Increased number of individuals reaping tax-free benefits from employee shares
Competing with the big shots, just got sweeter!
Ever felt like the little fish in a big pond when it comes to taxes for employee benefits? Well, buckle up, because things are about to change! Now, companies can exempt their employees, including those from affiliated firms, from up to 2,000 Euro per year in taxes. Let's dive into the nitty-gritty details!
The Game Changer: The Tax Act 2024
The Tax Act 2024 has altered the playing field significantly. It allows employees of subsidiary companies to participate in the parent company, increasing their chances to share the overall success of the corporate group. This expansion, effective from the tax year 2024, aims to benefit many more employees.
What's the Catch?
The fiscal bonus is a generous gesture by employers, open to all employees who've been active in the company for a year or more. It's a voluntary performance, a wealth participation in the corporate group of the employer's own company, granted as a tax-free "benefit in kind." No tax retention periods apply to employee participation.
But Wait, There's more!
However, there are some conditions to keep in mind. Shares in a corporate company can only be transferred tax-favorably if the tax thresholds in relation to the totality of all corporate companies are not exceeded, and none of the corporate companies was founded more than 20 years ago.
Deferring Taxes on Larger Participations
Have a larger employee participation that exceeds the allowance of 2,000 Euro? Don't fret! Under certain conditions, the monetary advantages from these participations are initially not taxed. Instead, taxation occurs at the time of the further transfer of the shares, upon termination of the employment relationship, or no later than after 15 years.
A Few Additional Conditions
A new "corporate clause" in the Tax Act 2024 contains additional conditions for tax deferral. None of the corporate companies can have a foundation more than 20 years old, and the SME thresholds in relation to the totality of all corporate companies must not be exceeded. This means that the group as a whole may not employ more than 1,000 employees and cannot have an annual turnover exceeding 100 million or an annual balance sheet total exceeding 86 million, to prevent large corporations from benefiting as well.
In light of the Tax Act 2024, businesses can now offer their employees tax-free benefits worth up to 2,000 Euro annually, potentially changining the dynamic of employee compensation within the corporate sector. Furthermore, this financial perk is open to employees of affiliated firms, making it an exciting prospect for many.
