With the recently published draft of a "Future Financing Act", the federal government has reacted to the criticism on the tax treatment of equity instruments granted to employees. From the perspective of young companies, the envisaged amendments are very positive.
In the battle for the best talent, startups and scaleups rely on innovative compensation models to retain employees in their company. In addition to traditional bonus payments, it is possible to grant phantom shares or to issue "real" shares in a company.
In an international context, such compensation elements are common and proven. From a German perspective, they are associated with some tax pitfalls.
If an employee is granted equity (e.g. shares in a limited liability company) in addition to their regular salary, either free of charge or at a reduced price, this granting is generally subject to income tax. Taxes must be paid even though no liquidity is received (dry income), and, in extreme cases, loans may even have to be taken out to settle the tax debt.
Consequently, the granting of equity instruments has so far not been particularly attractive from a tax perspective.
The 2021 newly inserted Sec. 19a of the German Income Tax Act (“ITA”) addresses this crucial criticism of the industry by granting preferential treatment of income from equity instruments for employees. The central element of Sec. 19a ITA is the granting of a tax deferral. Equity instruments granted to an employee in...
SOUTHEAST Mo. (Heartland News) - The Missouri Attorney General announced felony charges against 17 people in Medicaid fraud cases, including some in the Heartland. According to Attorney General Ca...