Under the Act of 26 March 1999, stock options granted as of 1 January 1999 are taxed upfront. The immediate tax charge on stock options, with no certainty that any gain will be realised later on, may lead employees to refuse them. Thus, at the end of the day, the Act of 26 March 1999, which was enacted with a view to promoting stock option plans in Belgium, may actually endanger their success.

In the Press Release by the Prime Minister following the Belgian Cabinet Meeting of 18 January 2002, the Government has shown its intention to change the tax treatment of stock options. Based on this Press Release, the beneficiary would be able to opt for a tax charge at grant or at exercise. Needless to say that he would have to make his choice from the outset.

We would like to emphasize that, to date, the Act of 26 March 1999 remains applicable to stock option grants and that there is no possibility to choose for taxation at exercise. Whether the Government’s intention will ever crystallize into a new tax provision is obviously very difficult to assess at this time.