Tag Archives: Germany

Capital gains from a management participation plan may not be wages

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

Granting of Restricted Stock Units is Compensation for Future Work Performance

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

Profit participation rights may be taxed as income in Germany

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