GEO INSIGHTS

HMRC’s latest statistics for tax years ending 2022 to 2024 show that employees received £790 million in Income Tax relief and £500 million in National Insurance relief from tax-advantaged Employee Share Schemes in 2024—a combined 18% increase from the previous year. Save As You Earn (SAYE) became the largest contributor to tax relief and had the highest total value of options granted and gains, driven by increased participation post-Covid and asset price growth. The number of companies operating ESS rose to 20,370, while the Company Share Option Plan (CSOP) saw significant growth following the doubling of its option limit.

Employee Share Schemes (ESS) are becoming more common in Australia as a way for businesses to attract, motivate, and retain talent by giving employees a stake in the company’s success. They can take the form of share offers, options, or loan-funded shares, but each structure comes with complex tax, legal, and compliance requirements, including reporting to the ATO and managing capital gains tax. To be effective and compliant, ESS must be supported by clear documentation, proper approvals, and expert legal advice tailored to the company’s goals and structure.

Luxembourg is introducing a modern carried interest tax regime and a special stock option regime for startup employees to attract top fund managers and support early-stage talent. Finance Minister Gilles Roth also emphasized the country’s push for digital transformation, including blockchain legislation, the MiCA directive, and the launch of the ‘peak accelerator’ to boost digital finance services. These reforms aim to strengthen Luxembourg’s position as a leading global financial center amid evolving economic and technological landscapes.

Foreign private issuers (FPIs), which accounted for over half of U.S. IPOs in 2024, benefit from lighter executive compensation disclosure requirements than U.S. domestic issuers, though these rules vary based on their home country’s regulations. To qualify as an FPI, a company must be non-U.S. incorporated and meet ownership or business-contact criteria, but that status is reviewed annually and may change. Despite more lenient requirements, FPIs should design executive compensation policies that align with shareholder expectations, anticipate potential regulatory changes by the SEC, and ensure compliance across all jurisdictions.

Recent global employment and tax updates include increased superannuation in Australia, new tax-free bonuses in Austria, and expanded employee share plan benefits in Italy and Japan, with similar startup-focused initiatives proposed in Luxembourg and New Zealand. Countries like Bosnia & Herzegovina and Slovenia are adjusting social security rates, while Japan simplifies securities laws to broaden employee equity access. Additionally, key compliance deadlines for employee share scheme reporting are approaching in the UK, Saudi Arabia, Australia, Vietnam, China, and other jurisdictions.