Employee Share Plans in Europe and the USA - Sorainen

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Employee Share Plans in Europe and the USAAustria5.2 Employer tax and social security contributions5.2.1 Corporation tax deduction: The employer may obtain a corporationtax deduction for the employee share plan costs incurred.5.2.2 Social security contributions: Employer social security contributionsarise on the exercise of an option in circumstances where an employeeis subject to social security contributions. The maximum rate ofemployer's social security contributions is 21.70% (blue collar workers)and 21.83% (white collar workers) for the year 2010 (the upper incomelimit for social security contributions is a gross monthly salary of €4,110).Under certain circumstances, an amount equivalent to 1.53% of theemployee's monthly gross salary must be paid by the employer into afund for future severance payments.5.3 Favourable tax regimePreviously, a favourable tax regime applied to non-transferable options if certainconditions were met. However, under the Tax Reform Act 2009 8 , the favourabletax regime for share options was restricted so that it now only applies to optionsgranted before 1 April 2009 9 . If non-transferable options, granted before 1 April2009 meet certain conditions, then the favourable tax regime will continue toapply to them.5.4 Tax withholdingThe employer must withhold any wage tax and employee social securitycontributions and other duties due.6. Taxation of share disposals6.1 If the employee sells shares within one year of acquiring them, the differencebetween the market value of the shares on the date of acquisition and the saleproceeds will be subject to income tax at the employee's marginal tax rate.6.2 If the employee disposes of shares more than one year after acquiring them, anygain on sale will be free of tax provided that the employee holds less than 1% ofthe company's total issued share capital at the time of sale. 108910"Steuerreformgesetz 2009".See section 124b, subsection 151 of the Austrian Income Tax Act.The one year holding period begins when the employee becomes the economic owner of the shares. Ifthe shares are subject to sale restrictions, the employee may not be regarded as their economic owner.UK/1729295/03 11 September 2010
Employee Share Plans in Europe and the USAAustria7. Employee benefit trustsThere is a special form of employee benefit trust 11 in Austria. Under thisarrangement, the trust holds shares in the employing company and dividendspaid on those shares are transferred by the trust to employees. Such dividendsare subject to a 25% withholding tax, up to a limit of €1,460 per employee peryear. (Where the dividend amount exceeds €1,460 then the dividends aretreated as income from employment, i.e. they are taxed at the employee'smarginal tax rate and social security contributions also apply).More generally, advantageous tax rules apply to Austrian trusts. When settingup an Austrian trust specific advice should be sought to determine the legal andtax issues.8. Data protectionEmployee consent must be obtained for the collection, processing and worldwidetransfer of personal data in connection with an employee share plan. 129. Employment lawPlease refer to paragraph 4 on pages 5-6 of this guide. This explains theemployment law issues which are generally applicable to a greater or lesserdegree in all the countries covered by this guide. There is a risk that employeesmay claim a right to continued participation in an employee share plan or thatrights under a plan may be included in compensation on termination.Companies should seek specific advice on these issues and other employmentlaw issues which may be applicable.1112"Belegschaftsbeteiligungsstiftungen".EU Directive 95/46/EC on data protection has been implemented in Austria by the Federal Actconcerning the Protection of Personal Data. Section 1 recognises the individual's right to privacy andpersonal data can only be processed and transferred if the purpose and content of the data and thereason for its transfer is specifically defined and the employee's privacy is not infringed. Theemployee's explicit consent is required which can be revoked at any time in relation to "sensitive data"as defined by section 4 of the Act (that is, for example, data concerning trade union membership,political views or health).UK/1729295/03 12 September 2010
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Employee Share Plans in Europe and the USA - Sorainen

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