Tax & Legal

As the state of employment, Germany has the right to tax a severance payment to the extent that the employee has exercised the activity in Germany. According to a decision of the Supreme Tax Court in the case of cross-border situations, the exclusion to tax benefits in kind from the exercise of share options and comparable rights under tax treaty law is based pro rata temporis on the place of employment of the employee during the vesting period (defined as the period in which the employee is entitled to acquire the options).

Concerning the taxation of stock options the Supreme Tax Court decided that the question of residency is not to be answered by looking at the year in which the benefit was received (which was the year in dispute), but rather at the time of the plaintiff's residency abroad in the period between the grant of the options and the date on which the option could be exercised for the first time.

In this issue: PwC Reports, Official Pronouncments, Supreme Tax Court Cases, From Europe and From PwC

The Supreme Tax Court has held that the benefit from stock options sold is realised on the date of disposal and is to be based on their value at that point in time.

The Supreme Tax Court has held that the issue of shares at a reduced price is not a taxable benefit if the acquirer is legally unable to dispose of them.

The Supreme Tax Court has held that a company incurred no expense in the issue of free-of-charge stock options to its staff.