This chapter provides an overview of stock options and discusses how to define stock option information.
When payees sell stock that they acquired through stock options, the resulting earned income can fall into three different categories:
Tax exempt income.
Irregular income.
In kind income
Tax Exempt Income
The system considers up to a certain statutory amount of stock income to be tax exempt if the payee selling the stock:
Held the stock for at least three years before selling it.
Acquired the stocks through a general plan. This means that the issuing company offered options to all employees under the same conditions.
Is an active employee of the company that issued the stock options.
Note. Tax exempt stock income is also exempt from Social Security contributions.
Irregular Income
For stock income that does not qualify to be tax exempt, the system treats a portion of it as irregular income if the payee who sold the stock acquired it over an accrual period greater than two years. The system reduces irregular income by a territory-specific percentage before adding it to the total taxable base. The maximum amount of stock income that can be considered irregular income is the statutory Medium Average Salary × years of income generation. This maximum amount is doubled for payees who:
Held the stock for at least three years before selling it.
Acquired the stocks through a general plan. This means that the issuing company offered options to all employees under the same conditions.
Note. The system does not reduce irregular income when determining Social Security contributions.
In Kind Income
The system considers any stock income that does qualify as tax exempt or irregular income as in kind income. Payees are responsible for paying any taxes associated with this income. Therefore, in kind stock income fall under the category of IRPF recupertido.
See Also
This section discusses how to record stock option income for payees.
Page Name |
Definition Name |
Navigation |
Usage |
GPES_EMP_STOCKS |
Global Payroll & Absence Mgmt, Payee Data, Assign Earnings and Deductions, Stocks Options ESP, Stocks Options ESP |
Record stock option income for payees. |
Access the Stocks Options ESP page (Global Payroll & Absence Mgmt, Payee Data, Assign Earnings and Deductions, Stocks Options ESP, Stocks Options ESP).
Use this page to enter information regarding the sale of stock options. By entering stock sale information, you assign the ACCIONES_CIA earning to the payee. This earning drives the calculation of taxes and Social Security contributions resulting from the stock sale.
See Delivered Nonbasic Earnings.
Sequence number |
Enter a sequence number for the stock sale. |
Sales Date |
Enter the date on which the payee sold the stock. The system uses this date as a reference point when calculating the payroll impact of the stock sale. |
Non-active Employee |
Select to indicate that the payee is not currently employed by the company who issued the stock options. |
Generation Period |
Enter the number of years over which the payee accrued the stock options that were sold. |
General Plan |
Select to indicate that the payee acquired the stock options through a general plan. |
Holding Period |
Enter the number of years for which the payee held the stock options that were sold. |
Stock Income |
Enter the income generated from the sale of the stock. |
Currency Code |
Enter the currency of the stock income. |