Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USAItalytaxed when the option was exercised. If social security contributionswere due, an employee would be subject to social security contributionson the amount subject to income tax at rates ranging from approximately8% to 10% 18 (the rates depended on the number and category ofemployees). For options exercised on or after 25 June 2008 (regardlessof when they were granted) the above regime no longer applies (seefurther paragraph 5.1.2 above). For options exercised before that datethe holding requirement referred to in (v) above continues to apply.5.2 Employer tax and social security contributions5.2.1 Corporation tax deduction: As a general rule, any actual cost incurredby the employer in relation to a plan granting share options toemployees is tax deductible. A case-by-case analysis is required,especially for intra-group charges.5.2.2 Social security contributions: Employer social security contributionswill not be payable on the exercise of an option unless the employee issubject to social security contributions.5.3 Tax withholdingIncome tax (and employee social security contributions, if any) must be withheldby the relevant employer, shown in the employee's monthly payslip and thenpaid to the relevant agencies. If the salary is not sufficient, the employee isrequired by Italian law to provide the employer with the funds necessary to paythe taxes and employee social security contributions which are due.6. Taxation of share disposals6.1 If the employee sells shares, the capital gain will be subject to capital gains tax.6.2 If income tax was not payable at the time the shares were acquired, the capitalgain will be the difference between the sale proceeds and the price paid by theemployee for the shares.18There are minimum earnings thresholds which vary depending on the business industry and accordingto the employees' category. The Italian Social Security Agency has fixed a maximum annual earningcap (€92,147.00 for 2010). Once exceeded, social security contributions are not due, but this appliesto employees only if (i) the employee had registered with the mandatory social security system startingfrom 1996 and had no social security contributions paid before 1996; or (ii) the employee was alreadyregistered before 1996 but had opted for a new way of calculating his pension, having met the relevantrequirements; and to come kinds of consultants falling within the category of the so-called "coordinatedand continuous collaborators", which in principle also includes directors not otherwiseenrolled in a professional pension scheme.UK/1729295/03 120 September 2010