The granting of stock options (employee shareholdings) as a form of remuneration is becoming increasingly important. Employees are granted the right to purchase shares of the company at a predetermined price within a certain period or at a certain time. As the exercise of the granted option usually constitutes a benefit from the employment relationship, the question of the correct tax treatment regularly arises. The following article provides a brief overview of the current changes.
Recently, the Federal Tax Court (BFG) had to decide whether the granting of stock options by the group parent company to employees of the group subsidiary company was at the instigation of the group subsidiary company (and therefore subject to non-wage labor costs) or not. In this specific case, the final decision-making power as to which employees were granted stock options and to what extent lay at the level of the group parent company's management board. The fact that the employer (group subsidiary company) and the third party (group parent company) are intertwined in terms of capital and that the employer
Nevertheless, the employer (group subsidiary company) is liable for wage contributions if the payments made by the third party (group parent company) are a shortening of the payment channel. This is the case, for example, if the payments made by the third party repay a debt owed by the employer to the employees. However, there was no evidence of this in the present case.
Based on the decision-making power of the group parent company's management board, the Federal Tax Court came to the conclusion that the disputed payments were wages from a third party (the group parent company) without the employer's (the group subsidiary's company) instigation and therefore there was no obligation to deduct non-wage labor costs.
However, it remains to be seen whether the Supreme Administrative Court will confirm the view of the Federal Tax Court. The proceedings are currently pending.
Time of Taxation
As option holders, employees always have the choice of exercising the option granted to them or allowing it to lapse. The Wage Tax Guidelines have therefore clarified that the free or discounted transfer of options that represent assets is not taxable at the time the option is granted, but only at the time the option is exercised. Irrespective of whether options are freely tradable or not, this is merely an opportunity for the employee, which is only realized subject to tax at the time of exercise.
Stock Options in the Group
Since 2015, employers have also been required to withhold wage tax from the employee for benefits from a third party if the employer knows or must know that such remuneration is being paid. However, according to established case law of the Supreme Administrative Court, the employer's obligation to withhold non-wage labor costs due to remuneration granted by a third party only exists if this remuneration was paid at the instigation of the employer and is therefore remuneration with the character of wages. In the case of remuneration from a third party without the character of wages (i.e. not at the instigation of the employer), there is no obligation to deduct non-wage labor costs regardless of the obligation to deduct wage tax.Recently, the Federal Tax Court (BFG) had to decide whether the granting of stock options by the group parent company to employees of the group subsidiary company was at the instigation of the group subsidiary company (and therefore subject to non-wage labor costs) or not. In this specific case, the final decision-making power as to which employees were granted stock options and to what extent lay at the level of the group parent company's management board. The fact that the employer (group subsidiary company) and the third party (group parent company) are intertwined in terms of capital and that the employer
- becomes aware of the third party's payments and approves them,
- economic or personal data is transmitted to the third party and
- is involved in the organizational processing of the payment of the benefits from the stock options,
Nevertheless, the employer (group subsidiary company) is liable for wage contributions if the payments made by the third party (group parent company) are a shortening of the payment channel. This is the case, for example, if the payments made by the third party repay a debt owed by the employer to the employees. However, there was no evidence of this in the present case.
Based on the decision-making power of the group parent company's management board, the Federal Tax Court came to the conclusion that the disputed payments were wages from a third party (the group parent company) without the employer's (the group subsidiary's company) instigation and therefore there was no obligation to deduct non-wage labor costs.
However, it remains to be seen whether the Supreme Administrative Court will confirm the view of the Federal Tax Court. The proceedings are currently pending.
Authors:
Viktoria Drapak  viktoria.drapak@bdo.at +43 5 70 375 - 1310 |
Julia Mäder |
