In a transaction, it is a possibility that the management and/or employees also invest as part of the company’s acquisition. This is management participation. This is done primarily to motivate the manager or employee to optimise the performance of the business. Management participation plans can have major consequences in terms of taxation. In order to avoid unforeseen expenses, you are well advised to call on the specialists of Meijburg & Co.
Management participation plan
Management participation plans are available in many forms. Aside from equity interests, option interests and other rights are also possible. In all cases, it is important to align the plan’s structure to the specific requirements of issuing entity.
If a management participation plan is not well structured, this has significant consequences. Not only for the acquired company , but also for the acquiring company and the manager or employees themselves. It is therefore important to structure the plan correctly in terms of tax and legal aspects. We can assist in these matters.
Potential risks for the business or shareholders
If you are considering a management participation, then we would like to share some thoughts with you on the consequences for the business. If your plan is not well structured, these consequences can be far-reaching. Here are some questions you can answer to prevent this:
- How much can the employees finance themselves?
- What should the financing be like for the entire structure?
- Should the employer burden be corporate tax deductible?
Possible consequences for the manager or employee
Are you taking part in management participation as a manager or an employee? Then you may experience taxation while being unaware of it. The most important consequences are those for personal income tax. Personal income tax consists of three boxes. We explain below what each box could mean for you.
Box 1
Inkomsten uit dienstbetrekking, zoals een normale bonus, vallen onder box 1. Ook bepaalde plannen horen bij box 1. Het gaat dan om plannen waarbij u het belang tegen een relatief lage prijs kunt verkrijgen. Het mogelijke rendement kan groot zijn of er worden speciale rechten uitgegeven. In die gevallen kan er sprake zijn van een lucratief belang. Dat betekent dat op het lucratieve belang een belastingtarief van maximaal 51.75% geldt. Het precieze percentage is afhankelijk van het totale belastbare inkomen van de manager of werknemer. Maar in de wet staat ook een mogelijkheid om het lucratief belang in box 2 te belasten. Dan is het tarief 25% (voor 2019). Dit vereist wel de nodige structurering.
Box 2
Vertegenwoordigt het aandelenbelang 5% of meer van het nominaal aandelenkapitaal of is er sprake van een speciale klasse van aandelen? Dan valt het onder box 2. Dat betekent dat dividenden en gerealiseerde winsten bij de vervreemding van het belang vallen onder het belastingtarief van 25%.
Box 3
Is het aandelenbelang minder dan 5% en kwalificeert het niet als loon? Dan wordt typisch de waarde van de aandelen op 1 januari van het betreffende jaar meegenomen als heffingsgrondslag voor box 3. De effectieve belastingdruk in box 3 is afhankelijk van alle voordelen uit sparen en beleggen. Het tarief ligt in 2019 tussen de 0,58% en de 1,68%.
Differences in taxation
Under which box and tax rate you fall depends entirely on how the management participation has been designed. As a result, taxation can vary considerably for the manager or employee. Moreover, the optimal tax structure may vary significantly for different plans. We will gladly advise you on which structure would be most advantageous for your situation.
Need help with management participation?
Is your company being taken over and are you participating in the transaction as a manager or an employee? Do you require tax advice on a management participation plan? Or do you want to know more about the legal possibilities to implement your participation plan? Meijburg & Co’s professionals are here to help you. We can optimise your plan’s structure in tax and legal terms, so that you will not be confronted with unnecessarily high costs. We can also offer assistance with all other aspects of management participation. We are looking forward to getting to know you.
