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Old 07.02.2012, 21:06
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Stock Options vs Shares - tax treatment?

Does anybody know whether the tax treatment for stock options (ie the ability to buy shares in a business at a pre-determined price) is different from shares themselves provided as part of employment?

Is the tax liability payable on granting of the stock or shares, at the vesting (ie after the period of waiting) or at the exercise (ie at the moment you turn them into cash)?
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Old 07.02.2012, 21:19
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Re: Stock Options vs Shares - tax treatment?

Swiss tax? And if so, are you american? Important as tax at different times but mechanisms can be put in place.
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Old 07.02.2012, 21:30
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Re: Stock Options vs Shares - tax treatment?

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Swiss tax? And if so, are you american? Important as tax at different times but mechanisms can be put in place.
Yes, swiss tax treatment only
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Old 07.02.2012, 21:32
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Re: Stock Options vs Shares - tax treatment?

This guide may help you on the options
http://www.ey.com/Publication/vwLUAssets/2011_global_executive_guide/$FILE/2011_global_executive_guide.pdf

OPTIONS
Assuming you are tax resident in Switzerland and receiving the options as an employee in Switzerland, the options are generally taxed on exercise. However if there is a well established market for options in the shares, then it would be considered that a market price for them can be established on grant, and you would be taxed then. i.e. well before getting any potential income!

SHARES
Assuming you are tax resident in Switzerland and receiving the shares as an employee in Switzerland, then shares will normally be taxed when you receive them "free of restrictions".

So for example if you are promised "5000 shares in 2014, conditional that you are still employed. You don't get title of the shares until 2014, and you don't get dividends until 2014" - most likely taxation is in 2014, when you actually get the ownership of the shares and rights to dividends.

If you are given the shares outright today, then you are taxed today (well, when you do your 2012 tax return...)

My experience on the issue is from 2004 - 2009 when I administered a previous employer's global share plan...so it may not be up to date
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Old 07.02.2012, 21:52
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Re: Stock Options vs Shares - tax treatment?

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SHARES
Assuming you are tax resident in Switzerland and receiving the shares as an employee in Switzerland, then shares will normally be taxed when you receive them "free of restrictions".

So for example if you are promised "5000 shares in 2014, conditional that you are still employed. You don't get title of the shares until 2014, and you don't get dividends until 2014" - most likely taxation is in 2014, when you actually get the ownership of the shares and rights to dividends.
Perfect - thanks, so the actual selling date of shares is irrelevant, only the date of receiving them?
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Old 07.02.2012, 22:05
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Re: Stock Options vs Shares - tax treatment?

exactly
income tax on the value of the shares given to you, when you receive them. They are considered "income from employment".

Then capital gains tax (i.e. none in CH) on the increase in value between now and selling.
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