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Employee options vs. rs us greek tax framework
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Economy & Finance
A recent tax update brought about much-anticipated changes in the taxation of employee options and RSUs. The Greek Tech Finance Network hosted Elina Filippou and Irene Tsiosta from Zepos & Yannopoulos who took a deep dive into this tax update and the use of employee options and RSUs in general.
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Employee options vs. rs us greek tax framework
- 26.01.2021 Stock Options & Share Awards Tax efficiency returned
- Contents 2 Back to the basics 1. Tax treatment revamped | overview 2. A few examples 3. Implementing in practice 4. Questions 5.
- Back to the basics 1.
- Key terms Stock Options Listed/Non-listed shares Share Awards Startups 1. Small companies with net asset value < €4.000.000, net turnover <€8.000.000 and average number of 50 employees 2. Very small companies with net asset value < €350.000, net turnover <€700.000 and average number of 10 employees 3. No registration requirement in the Startup Database of Elevate Greece
- Is it an option or a share? 5 Stock Options Options offered at a zero or discounted price for the purchase of shares Share Awards • RSUs • Restricted Stock • Performance Shares • Performance Units • Matching Shares
- Tax treatment revamped Overview 2.
- Tax efficiency is back 7 Old regime up to 44% salary tax on benefit upon exercise/vesting New regime (under conditions) 5% capital gains tax for Startups; only for stock options 15% capital gains tax
- Stock Options | 3 milestones for taxation Stock Options 2-year + holding period Option grant date The 2-year (or 3-year, for Startups) minimum holding period starts counting Option exercise date The taxable benefit is now generated although taxation is deferred Share transfer date The taxable benefit, classified as capital gains, is now subject to 15% income tax or 5% for Startups* *5% rate for options granted within first 5 years of Startup operation
- Share Awards | 2 milestones for taxation Share awards No minimum holding period requirement Award grant date No taxable event Acquisition of shares The taxable benefit is now generated, although taxation is deferred Share transfer date The taxable benefit, classified as capital gains, is now subject to 15% income tax
- Defining the benefit for non listed shares Net Asset Value Sale price Exercise of options Acquisition of shares Share transfer
- A few examples 3.
- Example #1 Stock options for non-listed shares Sale price Euro 5 Exercise price Euro 2 Share transfer date Option grant date Option exercise date Euro 2 x 15% capital gains tax [Art. 42A] Jan 2021 Taxable event Share value* Euro 4 *Based on company’s net asset value Euro 1 x 15% capital gains tax [Art. 42] & Jan 2022 May 2023 Taxable benefit (per share) = Euro 2 (Euro 4 share value minus Euro 2 exercise price) Taxable benefit (per share) = Euro 1 (Euro 5 sale price minus Euro 4 share value at the date of exercise of options/acquisition of shares)
- Example #2 Stock options for Startup shares Sale price Euro 5 Exercise price Euro 2 Share transfer date Option grant date Option exercise date Euro 2 x 5% capital gains tax [Art. 42A] Share value* Euro 4 *Based on company’s net asset value Euro 1 x 15% capital gains tax [Art. 42] & Taxable benefit (per share) = Euro 2 (Euro 4 share value minus Euro 2 exercise price) Taxable benefit (per share) = Euro 1 (Euro 5 sale price minus Euro 4 share value at the date of exercise of options/acquisition of shares) Jan 2021 Taxable event Jan 2022 May 2024
- Example #3 Share awards (non-listed incl Startups) Sale price Euro 5 Share transfer date Award grant date Acquisition of shares Share value* Euro 4 *Based on company’s net asset value Euro 5 x 15% capital gains tax [Art. 42A] Taxable benefit (per share) = Euro 5 (Euro 5 sale price of shares) Jan 2021 Taxable event Jan 2022 Feb 2022
- Implementing in practice 4.
- Tax compliance for employer Grant date of option / award Option exercise date / acquisition of shares • Salary certificate (reference to the taxable benefit, the grant date and the amount of shares) • Withholding tax return (filed on a monthly basis for reporting purposes) Share transfer date
- Tax compliance for employee Grant date of option / award Option exercise date / acquisition of shares Income tax return of the fiscal year following the transfer of the shares Share transfer date
- New rules apply from 01.01.2020 01.01.2020 • Shares vesting after 1.1.2020 • Options exercised after 1.1.2020 • Applicable for current, future and past employment relationships
- Eligible issuing companies Stock option plans • Greek non-listed companies including startups • Greek companies under the form of “IKE” are not eligible • Parent companies with Greek subsidiary companies in Greece • Affiliated companies Share award plans • Greek non-listed companies including startups • Parent companies with Greek subsidiary companies in Greece • Affiliated companies
- Any questions? 20
- Contact us Elina Filippou Tax Partner e.filippou@zeya.com Irene Tsiosta Tax Associate e.tsiosta@zeya.com 21
- www.zeya.com Thank you