Ask a tax advisor on the topic of Income tax return

stock options

November 2, 2009 | 20,00 EUR | answered by Oliver Burchardt

Hello,

my husband has received stock options during his time with the company, which he has redeemed upon leaving the company. How should these options be treated in the tax return, are they considered benefits in kind that are added to the taxable income, or is it considered a private sale transaction?

Thank you!

Oliver Burchardt

Dear questioner,

Thank you for your question, which I am happy to answer as part of an initial consultation.

The tax treatment of stock options has now been finally clarified by the Federal Fiscal Court. The options granted are to be subject to taxation as employment income upon receipt (in your case, upon exercise). The amount relevant for taxation is to be determined by the difference between the option price and the stock market price of the shares on the acquisition date.

Please note that in case the stock options represent employment income for several years, the reduction for extraordinary income according to § 34 Income Tax Act (the so-called "Fünftelregelung") may apply. This can help mitigate the effect of progression.

I hope my explanations have been helpful to you.

Best regards,

Oliver Burchardt
Tax advisor