Employee Share Plans in Europe and the USA - Sorainen

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Employee Share Plans in Europe and the USASpain4.2.2 Social security contributions: Employer social security contributionswill be payable in respect of shares provided to employees for free or ata discount on the amount subject to income tax at a standard rate (forthe 2010 tax year) of 29.90% for indefinite employment contracts,31.10% for full-time fixed-term employment contracts and 32.10% forpart-time fixed-term employment contracts, plus contributions foroccupational accidents and illnesses (which range from 0.90% to 8.15%,depending on the type of activity carried out). The maximum earningsthreshold for the 2010 tax year is €3,198 per month. 184.3 Tax withholdingThe employer must withhold any income tax and social security contributionsarising from the acquisition of shares. 195. Taxation of share options5.1 Employee tax and social security contributions5.1.1 Grant: There is no tax charge on the grant of a share option providedthat it is not transferable. 205.1.2 Exercise: There is an income tax charge on the exercise of a shareoption on the difference between the market value of the shares at thedate of exercise and the option exercise price. For the 2010 tax yearincome tax rates range from 24% to 43%.5.1.3 Social security contributions: Social security contributions arise onthe exercise of an option on the amount subject to income tax at astandard rate of 6.35% for indefinite employment contracts and 6.40%for fixed-term employment contracts for the 2010 tax year. Themaximum earnings threshold for the 2010 tax year is €3,198 permonth. 2118192021Therefore, in principle, no contribution is paid on earnings over this amount. Earnings mustnevertheless be apportioned in the fiscal year in which they are received and separate additionalcontributions must be produced for any previous months.Provided that it exceeds or is not included in the tax exemption referred to above.Nor assignable.Therefore, in principle, no contribution is paid on earnings over this amount. Earnings mustnevertheless be apportioned in the fiscal year in which they are received and separate additionalcontributions must be produced for any previous months.UK/1729295/03 175 September 2010
Employee Share Plans in Europe and the USASpain5.1.4 Tax exemption: The tax exemption referred to in paragraph 4.1.3applies if the relevant conditions are met at the time of exercise of theoption. 225.2 Employer tax and social security contributions5.2.1 Corporation tax deduction: The costs involved in the administration ofa share plan and employer social security contributions are deductible. 23When shares are purchased or a cost is incurred under a rechargearrangement with a foreign parent, the costs are also deductible. 245.2.2 Social security contributions: Social security contributions arise onthe exercise of an option on the amount subject to income tax at astandard rate (for the 2010 tax year) of 29.90% for indefiniteemployment contracts, 31.10% for full-time fixed-term employmentcontracts and 32.10% for part-time fixed-term employment contracts,plus contributions for occupational accidents and illnesses (which rangefrom 0.90% to 8.15%, depending on the type of activity carried out). Themaximum earnings threshold for 2010 is €3,198 per month. 255.3 Tax withholdingThe employer must withhold any income tax and social security contributionsarising from the exercise of the option. 266. Taxation of share disposalsThe difference between the sale proceeds of the shares and (if lower) the marketvalue of the shares on the date of acquisition is taxed at a fixed rate of 19% on2223242526In cases where the exemption is not applicable because the requirements are not met or because thebenefit obtained by the employee exceeds the exempted €12,000, the taxable income in both casescan be reduced by up to 40%, provided that the taxable benefit is classed as "irregular income". Theamount of taxable income which may be exempted cannot exceed 40% of the average annual salary(the average annual salary for 2010 is €22,100) multiplied by the number of years from grant tovesting. This limit may be doubled if the shares are held for at least 3 years and the offer of optionswas made to all employees (of the company or group company) on the same terms.Invoices should support these costs.Provided documents to evidence the cost support the claim (this cost will be categorised as a salarycost).Therefore, in principle, no contribution is paid on earnings over this amount. Earnings mustnevertheless be apportioned in the fiscal year in which they are received and separate additionalcontributions must be produced for any previous months.Provided that it exceeds or is not included in the tax exemption referred to above.UK/1729295/03 176 September 2010
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Employee Share Plans in Europe and the USA - Sorainen

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