Employee Share Plans in Europe and the USA - Sorainen

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Employee Share Plans in Europe and the USAPortugal5.2.2 Social security contributions: Employer social security contributionswill be payable if the employee is subject to social security contributions.The maximum rate of employer social security contributions is 23.75%for the 2010 tax year. 135.2.3 Reporting requirements: The employer must declare the existence ofthe employee share plan to the tax authorities by the 30 th June of thefollowing year (even if the plan relates to a group company). 145.3 Tax withholdingThe employee is liable to account for any income tax due. Social securitycontributions must be withheld by the employer.5.4 Other tax rulesThe vesting of rights attaching to shares may give rise to income tax in certaincircumstances if the shares were subject to certain restrictions. 15Payments made to the employee on account of the right to any income inherentin the shares as well as on account of any increase in value in the shares aredeemed to be employment income.6. Taxation of share disposals6.1 If the employee sells shares, the difference between the market value of theshares on the date of acquisition and the sale proceeds will be subject to tax atthe rate of 20% for the 2010 tax year. The annual positive balance betweencapital gains and capital losses arising from the sale of shares and debtsecurities during that year is subject to an exempt amount of up to €500. 16131415Please refer to footnote 7.Please refer to footnote 10.In employee share plans, where:• the shares are neither acquired nor registered in the name of the employee;• the employees cannot sell or otherwise dispose of the shares; and• the employees will cease to participate in the plan on the termination of their employment,the vesting of the rights attaching to the shares (that is, the right to dispose of the shares) will be ataxable event. The employees will be taxed on the difference between the market value of the sharesat the time of vesting and the price paid by the employee, if any, for the shares. Employee andemployer social security contributions will also be due on the same amount.16The 20% tax rate is applicable to the annual positive balance between the capital gains and lossesarising from the sale of shares and other securities during the year. In the case of shares of micro orUK/1729295/03 155 September 2010
Employee Share Plans in Europe and the USAPortugal6.2 If the shares are bought back from the employee by the employer or by a groupcompany, the gain may be taxed as employment income (and not as a capitalgain).7. Employee benefit trustsTrusts are not recognised under Portuguese law. 17 If a Portuguese resident is abeneficiary of a discretionary employee benefit trust, he will not be taxable forthat reason alone but he may be taxed when he actually receives a benefit fromthe trust.8. Data protectionEmployee consent must be obtained for the collection, processing and worldwidetransfer of personal data in connection with an employee share plan. 18small companies not listed on a regulated market, only 50% of that positive balance is subject to tax.For this purpose, small companies are those with less than 50 employees and less than €10 millionannual turnover or balance sheet and micro companies are those with less than 10 employees andless than €2 million annual turnover or balance sheet.1718Except within the free zone of Madeira.Portuguese law on data protection is based on the EU Directive (Directive 95/46/EC) and requires thecreation or implementation of a database containing personal data to be notified to the National DataProtection Commission, unless specifically exempt.The company responsible for the data processing should notify the National Data ProtectionCommission before processing data by electronic means. The notice should set out the purpose of thedata processing, a description of the categories of data subjects, the names (or categories) ofrecipients and the circumstances in which they will receive the data.These notification requirements do not apply to data processing relating to employees solely inconnection with payroll payments, including the calculation and payment of salary, fringe benefits andother bonuses. It is not clear whether the data processing in relation to employee share plans fallswithin the scope of this exemption but it is understood that the National Data Protection Commissiontake the view that notification is required.Consent (as opposed to notification) from the National Data Protection Commission is required in thefollowing cases:• processing of data relating to an individual's philosophical, political or religious beliefs, sexualorientation, race or health;• processing of personal data relating to an individual's credit status or solvency;• use of data (about the same individual) collected from different sources or for different purposes;and• use of data for purposes other than those for which it was collected.Under Portuguese law, the collection of personal data is permitted whenever the consent of the datasubject has been obtained. Such consent is not necessary when personal data is collected for thefollowing purposes:UK/1729295/03 156 September 2010
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Employee Share Plans in Europe and the USA - Sorainen

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