The Superior Court of Justice expects to judge in 2024 Theme No. 1,226, which affects Special Appeals 2,069,644 and 2,074,564, and seeks to define the legal nature of the “stock option plan”.

The topic aims to clarify the legal nature of company stock option plans for executives (stock option plan), whether linked to the employment contract (remuneration) or strictly commercial, in order to then define what the applicable rate would be and when Income Tax would be levied on this situation.

Stock options have been increasingly used in the Brazilian market and consist, in short, of allowing employees of the company to acquire shares of the same at a normally more advantageous price as a way of encouraging, recruiting and retaining employees in the company. However, this practice leads to extremely important discussions in the labor and tax world, for example, since it would be essential to define whether these are a form of remuneration for employees and, therefore, how they would be taxed.

The issue showed the need for analysis by the Court, as several divergences were observed in lower courts on the subject. The discussions and divergences are based on the lack of definition as to whether this would be a type of remuneration for work or whether they would be merely strictly commercial relations and not related to the services provided by the buyers to the companies. This definition is essential to determine how these share purchases will be taxed.

We would like to emphasize that this discussion is essential for the tax sphere, given that the outcome will determine how taxpayers who carry out this type of transaction will be taxed in our country. Our tax team will monitor the judgment on the matter and remains available for any clarifications on the matter.