Context

As you know, the tax treatment of pre-1999 stock options has always been a bone of contention between the tax authorities and most tax practitioners. Most Belgian tax practitioners consider that the ‘taxable moment’ is either the grant date or the vesting date of the stock option, the subsequent exercise of the option then being considered as a matter within the management of the optionee’s private estate. According to the Belgian tax authorities, pre-1999 stock option income is subject to income tax on the date of exercise, so that the stock option income is the difference between the fair market value of the shares on the date of exercise and the exercise price, the only tax-exempted stock option income being that qualifying under the Act of December 1984 (position confirmed by a decision of the Brussels Court of Appeal on 2 May 2001).

News

The Antwerp Court of Appeal handed down a decision on 19 February 2002 in this respect. The Court estimated in this case that the options were of a “permanent precarious nature” until the date of exercise and considered the spread at exercise being a taxable benefit in kind. This Court case is probably not the epilogue on the controversy over the tax treatment of pre-1999 stock options.