Agreement on subscription rights in the employer company
Transfer to the employee's own company
In this master's thesis, it is examined what the applied rules and regulations are in relation to the transfer of an employee's conditional agreement on subscription rights for the purchase of performance and bonus shares to the employee's personally owned company. In relation to this, current laws, the question of the rightful recipient of income, the significance of suspensive conditions in the agreement with the employer company, determination of the market value and the arm's length terms for related parties are reviewed.
The review is based on a section in The Legal Guide (the Danish tax law instructions) as well as the precedent from four binding rulings (documents where taxpayers have asked for the opinion of the tax authorities).
Then, it is examined how the employee’s company is taxed after the transfer of the agreement, as well as how the employee is taxed if the agreement is not transferred. It is concluded that there are no special rules or regulations concerning the area, so the tax matters are assessed on the basis of the general tax rules and regulations. It is within the rules of the rightful recipient of income that the agreement can be transferred to the employee's own company if the
employee is taxed in connection with the transfer. Although the suspensive conditions cannot be transferred from the employee to his own company in civil law, the transfer is approved for tax purposes. The market value is determined on the basis of the general tax rules and regulations for valuing subscription rights, and the value must be determined on the basis of the arm's length terms so that the value corresponds to what independent parties would agree on. A small reduction in the value may be given due to the suspensive conditions.
If the employee withdraws the profit as dividend from his own company when the company has sold the shares purchased for the subscription rights, the total tax payment will be approximately the same, regardless of whether the agreement is transferred to the company or whether the employee acquires subscription rights and buys and sells the shares. If, on the other hand, the employee leaves the profit in the company, there is a tax saving, which is acceptable, as it does not dispute the tax rules and regulations to arrange affairs in such a way that you pay the lowest possible tax. In conclusion, an employee transferring the agreement on subscription rights in the employer company to his own company can be approved for tax purposes.
|Educations||Master i Skat, (Executive Master Programme) Final Thesis|
|Number of pages||56|
|Supervisors||Peter Koerver Schmidt|