The German Supreme Tax Court has confirmed that a close to “market standard” Management Equity Program will be taxed on capital income principles. The decision (court number IX R 43/15) provides comfort with respect to most structural aspects of Management Equity Programs, but puts the spotlight on the entry valuation as most critical feature to get right. Structuring Management Equity Programs will need to focus even more on the accuracy of the entry valuation than in the past.
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