Stock options: STJ upholds decision for taxation on capital gains

The position favors the taxpayer, who pays income tax only if there is an increase in net worth. 

In rejecting the appeal filed by the Federal Government, the High Court of Justice (STJ) upheld the decision that stock options are not part of remuneration and, therefore, are subject to a lower income tax (IR) incidence. 

In practical terms, this means that the prohibition on applying a tax rate of up to 27.5% on the purchase of securities remains, especially since there is a cost associated with acquiring them. Thus, the income tax rate of 15% to 22.5% on the sale of shares applies exclusively to capital gains.

Rejected unanimously in a session held this November, the appeal by the Office of the General Counsel for the Federal Treasury (PGFN) was not even debated. The decision is expected to be followed by other courts.

Understand the Case

In September of this year, the STJ analyzed the legal nature of stock options: whether they are tied to an employment contract (remuneration) or strictly commercial, to determine the applicable income tax rate and the timing of tax incidence.

On this occasion, the thesis established on Topic 1,226 (REsp 2074564/SP and REsp 2069644/SP), and which remains in effect for the time being, is as follows:

1. Under the Stock Option Plan regime (Article 168, § 3, of Law No. 6,404/1976), because it is characterized by its commercial nature, personal income tax (IRPF) is not levied at the time of the actual acquisition of shares from the granting company, given the absence of any asset appreciation in favor of the acquiring option holder.
2. Personal income tax/IRPF will be levied, however, when the transferee of shares in the Stock Option Plan resells them with a capital gain.

In other words, the legal nature of these agreements is mercantile and not remunerative. Income tax will only be levied on the sale of the shares, in the event of an increase in the transferee's net worth.

Also read: STJ define que stock options não fazem parte da remuneração e pagam menos IR 

What are stock options plans?

The so-called Stock Option Plans (SOPs) are stock purchase option plans, a modality widely used abroad, especially in the United States, where these instruments are offered by companies to their executives.

With the favorable decision for Brazilian taxpayers, this practice may be expanded in the country. Provided for in the “Corporate Law” (Law No. 6,404/1976, Article 168), these plans are used by publicly held companies as a strategy to retain their managers or employees, who can acquire a stake in the company through shares.

Individual Tax Support

Domingues e Pinho Contadores keeps abreast of updates in the tax field to advise its clients on best practices. For this support and to ensure full compliance, please contact: dpc@dpc.com.br

Sources: 

https://valor.globo.com/legislacao/noticia/2024/11/18/stj-mantem-decisao-contra-tributacao-de-stock-options.ghtml