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Tapestry Alert: Luxembourg – New share plan
reporting obligations
January 2016
Dear Client,
New filing obligations apply to all share plans operating in
Luxembourg. These apply to new plans due to be set up from 1
January as well as to existing plans.
On 28 December 2015, the Luxembourg tax authorities issued a circular
(circular L.I.R. n° 104/2bis) which sets out new reporting
obligations in respect of current and new share plans implemented by
Luxembourg employers. The circular applies to any Luxembourg
employer, including a subsidiary or branch of a foreign parent company
making awards in Luxembourg.
What is the
scope of the new regulations?
The circular applies to employee stock option plans implemented after
31 December 2015 as well as to plans which were implemented before
2016 but under which further awards can be made.
Although the circular refers specifically to ‘stock option plans’,
our Luxembourg lawyers have advised that the circular applies
to any type of employee share plan and that it would be prudent to
make a filing even for a cash plan if the plan could be satisfied by
an issue of shares.
What is
required?
The circular requires employers to file a copy of the share plan
rules (and any other documents which set out the terms of the award)
and a list of the plan participants with the local withholding tax
office two months before setting up a new plan and as soon as
possible for all existing plans.
What happens
if this is not done?
The circular does not specify any penalty for non-compliance.
Tapestry
Comment:
The circular
is a brief, half-page document and raises some practical issues:
- It would
appear that this new requirement was rushed through and a number
of important issues are still being resolved.
- It is
not clear how the two month notification period will apply for
plans which are due to be implemented before the end of February
2016 or which existed before that date. This point has been
raised with the Luxembourg tax authorities and further guidance
is expected but in the meantime local counsel recommends acting
as quickly as possible to make the filing.
- The
filing requirement refers to the plan rules and the names of the
participants (so there is no requirement to include the value of
any awards granted). However, even this limited level of
information may cause difficulties where the names of the
participants are not known at the outset of the plan.
Complying with the circular should
be a straightforward procedure although it will need to be updated
each year. We are in contact with our local counsel in
Luxembourg so please let us know if you need any further information
or help with making the filing.
Bob, Jordan and Sharon
  
Bob Grayson Jordan Levy
Sharon
Thwaites
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