Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USARepublic of Lithuania6.2 This relief does not apply if the shareholder sells the shares to the issuer ofthose shares or the sale proceeds are received from a company established in atax haven.6.3 Where the exemption does not apply, the capital gains (being the differencebetween the sale proceeds and acquisition costs of the shares) are subject toLithuanian personal income tax at a rate of 15% 9 . As from 1 January 2010,where an employee disposes of shares in his employing company or in a groupcompany (whether acquired from the exercise of an option or otherwise), thetaxable capital gains is calculated based on the difference between the saleproceeds and the market value of the shares at the time they are acquired by theemployee. Any income taxes computed and paid upon the acquisition of theshares are also not deductible for capital gains tax purposes as part of theacquisition costs when those shares are sold.7. Employee benefit trusts7.1 Employee benefit trusts are not recognised under Lithuanian law, but aLithuanian company may make contributions to such a trust for the benefit of itsemployees.7.2 The tax treatment of benefits received by employees from employee benefittrusts is unclear under Lithuanian tax legislation and advice should be sought ona case-by-case basis.8. Data protectionIt is recommended that the employee’s consent is obtained for the collection,processing and worldwide transfer of personal data in connection with anemployee share plan.9. Employment lawUnder Lithuanian employment law, there is a risk that employees may claim aright to continued participation in an employee share plan or that rights under aplan may be included in any compensation due on termination of employment.Companies should seek advice on a case-by-case basis on these issues and/orother employment law issues that may be applicable.9The income tax should be paid and declared by the individual by the 1st of May of the calendar yearfollowing the tax year in which the shares are sold.UK/1729295/03 135 September 2010