely?) case the equity is worth a ton of money, by default you’d pay tax on the capital gain if I understand correctly.

Edit: Merkblatt des kantonalen Steueramtes über die Besteuerung von Mitarbeiterbeteiligungen | Kanton Zürich seems pretty authoritative, unless there’s a tax ruling upfront, options are taxed at exercise for the entire gain (value minus exercise cost)

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I confirm what nabalzbhf writes, we’ve had multiple presentations on the topic at my company, and I looked into it deeper to understand whether it made sense to exercise.

Options are taxed at exercise on (current value - strike price), where the current value is decided by agreement between the company and the tax administration if I understood correctly (I assume the company is still private in your case, otherwise it is current market price), and updated about once a year.
So if strike price is 10, current value 11, you will pay income tax this year on (11 - 10) * number of shares exercised. After that, you will have regular shares, with the usual (no) tax on the gains.

Once exercised, you will also pay wealth tax on the shares, but I believe generally the value used there is very low (in my case roughly value/100, so if value is 10/share, your wealth will be credited with 1ct per share, negligible).

Generally, the system is pretty logical: the “safe” gains are taxed as income, the speculative ones as capital gains. But since the “safe” gains are not so safe in practice due to lack of liquidity, it’s often a pretty bad deal.
My conclusion was that it made sense to exercise either very early when value is still low and take a long bet, or wait until after IPO. Once the company is established, your upside is low (probably a low single digit multiplier at best), risk is still high and income tax on exercise will be significant.

Regarding the France part, it will depend on your contract. But assuming it’s just the headquarters that are in France and you have a regular Swiss contract, as far as I know it doesn’t change anything except that you will get shares in a French company and not a Swiss one. My company is headquartered outside Switzerland, and we still follow the Swiss rules.
A shame, because according to my colleagues attached to the French entity, options are more interesting there as you are taxed on (value at grant - strike point), so even if the company 10x since the grant, you still only pay the income tax on the old price at exercise (and not the current price as in Switzerland). Though knowing the French they most likely have tons of other taxes on top.

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