• Service: Tax, International Executive Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 8/13/2013

Finland - Taxation of employee stock options for international assignments 

August 13: Finland’s Supreme Administrative Court issued a decision concerning the income tax treatment of employee stock options with respect to employees with international work assignments.

In the case before the high court, an individual worked in Italy from March 2000 to July 2003, and subsequently lived in France and Finland. The individual exercised options under a stock option plan in early 2006.

At issue―given the individual’s time working abroad―was the income realized on the stock option exercise fully taxable in Finland. The court concluded that in situations when there are international assignments of work, there must be an allocation determined by reference to the time when stock options are granted to the time when the options are exercised (i.e., a grant-vesting determination). This also follows provisions in the OECD Model Tax Convention.

Thus, with this decision, it may be possible for taxpayers to allocate taxability of stock options corresponding to the portion of working time spent in Finland. The decision may provide refund opportunities for taxpayers who paid Finnish tax on exercised stock options, as early as for tax years in 2007 and subsequent years.

Read an August 2013 report (Finnish) prepared by the KPMG member firm in Finland: Työsuhdeoptiotulon verotuksen muutos kansainvälisissä tilanteissa

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