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Share tax incentives for shareholders who work in the company

 

If your company rewards employees by giving them shares or units of your own or another company in the same group free of charge or at a reduced price, you have to show in the payroll payment in kind.
The amount to be reflected is the difference between the market value of the shares at the time of delivery and the amount paid for them.
This type of remuneration has the advantage that the income obtained is exempt from personal income tax up to a limit of 12,000 euros per year. To do so, the following conditions must be met:
  • The worker cannot have a shareholding of more than 5% in the capital (alone or with their spouse or relatives up to the second degree).
  • The shares must be held for at least three years before being transferred.
  • The company must offer the shares to all employees under the same conditions.
In addition, if your company is an emerging company, from 2023, employees can benefit from higher incentives in their income tax:
  1. In these cases, the amount that can be exempted is up to 50,000 euros per year instead of 12,000 euros.
  2. If this limit is exceeded, the employee is not taxed on the excess until the year the shares are transferred, the shares are listed on the stock exchange, or ten years have elapsed since their acquisition.
Moreover, to apply for this exemption, the offer is not required under the same conditions for all employees. It only needed to be made as part of the company’s general remuneration policy and contribute to employee participation.
Here is an example of how the value of the declaration of shares affects personal income tax and if you can sell them in the future.

 

  1. The total remuneration in kind is the difference between the value of the shares received and the amount paid by the employee for them: 63,000 euros: (9,000 shares. 12 euros) – (9,000 shares. 5 euros).
  2. The shares in emerging companies must be valued at the value of the shares subscribed by a third party in the last capital increase carried out in the previous year or, failing this, at their market value at the time of their delivery.
  3. If the employee sells the shares before 2033 (provided that they have held them for three years), they must declare this remuneration in the personal income tax for the transfer year.

Remember that you can count on Leialta as your accredited consultancy to help you manage your company.

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