Employee shareholdings from a company and employee perspective

1. export of employee options and cost recharge

On January 1, 2013, José Marcos will receive employee stock options from the Group holding company Zergon AG ("Z AG"), domiciled in Zurich. The vesting period ends on 1 January 2016. On 1 July 2016, Mr Marcos exercises the options (strike price: nominal value per share) and receives a monetary benefit of CHF 90,000. From 1 January 2013 to 31 December 2013, Mr Marcos lived and worked in Zurich for Mikron-CH, a subsidiary of Z AG. Since 1 January 2014, Mr Marcos has lived and worked in London for Mikron-UK, another subsidiary of Z AG.

José Marcos is married to the non-working Maria Grazia Marcos, and has three children, Jimmy, Lolita and Kai. Mrs. Marcos and the children will remain resident in Zurich, where they will be visited by Mr. Marcos every weekend, until December 31, 2014, when they will move to London to live with Mr. Marcos on January 1, 2015.

From 1 June 2015, José Marcos will be travelling to Zurich for a total of 7 weeks: for 5 weeks he will work in his old office at Mikron-CH to support his successor there in a particularly difficult business situation. For the remaining 2 weeks, José will visit an old friend of his, Freddy Feuerstein.

• What are the tax consequences for José Marcos?
• What are the tax consequences for Mikron-CH?
• What are the consequences under social security law? Which certificates should be obtained from whom?
• At what point in time must a certificate be issued by the employer with the withholding tax statement? To whom is it addressed? What information must be entered in the wage statement?

Addition:

In order to secure the obligation towards the new management, Z AG will buy back its own shares on the open market in 2013.

• What are the tax consequences for Mikron-CH und Z AG in this context?

variant:

Instead of buying its own shares, Z AG decides to create the necessary shares in 2016 by means of a capital increase.

• What are the tax implications for Z AG and Mikron-CH?

variant:

Instead of living and working in London, Mr Marcos lives and works in Tehran, Iran. Iran has no social security agreement with Switzerland.

• What consequences does this have for José Marcos?

2. export of employee shares with surrender

On January 1, 2013, José Marcos acquired an employee share, blocked for 10 years, from the holding company, Zergon AG ("Z AG"), domiciled in Zurich. Mr Marcos will work for Mikron-CH in Zurich from 1 January 2012 to 31 December 2015 and will take up residence in Madrid as of 1 January 2016. From this date, he will work for Mikron-ES, a subsidiary of the Zergon Group based in Madrid.

On 31 December 2017, Mr. Marcos will leave the Zergon Group as a good leaver. According to the share purchase plan and a separate agreement, he has to return the shares to Z AG at the original purchase price of CHF 1,500. The market price of the share on that day is 1,000 Swiss francs per share.

• What are the tax and social security consequences of this share redemption for José Marcos, Z AG and Mikron-CH?

variant:

Mr. Marcos has committed a serious breach of fiduciary duty during his employment and is leaving the company for this reason. The shareholding plan states that in such a case, any employee shares must be returned free of charge.

• What tax and social security consequences does this return have for José Marcos, Z AG and Mikron-CH?

3. import of employee stock options by the Board of Directors

Maria Sanchez is a director of the US parent company of the Tacit Group, Tacit-US, based in Dover, Delaware. Ms Sanchez will receive 1000 employee stock options free of charge on January 1, 2013, the rights to which will be acquired at the end of the five-year vesting period. At the time of submission, Ms. Sanchez lives and works as CEO in Berlin for the subsidiary Schweigen-DE of Tacit-US. Two years later, on 1 January 2015, Ms Sanchez will be sent to Zurich to work for the Zurich subsidiary Verlust AG of the Tacit Group. Subsequently, Ms Sanchez will work for this company for more than three years until 31 December 2018. Ms Sanchez could therefore exercise the employee stock options in Zurich. However, because she believes that the share price is not yet high enough, she is waiting to exercise the options. Only on 1 July 2019, Mrs. Sanchez will exercise her employee options. The realised monetary advantage is CHF 50 per option (value: CHF 60, exercise price CHF 10; 1 share per option). Verlust AG had acquired shares in Tacit-US to the value of CHF 4'000 to hedge this transaction.

• What are the tax consequences for Maria Sanchez and for Verlust AG?
• Who pays the social security contributions on Maria Sanchez's income from exercising her option and what is the relevant salary from a Swiss perspective?

Addition:

In addition to the options, Ms. Sanchez will receive a bonus (anniversary bonus for 6 years of service) from the parent company Tacit-US as of December 31, 2018. However, on the initiative of the American president, the DBA-US will be terminated by the American side.

• What are the tax consequences for Maria Sanchez in Switzerland?

4. adjustment of employee options during the vesting period

The Pozadania group is about to be sold to Zwierze AG, based in Zurich. For this reason, the Pozadania Group decides to reduce the strike price. This will take place approximately two years before the options are vested by Bolek Nowak, who has been living in Zurich for one year and works for a subsidiary of Pozadania, Sorka-CH, based in Zurich, but before that he had his residence and place of work in Warsaw at the parent company Pozadania-PL. Mr Nowak received the options three years ago.

• What are the tax and social security consequences for Bolek Nowak and Sorka-CH?

variant:

Instead of reducing the option prices, the Pozadania Group decided to shorten the vesting period from 5 to 4 years.

• What are the tax consequences for Bolek Nowak and Sorka-CH?

variant:

Mr. Nowak has been the owner of an employee share, which has been blocked for more than 5 years, for 3 years. The group Pozadania decides to reduce the blocking period to 4 years.

• What are the tax and social security consequences for Bolek Nowak and Sorka-CH?

variant:

Mr. Nowak holds shares in the parent company Pozadania-PL. For the sale to Zwierze AG, the latter promises him an additional payment of CHF 50,000 in addition to the purchase price, provided that he has worked for a company in the Pozadania Group for at least 3 further years. Mr. Nowak will continue to work for Sorka-CH and will receive payment from Zwierze AG after 3 years.

• What are the tax and social security consequences for Bolek Nowak, Zwierze AG and Sorka-CH?