Tax at purchase on discount.
Annual exemption may apply to first EUR 2,065 of discount if shares held three years from date of purchase and certain other requirements met.
Tax on sale. A Foreign Financial Asset Tax may be assessed on the value of shares held outside of Italy.
Under Italian tax law, the fair market value of the shares is calculated based on the one-month average price prior to the date of determination
Allowed if subsidiary reimburses parent under a written agreement. The deduction may be limited to accounting expense of award based upon OECD guidelines and commentary on transfer pricing and may increase labor risks.
Income Tax:
Withholding and reporting required, unless income is exempt from tax (based on EUR 2,065 exemption).
Social Insurance Contributions:
Employee and employer social insurance contributions apply (to the extent applicable wage ceiling not already met), unless EUR 2,065 exemption applies to income. If applicable, employer must withhold employee's contributions.
Italian financial intermediary is generally required to offer ESPP in Italy but exception applies for:
- offers made in person/hardcopy or
- offers made electronically which comply with certain specific requirements.
The EU Prospectus Regulation is in effect in all European Economic Area countries, which includes all EU member states, Iceland, Liechtenstein and Norway (EEA).
ESPP purchase rights are considered a public offering of securities for purposes of the EU Prospectus Regulation.
An EU-compliant prospectus will be required for the offer of an ESPP in any EEA member state, unless an exemption or exclusion applies. A "small offering exemption" is available if the offer is made to less than 150 persons in a member state. An "employee share scheme exemption" is available if the offer is made to existing or former employees (or directors), provided the offerees are provided with a short disclosure document that contains certain prescribed information about the offer. An exclusion for offers under a certain value threshold across the EEA may also be available.
Additional requirements may apply if relying on certain exemptions/exclusions or if a prospectus must be filed.
Please contact Baker McKenzie for details.
Possible entitlement issues.
Although the risks may be reduced if employees acknowledge discretionary nature of plan and that award income is excluded from salary, a Milan labor court has ruled that income from a stock option exercise is employment compensation.
Employees should expressly agree to accept certain non-negotiated terms of the award.
Discrimination against part-time employees is generally prohibited.
The EU Council Directive 2000/78/EC prohibits age discrimination. Most, if not all, countries (including Italy) have adopted local rules implementing this Directive, which may have an impact on design of equity and other incentive plans in the EU, particularly on age or age and service provisions which give different treatment (e.g., accelerated or continued vesting) for those meeting the criteria.
A valid basis is required to collect, process and transfer personal data.
The EU Data Protection Regulation ("GDPR") became effective in all EU/EEA countries on 25 May 2018. It introduces new requirements and increases the powers of data protection authorities, rights of data subjects and potential penalties for non-compliance.
Accordingly, companies should review their approach to data privacy compliance in the context of equity plan administration and consider on which basis they may be able to rely to collect, process and transfer data.
Registration and notification requirements with local data privacy authorities may also apply.