In a recent decision, the Superior Court of Justice ruled that there is no incidence of personal income tax (IRPF) at the time of acquisition of shares, as a result of granting a purchase option related to a Stock Option Plan, as there is no increase in equity for the acquirer in this
moment.
When analyzing the issue under the thesis of Topic 1226, the Superior Court of Justice recognized that the taxable increase in assets will only occur at a later date, upon the sale of shares acquired through a Stock Option Plan. This is if a capital gain is determined.
With this decision, the STJ recognized that the Stock Option Plan reflects a commercial transaction, which allows executives, employees and service providers of a given company to purchase shares under certain conditions, and at a previously defined price.
Stock Option Plan beneficiaries have complete freedom as to whether or not to join the plan – in other words, to buy the shares – and when to sell the shares, with no compensation or remuneration for any activity.
This is an important victory for taxpayers that will certainly reinforce discussions that attempt to classify such a benefit as remuneration for the purposes of levying social security contributions.
a) Under the Stock Option Plan regime (art. 168, § 3, of Law No. 6,404/1976), because it is of a commercial nature, personal income tax/IRPF is not levied upon the effective acquisition of shares from the company granting the purchase option, given the absence of an increase in equity in favor of the purchasing optant.
b) Personal income tax/IRPF will be levied, however, when the purchaser of shares in the Stock Option Plan resells them with a capital gain.
Full Content Information
The controversy is limited to “defining the legal nature of the Stock Option Plans for the Purchase of Companies by Executives (Stock option plan), whether linked to the employment contract (remuneration) or strictly commercial, to determine the applicable income tax rate, as well as the time of incidence of the tax”.
In general terms, the so-called Stock Option Plan (SOP) consists of the offering, by the corporation, of a stock option to purchase shares in favor of its executives, employees, or service providers, under certain conditions and at a pre-established price (art. 168, § 3, of Law No. 6,404/1976). The interested party may then accept the option and, at the time and manner, purchase the respective shares, paying for them the price previously defined by the company. Subsequently, once the owner of the shares, the acquirer may sell them in the financial market.
As far as we know, adherence to the SOP is completely voluntary and, considering the characteristics listed above, even when the option is exercised, the employee is not obliged to purchase the shares immediately: he can consider market fluctuations and the most advantageous moment for him for this acquisition.
On the other hand, according to art. 43 of the CTN, the taxable event for income tax is
the acquisition of economic or legal availability resulting from an increase in equity. However, everything indicates that this is a simple transaction involving the offering and purchase of shares.
It is clear that in the option to acquire shares, even if offered at a value lower than that of the financial market, there is no way to envision the existence of “income” or “increase in equity” in the definition of tax law for the occurrence of the taxable event on income, since what we have, at that moment, is simply the optant exercising a right that was offered to him (to agree to the purchase of shares in the manner established in the SOP), added to the expenditure that he must make of the pre-established value for the acquisition of the asset, the share).
The thesis that the employee earns income consisting of the difference determined between the value stipulated/paid for the share and that corresponding to that practiced in the financial market at the same time is not consistent with the normative provision that, for there to be a fact subject to the levy of tax, there must be real economic or financial availability of wealth added to his/her assets.
As the doctrine explains, there is no such thing as presumed income, since income must always be real. The amount of income may be presumed or arbitrated; however, its existence must always be real. Therefore, the mere entry of the asset (share) into the assets (a civil law concept) of the employee exercising the purchase option cannot be considered a taxable event, which, in itself, does not represent an “increase in assets” for tax purposes.
Assuming the existence of “income” in these terms would correspond to having as a valid “fiction” of taxable patrimonial increase whenever there was the acquisition of goods with some type of discount or reduction – which is not admissible by the tax law, since the principles of closed typicality and strict legality prevent the taxation or conviction of the taxpayer based on presumptions, fictions or indications.
Another aspect concerns the immutable nature of the share offering and acquisition transaction. The fact that this legal transaction occurs within the scope of the SOP does not transform the actual action into a separate legal act, nor does it separate it into other legal acts. It should also be noted that the interpreter of the tax code is not permitted to alter civil law concepts, in this case, the income arising from the specific legal transaction of the purchase and sale of shares, to broaden the scope of tax collection, as per Article 110 of the Brazilian Tax Code.
Therefore, considering that we are dealing with the “purchase and sale of shares” itself, whose nature is strictly commercial and not labor-remunerative, the incidence of income tax will occur in the form of capital gains, at the time the asset is sold for a profit.
