Stock Options and downgrade application for irregular performance
The TSJ Catalonia understands that the stock options are a salary supplement to which the reduction for irregular performance is applied when the period of generation of the return exceeds two years.
Stock Options and downgrade application for irregular performance
A taxpayer is the holder of a stock option plan, granted from 2007 to 2010. On 06-30-2011, as a result of a business reorganization with changes in the shareholding and business succession, the company buys the options and financially compensates the interested.
Within the legally established period, the taxpayer presents a self-assessment of personal income tax for 2011 without applying any reduction on the amounts declared as income from work.
Subsequently, he requests the rectification of the self-assessment made, indicating his right to a reduction for irregular performance in the amount derived from the compensation for cancellation of the plan. It alleges that the regulatory norm expressly includes as irregular returns the amounts paid in compensation or repair of salary supplements, pensions or annuities of indefinite duration or for the modification of working conditions.
The Administration rejects their claims, considers that there is no modification of the working conditions imposed by the employer, but rather the application of a contractual provision. Also, when the plan is canceled, the stock options are never exercised. The taxpayer, dissatisfied, presents a contentious appeal.
The TSJ Catalonia, after analyzing the facts, states:
a) That the stock options are a salary supplement.
b) That the standard also expressly states that net returns with a generation period of more than two years, as well as those that are classified by regulation as obtained in a notoriously irregular way over time, will be reduced by 40% -from 1- 1-2015, 30% -.
In the case prosecuted, based on its nature as a salary supplement and its consideration as an irregular performance -the compensation occurs in a generation period that exceeds more than two years-, it is necessary to estimate the appeal and recognize the appellant’s right to be apply the requested reduction.