The tax consequences in Germany of a management participation plan are not clear. An employee holding an interest in their employer company may either be taxed on the basis of receiving income from their employment or from a capital asset. This results in different tax treatment. Last year the Fiscal Court of Cologne considered a case … Continue Reading
The Fiscal Court of Cologne has ruled that, for German tax purposes, Restricted Stock Units (“RSU’s”) should be regarded as compensation which is intended to be an incentive for the future work performance of the employee. This compensation may therefore be subject to tax in Germany even if the employee has ceased to be resident … Continue Reading
If executives of a German company are granted equity interests in the company, the tax treatment of payments resulting from such equity interests can prove controversial if the tax authorities launch a tax audit. The payments could either be treated as employment income or as a capital gain. In the first case, the payments will … Continue Reading
Within the scope of employee equity participation in Germany, it has been controversial whether income from capital commitments is either partly or entirely to be taxed as employment income or a capital gain. In a recent decision, the German Federal Fiscal Court (Bundesfinanzhof, BFH) has now clarified that value derived from profit participation rights (Genussrechte) … Continue Reading
In common with many countries, Germany generally taxes an employee stock option at the time the option is exercised, rather than at the time it is granted. After all, that’s when the value is realised. A recent decision of the German Federal Fiscal Court opens up the possibility of reducing the tax cost to employees … Continue Reading
