An overview by Borenius, Taxand Finland
In a recent Legal Alert, Heikki Wahlroos and Ida-Maria Wikström from Borenius, our member firm in Finland, outline the Finnish Supreme Administrative Court’s (SAC) decisions in two cases (SAC 2023:65 and SAC 2023:66) which provide welcome clarification on the allocation of share issues to employees in private companies.
In qualifying personnel share issues, private companies can issue shares to their employees using the mathematical value of the shares as the subscription price (in practice the substance value) without the employees receiving any taxable benefit if certain requirements are met. The discount, which is not taxable, often represents a significant benefit for the participants. One of those requirements is that the benefit must be available to the majority of the personnel (i.e., to over 50% of the employees) on the same terms and conditions.
It has been subject to much debate on what grounds and to what extent the number of shares allocated to employees may vary between different employees and employee groups. The recent decision by the SAC clarifies the acceptable ways for the allocation of employee shares, including basing the allocation on length of employment or on the employee’s role and contribution to the company.
Read the full overview here.
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