Treatment of share options in foreign company (Dutch)

Treatment of share options in foreign company ...

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A UK resident employee of a Dutch parent (the company has a UK LTD) is awarded share options in the Dutch parent. 

The Dutch parent is bought by an acquirer. How would the gain on the share options be treated?

As capital or income? Would they be captured as an unapproved scheme?

Many thanks in advance

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By thisistibi
06th Aug 2013 14:36


This is a complex area.  You have not given an entirely clear fact pattern, which also makes it difficult to comment.  Does somebody operate PAYE on the salary of the UK resident employee?  If so, it seems likely they will also need to operate PAYE on certain share awards to the employee, as they will form part of his/her emoluments. 

If the Dutch share scheme has not been formerly approved by HMRC, then it seems reasonable to assume that it's an unapproved scheme.

The way share option schemes typically operate is that an employee is granted options to buy shares in a company at a later date, and a particular price (the exercise price).  If the exercise price is similar to the company's share price at the date of grant, then the grant is not iself normally a taxable event.  In this case, the taxable event will normally be when the options are exercised.  You refer to the Dutch parent being purchased resulting in a "gain" on the share options.  But you don't explain what you mean by this.  Upon purchase of the parent company, the share options may have been cancelled or they may be replaced with shares in another company or with cash.  You will need to find out exactly what happened to understand the UK tax treatment.

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