GEO INSIGHTS

A new bipartisan proposal, the SHARE Act, would give public companies a 3% corporate tax rate discount if they distribute at least 5% of their stock to the lowest-paid 80% of employees. Sponsors project the plan could transfer nearly $4 trillion in stock value to about 40 million middle-class Americans, helping narrow wealth inequality while boosting employee ownership and loyalty. Companies could offset share dilution through the tax break, and stock awards would be tax-deductible for businesses and tax-free for employees.

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.

The UK government's new PISCES trading platform introduces regulated, periodic opportunities for shareholders in private companies to sell shares, addressing long-standing liquidity challenges for employees and early investors. Legislative changes ensure that participation in PISCES will not jeopardize the tax-advantaged status of EMI and CSOP options, removing a key barrier to broader employee share ownership. While the platform holds promise, its success will depend on forthcoming FCA rules and how companies balance legal, tax, and practical implications before opting in.

UniCredit has launched "U Share," an employee share ownership plan allowing eligible staff to invest between €500 and €10,000 in UniCredit shares with added benefits. Participants receive 20% in free Discount Shares after 18 months and an additional 20% in Matching Shares after 36 months, subject to continued employment and meeting company performance goals. The plan, approved in April 2024, aims to foster a stronger alignment between employees, management, and shareholders by promoting a culture of ownership.

L’Oréal has launched its fifth global employee share ownership plan, offering up to 300,000 discounted shares to employees in 62 eligible countries, with the subscription period running from June 11 to June 25, 2025. The initiative allows participants to purchase shares under a ‘classic’ formula with a matching employer contribution and requires a five-year holding period, subject to early release conditions. CEO Nicolas Hieronimus emphasized the company’s commitment to sharing value with employees, noting that nearly half of L’Oréal’s workforce are already shareholders and that the plan is intended to be repeated annually.