Under the current tax framework and practice of the cantonal tax authorities, the valuation of employee stocks for tax purpose is often an issue for unlisted companies – mainly start-ups and family businesses. This makes employee stocks of unlisted companies unattractive from a tax perspective compared to employee stocks of listed companies.
The initiative includes significant tax benefits especially in terms of the tax valuation of employee stocks for wealth tax purposes, capital gains treatment on the sale of employee stocks and taxation of employee stock options. According to the original initiative text (submitted on 15 June 2017), federal tax law should be amended. The key provisions are:
- The sale of employee stocks in an unlisted company results in a tax-free capital gain after a holding period of five years.
- The tax value of employee stocks in an unlisted company is considered to be based on the equity of the company (at least the share capital) for seven years upon one-time application of the company.
- The taxable income on employee stock options of unlisted companies must be calculated as outlined above (in the previous provision) and should be reduced by 50%.
In a nutshell, it makes it much more attractive from a tax perspective for unlisted companies to grant employee stocks or stock options.