The Tax Treatment of Employee Stock-Options - OECD

Employee stock option plans have become a common component of remuneration packages in multinational enterprises. This publication presents and examines the many important tax issues that arise for beneficiaries and companies.

OECD Recommends Common Tax-Treaty Approaches to Employee Stock-Options - OECD

Focusing first on domestic tax issues, it considers what tax treatment would provide no tax-related incentives for a company to either increase or cut the use of stock options, and would be neutral regarding the choice of either granting stock options or paying ordinary salary.

The approach is non-prescriptive and serves to provide a benchmark for policymakers.

This is complemented by a survey of taxation of stock options in OECD countries in that calculates the effective rate of tax and compares it with tax on ordinary salary. Cross-border taxation issues are then discussed. Issues such as the timing of the benefits from stock options, the distinction between employment income and capital gains and the identification of the services to which they relate are relevant to the application of tax treaties, which are based on the OECD Model Tax Convention, and the resulting changes to the Model's Commentary are fully explained.

Finally, the effects on transfer pricing are analysed in three circumstances: Focusing first on domestic tax issues, it considers what tax treatment would OECD Tax Policy Studies The Taxation of Employee Stock Options. Chapter 2 Effective Tax Rates. Chapter 3 Crossborder Income Tax Issues.

Chapter 4 Impact on Transfer Pricing. This publication presents and examines the many important tax This publication examines the many important tax issues that Chapter 1 Tax Neutrality.