Decisions from the Swedish Supreme Administrative Court concerning employees' acquisition of shares
Recently the Swedish Supreme Administrative Court (Regeringsrätten) published two decisions on appealed advance rulings concerning taxation of employees' acquisition of shares combined with certain restrictions. The question was whether the employee should be taxed when receiving the shares or when the restrictions ceased. In both cases the Court decided that the employee should be taxed when receiving the shares even though certain restrictions where at hand at that time. To be taxed when receiving the shares is probably more favorable from a financial point of view for the employee, since any value increase thereafter will be taxed as capital income instead of earned income.
In one of the cases the employee entered a Shareholders agreement with the main owner, a foreign private equity fund, on receiving the shares. According to the Shareholders agreement the employee could only sell the shares if the other shareholders consented and the other shareholders may buy the employee's share at the original price if he gave notice. In the other case key personnel received free shares by an Incentive Scheme. The Scheme contained certain restrictions, for example the employee could not sell nor dispose of the shares otherwise within a certain period. Furthermore, the employee had to return the shares without any compensation if the employment ceased within a certain period. In both cases the employee gained voting right and right to receive dividends on receiving the shares.
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[2010-01-07]
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