What this article is about:
- Definition of a Stock Option Plan, as per the Romanian tax law
- Taxation rules for a Stock Option Plan
- Exemption from taxation as salary income
- Taxation on the sale of securities received as part of the plan
This article is specifically addressed to HR professionals interested in the tax treatment applicable as per the Romanian tax law to a stock option plan, or to other similar remuneration plans based on company shares offered to employees. Thus, we describe below the tax rules applicable in Romania to such share plans, as per the 2020 tax legislation.
An important characteristic of such share based plans (or any remuneration programs through capital elements) is that both the employees and the employers can benefit from a preferential tax treatment, if certain conditions as provided by the Romanian tax legislation in force are fulfilled (Law 227/2015 on the Romanian Tax Code), as we describe below.
Therefore, at least from this perspective, a stock option plan is a very attractive way to remunerate key employees and, at the same time to commit them to remain in the company in the long run. At the same time, it is an effective mean for connecting the dimension of the employee’s professional performance and that of the company’s economic performance.
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