Executives required to work abroad may face double or even triple taxation on stock options that are part of their remuneration package – and business is pressing governments to end these anomalies among tax regimes.
ICC experts have proposed solutions to tax authorities designed to avoid these fiscal impediments to workforce mobility, which are particularly severe for multinational companies moving key personnel among subsidiaries in different countries.
The corporate taxation experts said: “The international business community proposes to establish as a convention that under tax treaties stock options should be treated as an incentive for future work. The taxation right would follow that of the salary.”
ICC Tax Commission Chairman Peter Baumgartner said: “It is by no means infrequent in today’s corporate environment of job mobility for employees holding stock options to be taxed twice or more under different national tax regimes.
Mr Baumgartner, who is Vice-President of the Federation of Swiss Industrial Holding Companies, added: “We are asking governments to look to their domestic laws for a satisfactory solution that doesn’t penalize people who are moved to posts outside their home countries.”
He cited the example of an executive based in Belgium whose stock options are taxed when they are granted, moving to Germany where those same options are taxed when shares are purchased and eventually taxed again in France when the executive finally gets to sell the shares.
“We are asking for the tax authorities to get their act together,” said Mr. Baumgartner. “The present lack of harmonization is totally out of place in today’s globalized economy that relies so heavily on cross-border business operations.”
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