Skip to content

You are here:

Employee financial participation – The accrual of shares is independent from economic ownership

The transfer of shares for no consideration results in income from employment if these shares are granted to employees for the work they have performed. Remuneration is paid at the point at which economic authority to dispose is obtained.

This is the case for a share purchase if an employee’s claim to obtain control over the economic authority to dispose of the shares is satisfied. The decisive criterion is the date on which the employer obtains ownership of the securities for the employee under civil law or, at least, economic ownership for the employee. However, determining this vital date is not unproblematic, as was demonstrated in a recent Federal Fiscal Court (Bundesfinanzhof, BFH) ruling from 26.8.2020 (case reference: VI R 6/18).

In the case in question, it was unclear if and when the benefit from the transfer of a block of shares for no consideration had actually accrued to an employee. The BFH referred the matter back to the Berlin-Brandenburg tax court (Finanzgericht Berlin-Brandenburg, FG) because, in the first instance, the FG had not determined if and when the employee had become the owner of the shares both under civil law and from an economic perspective. In the second hearing, the FG will now have to make up for its omission and, accordingly, determine when the disputed block of shares accrued to the employee.

Back to top of page