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Assessment on share In that case, the share under the possession of the employee
acquisition plans provided to legally and economically will be considered as wage and
income tax withholding liability shall be fulfilled by the
employees in terms of income employer through declaring it by a withholding tax return.

tax Under the situation that income provided within the scope
of a share acquisition plan is directly paid by an employer
Multinational companies recently started to develop resident abroad and charged out to a Turkish resident
diversified and encouraging wage schemes intended to employer, the provisions of Article 95 within the Income
increase employee engagement and motivation against the Tax Law no.193 shall apply. The employee will be required
rapid circulation of company employees. Share acquisition to declare his income through the annual income tax return
plans take the lead among those practices and encouraging for the period in which the shares started to be under his
wage schemes. possession legally and economically.

Within the scope of share acquisition plans, corporate In case that the employee divests from the share acquisition
stocks are granted as bonus shares to particularly the high plans with his own will, the repetitive Article 80 of the
level executives or the purchasing rights of share plans Income Tax Law will be required to take into account. The
are granted to the employee at a lower cost. The purpose income obtained through the stocks that the employee
of these plans is to increase the employees' loyalty to the divested out voluntarily will be considered as a gain of
employer, to create a center of attraction for qualified appreciation and should be declared through an annual
employees outside the company and to create a win-win income tax return.
situation by bringing the employer and employee together in
a common denominator. If it is detected that the share option is related to the
services performed in more than one country, it will be
The share plans implemented by the multinational companies important to determine how much of the benefit provided
in our country generally are as follows: by these plans is related to the service in each country. The
suggestion made by Organisation for Economic
• Stock option plans Co-operation and Development (OECD) at this point is that
• Employee stock purchase plan this determination should be made in each country within
the scope of the share acquisition plan within the term of
• Stock appreciation rights the progress period. Another approach in this matter is to
• Phantom shares examine the agreements if there is a bilateral agreement
• Restricted stock units between the countries concerning the taxation of the
benefits provided under the share acquisition plan. However,
The basic processes of share acquisition plans are; grant for the sake of an appropriate taxation, it will be more
date, vesting date, holding period, exercising date and accurate to evaluate each share acquisition plan in its own
selling date. Employee entitlement to take the shares of circumstances.
the company as a result of fulfilling the requirements in the
share purchase plan is not sufficient for the tax to arise.
The event that gave rise to tax in the share acquisition plan
occurs when the stock options start to be in the possession
of the employee legally and economically.

It would be necessary to review the Article 61 of the
Income Tax Law in order to clarify the state of the income
obtained from the shares acquired by the employee as a
result of fulfilling the specified time and performance target
conditions in the stock plans. Within Article 61 of the Income
Tax Law, the definition of the wage is made as the benefits
provided as money and property and may be represented
by money for the service of employees performing jobs
with a liability to the employer and dependent to a certain
workplace. In that situation, the share options which are
granted to the employees free or under the market value, will
be considered as wage since they are considered as a benefit
to the employee.
Explanations in this article reflect the writer's personal view on the
In the circumstance that the benefits of a share acquisition matter. EY and/or Kuzey YMM ve Bağımsız Denetim A.Ş. disclaim any
plan is provided by an employer resident in Turkey or responsibility in respect of the information and explanations in the
provided by an employer resident abroad and charged out to article. Please be advised to first receive professional assistance from
the related experts before initiating an application regarding a specific
an employer resident in Turkey, provisions of Article 94 of matter, since the legislation is changed frequently and is open to different
the Income Tax Law shall apply. interpretations.

10 Aralık 2018