Taxation for stock options plans, more favorable in Romania than the region

Stock Option Plans, based on which employers grant equity in the company to their key employees, is more favorable from a tax perspective in Romania than in other countries from Central and Eastern Europe, shows a Deloitte Romania analysis.

Besides Romania, the analysis covers eight other countries in the region, namely Hungary, Poland, Czech Republic, Slovakia, Bulgaria, Croatia, Serbia and Latvia.

“Granting company shares is a remuneration method based on which the employer connects the individual performance of top management employees with the business performance, generating increased loyalty and, at the same time, additional motivation,” mentioned Raluca Bontas, Partner Global Employer Services, Deloitte Romania.

The tax incentives are the main benefits for the equity plans as taxation occurs when the employee sells the shares and thus obtains a capital gain, and not when he actually receives them, like in the case of other types of benefits.

The applicable laws in Romania, Poland, Serbia, Latvia and Hungary provide similar tax incentives, for certain equity plans, the main difference being that the legislation in Romania is more favorable from a tax perspective. The income tax for the capital gain is higher in Latvia (20%), Poland (19%), and in Serbia and Hungary (15%), compared to 10% currently in Romania. Meanwhile, applicable laws in the Czech Republic, Slovakia, Bulgaria and Croatia do not provide a favorable tax treatment for equity incentives.

(Photo source: Deloitte Romania)