Listed stock options and warrants - The Ruling Commission has fixed certain conditions

The so-called "Ruling Commission" sets the conditions under which listed options enter into the scope of the law of 26 March 1999. This is an important decision regarding the exemption from social security of such options.

Listed stock options and warrants are in principle exempted from social security to the extent that they fall within the scope of the law of 26 March 1999 and if they meet certain conditions.

In this regard, the tax administration has published an interesting decision specifying the conditions under which the listed options and warrants constitute options within the meaning of such law.

Although it confirms that listed options enter into the scope of the law, it makes a reservation that there may be a dissimulation, particularly in cases of:

• non-compliance with the hierarchy of sources of law;
• replacement of remuneration or a benefit to which the employee was entitled and which he waived at a moment that the remuneration or benefit was actually due;
• replacement of the monthly basic remuneration (fixed or variable), holiday pay or 13th month;
• disproportion relative to the usually granted remunerations;
• retrocession of the options to the company-employer or to a company of the group, except under certain conditions;
• grant to an employee to whom the employer has notified a dismissal.

The Ruling Commission also confirmed that the general anti-abuse measure (art. 344, § 1, I.T.C. 1992) does not apply. Listed options are indeed taxed on the basis of their actual value, so that they do not provide a tax benefit.

> Action Point

In the future, it is prudent to ensure that listed stock options and warrants comply with the new conditions defined by the Ruling Commission.