Context

As you may recall the tax treatment of pre-1999 options not qualifying under the Act of December 1984 has always been a bone of contention between taxpayers and the tax authorities. Courts have now on several occasions addressed their tax treatment. You will recall, in particular, the decision of January 16, 2003 of the Court of Cassation which overturned the decision of the Court of Appeal of Brussels (see PTX Headline of 17 January 2003*). The Court of Cassation took the view that it cannot be concluded by reverse reasoning from the provisions of the 1984 Act that the gains realised when exercising non-qualifying options constitute taxable income.

News

The Court of First Instance of Brussels in its decision of September 2, 2002 (recently published) stated that non-qualifying pre-1999 options (not transferable) are taxable on the first date they can be exercised and that the taxable amount is the positive difference between the stock price on that date and the exercise price. This is therefore another decision confirming that the aforesaid reverse reasoning of the 1984 Act does not stand up to scrutiny and that the taxable point in time of such options may be other than their exercise date.

(*) http://news.hrservices.be?200301171610