The High Chamber of the Administrative Panel of Tax Appeals (“CARF”), with the quality vote cast by its Chairman, has understood by majority of votes that the social contribution over the payroll shall levy over the difference between the amount stipulated in the stock option agreement at the time of its execution and the market value of relevant shares on the date of their actual acquisition (when the exercise of the option and the actual disbursement occur).
In a recent administrative proceeding before CARF, a company that issued stock options argued that corresponding option plans have mercantile character (as beneficiaries pay relevant compensation), entail risks, and that gains are possible (rather than guaranteed) and result from the variation of stock prices (not from labor).
CARF, however, in a decision rendered on 24 May 2017, considered that the analyzed stock option plan had salary nature, thus maintaining the tax assessment.
That is an important precedent in the process for the definition of a majority case law on taxation of stock option plans, depending on the salary or mercantile nature that derives from the characteristics of each plan.
Also in May/2017, in another trial decided by quality vote, the High Chamber of CARF stated that Withholding Income Tax shall levy on the acquisition of shares through a stock option plan. However, the relevant decision did not define when the triggering event occurs, if at the moment the shares acquisition right is granted, or after the vesting period, at the time of the exercise of the option and acquisition of shares.