Future Financing Act
Employee share ownership
The free or reduced-price transfer of equity interests in one's own company to the company's employees, such as shares, convertible bonds, profit participation certificates, cooperative shares, etc. issued by the employer. (cf. Section 2 of the Fifth Capital Formation Act), is tax-free up to a maximum of €1,440.00 per year under current legislation. Social insurance exemption exists analogously up to the same amount. The prerequisite is that the participation is open to at least all employees who have been in a current employment relationship with the company for one year or more without interruption at the time the offer is announced (Section 3 No. 39 of the German Income Tax Act/EStG).
Future Financing Act
This tax allowance is now to be increased to €5,000.00 per year as part of the planned "Act on the Financing of Investments to Secure the Future (Future Financing Act/ZuFinG)". In addition, the tax benefit is to be granted only for those asset participations that are granted in addition to the salary that is owed anyway (Section 3 No. 39 Sentence 2 EStG-E). This means that tax-free capital formation through deferred compensation will no longer be possible in the future.
Deferred taxation
The Future Financing Act also contains further measures for income from non-independent work from asset participations, in particular with regard to the period for deferred taxation (Section 19a EStG). This is currently 12 years and is to be extended to 20 years. This means that employees will not have to pay tax on non-cash benefits from asset participations in their own company granted by the employer in addition to the wages owed anyway until after 20 years or in the event of an earlier sale/transfer. This is intended to counteract the so-called "dry-in liquidity problem", which has been a particular burden on start-up companies and their employees in the past.
Status: June 27, 2023
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