Share-based incentives (stock options, share plans et cetera)
The Dutch tax rules governing share-based incentives (including the so-called ‘lucrative interest’ regulations) contain many pitfalls. It is crucially important to distinguish between the tax effects in box 1, 2 and 3 of the Dutch income tax system. We have ample experience in the design and implementation of employee participation plans (such as stock options, SARs, share (savings) schemes et cetera).
This particular method of compensation is also beneficial for start-ups, as it instils a sense of belonging in the employees and provides them with a relatively inexpensive compensation item for the long term. For start-ups, we offer a comprehensive package at a favourable fee. This package ranges from identifying the requirements, to handling the design and implementation of a plan that meets all of the stakeholders’ wishes. We can also assist in negotiations with the Dutch tax authorities (i.a. on valuations), as well as with the communications to the employees and the administrator of the selected plan.
In cross-border employment situations, companies and employees may have to meet administrative obligations in multiple jurisdictions in connection with their employee participations. We can identify these obligations and assist you in maintaining overall control, while staying in compliance with all applicable rules and regulations. We can also confer with the Dutch tax authorities with a view to reaching an agreement with them on the tax consequences of (foreign) employee participations. We would typically use a quick scan to start identifying any potential risks.
In case of mergers and acquisitions, we are able to assist in handling the tax effects of the wrap-up of any legacy employee participations.