Marc Seematter’s Post

Maximizing Compensation Designs with R&D Tax Incentives: A Strategic Approach In today's competitive landscape, companies are constantly seeking ways to innovate and stay ahead of the curve. Research and Development (R&D) activities play a pivotal role in driving innovation, but they can also incur significant costs. However, governments around the world recognize the importance of R&D in driving economic growth and offer tax incentives to encourage companies to invest in such activities. One often overlooked aspect of R&D tax incentives is their potential impact on compensation designs within organizations. By strategically aligning compensation structures with R&D tax incentives, companies can not only optimize their innovation efforts but also enhance employee motivation and retention. Here's how: Maximizing R&D Tax Credits: Many countries offer tax credits or deductions for qualified R&D expenses. By structuring compensation plans to reward employees involved in R&D activities, companies can directly leverage these incentives to offset costs. For example, offering bonuses or stock options tied to the success of R&D projects can motivate employees to contribute more effectively while also maximizing tax benefits for the company.

If you started your job during the year, a "small" tax return ("Annual Statement") can enable you to benefit from an advantageous tax refund! 😃    Why is this so advantageous? taxx.lu explains it all! In Luxembourg, employees don't have to worry about their taxes, as the employer is responsible for calculating and paying them to the State. However, the employer assumes that you earn the same salary throughout the year. But if you started work after 1 January, on 1 July for example, the tax has to be reassessed at the end of the year on the basis of your actual earnings over the whole year. This means that you can get a substantial refund on the tax paid during the months you worked. 💰    For example: You started your first job on 1 July, earning a gross monthly salary of €2,500. Your employer deducted €153.20 in tax from your pay each month, for a total of €919.20 between July and December. Using the "annual statement", you inform the State that you have only received this salary for 6 months (from July to December).    Taking into account possible deductions (taxx.lu automatically takes care of this for you), the State calculates the actual amount of tax payable, which in your case is EUR 74. Since you paid EUR 919.20, you can now claim a refund of EUR 845.20! 🎉    The State will not automatically refund you this money, but to take advantage of it, send them an "Annual statement". 📝    How do I do it? It's quick and easy on taxx.lu! Do a free simulation now on taxx.lu to estimate your refund! 🚀🔍  https://lnkd.in/e2X5TS-a 

Businesses need to know how to navigate the intricate tax landscape of ESOPs for a comprehensive understanding of their impact on businesses and employees. #esop #taxation

Does your company file a blue tax return and benefit from the tax advantages? But remember that the tax office can revoke your blue tax return if you have triggered certain conditions. To know more about the Japanese tax regulations for your company, please watch our video and reach out to us at Seventh Sense Group! #taxhelp #accountingservices #taxservices #taxreturn #accountant #payroll #Japan #Tokyo #bilingual #incorporation https://lnkd.in/g6SThe-U

Taxation in the context of Employee Stock Option Plans (ESOPs) involves considerations at different stages, from the grant of options to their exercise and eventual sale of the underlying stock. The tax implications can vary based on the jurisdiction and specific rules applicable. Below, I'll provide a general overview: ~Grant of Options: No immediate tax implications when you receive stock options. It grants you the right to buy shares at a set price in the future. ~Exercise of Options: Taxes kick in when you exercise options. The difference between the stock's market value at exercise and the exercise price is taxable as employment income. ~Sale of Shares: When you sell shares acquired through options, you incur capital gains or losses. The profit or loss is the difference between the sale price and the stock's value at exercise. Capital gains may be subject to capital gains tax, depending on the jurisdiction. ~Timing and Holding Period: Holding shares for a specific period might result in favorable tax treatment. Longer holding periods may lead to reduced capital gains tax. ~Employer Withholding and Reporting: Employers often withhold taxes on the taxable benefit at exercise. Employers handle reporting to tax authorities and provide necessary tax documents. ~Special Considerations: Tax rules vary by jurisdiction, and there might be deferral options under specific conditions. Seek professional advice to navigate complex tax laws effectively. Understanding share-based payments is crucial for businesses. Stay informed and stay ahead!

Global Mobility: taxation of the share-based payments received from a foreign parent company   In our latest newsletter, we will focus on the assessment of the taxable income and the related tax liability arising from the share-based compensation received by Hungarian employees from the foreign parent company of their Hungarian employer. Due to the termination of the Hungarian-American agreement, this topic is particularly relevant, since in the absence of an agreement on double taxation, different rules have to be taken into account when determining the tax liability related to income derived from such benefits (e.g.: dividends). #WeAreVGD #taxexperts #tax #taxes #taxation #hungary #investments #expatpayroll #payroll #payrolltaxes #sharebenefits #foreignworkers #thirdcountryworkers #workpermit #immigration #crossborderemployment #globalmobility #globalmobilitytaxservices #GMTS #vgd #nexia https://lnkd.in/dgzqJv3z

IP-related tax breaks are meant to spur companies to invest locally and create jobs. But do they? This study by Associate Professor Rebecca Lester aimed to find out. Some governments offer “innovation box” incentives that reduce #taxes on innovation-related income. Lester investigated whether companies receiving these incentives do in fact increase their investment in fixed assets, as well as the incentives’ impact on employment and wages. Lester studied seven countries, most in the EU, that had innovation box tax policies in place prior to 2017. In these countries, she found that companies that took the tax incentives invested 2.6% more capital than those in non-innovation box countries, which amounted to an average of about 4 million euros more compared to businesses that were ineligible for the tax break. As for employment, Lester found that the benefiting firms didn’t add any more jobs, but they did raise wages for current employees. On average, an individual employee’s salary rose by around 45,000 euros in the three years following a company receiving the tax break. Lester concludes that innovation box incentives are effective. “[These] are one of the few incentives countries can still use to retain and attract business activity across borders,” she says. https://lnkd.in/gas9iWhB

IP-related tax breaks are meant to spur companies to invest locally and create jobs. But do they? This study by Associate Professor Rebecca Lester aimed to find out. Some governments offer “innovation box” incentives that reduce #taxes on innovation-related income. Lester investigated whether companies receiving these incentives do in fact increase their investment in fixed assets, as well as the incentives’ impact on employment and wages. Lester studied seven countries, most in the EU, that had innovation box tax policies in place prior to 2017. In these countries, she found that companies that took the tax incentives invested 2.6% more capital than those in non-innovation box countries, which amounted to an average of about 4 million euros more compared to businesses that were ineligible for the tax break. As for employment, Lester found that the benefiting firms didn’t add any more jobs, but they did raise wages for current employees. On average, an individual employee’s salary rose by around 45,000 euros in the three years following a company receiving the tax break. Lester concludes that innovation box incentives are effective. “[These] are one of the few incentives countries can still use to retain and attract business activity across borders,” she says. #WorldCreativityandInnovationDay https://lnkd.in/gnqdfeiG

How do tax authorities conclude that a company has a permanent establushment ? A few companies I worked for before have not laid atention to this really important rule: Tax authorities use various criteria to determine if a company has a permanent establishment (PE) in a particular country. These criteria may vary slightly from one country to another, but they generally include the following factors: 1. Physical presence: Tax authorities consider whether the company has a fixed place of business in the country, such as an office, branch, warehouse, or factory. 2. Duration of presence: They look at the length of time the company operates in the country. If the presence exceeds a certain duration, it may indicate the existence of a PE. 3. Key decision-making activities: Tax authorities examine whether significant business decisions are made within the country. If the company's management or board of directors make important decisions related to the business in that country, it may indicate the presence of a PE. 4. Dependence and control: They assess the level of autonomy and control the company has over its operations in the country. If the company is heavily dependent on, or controlled by, another entity in the country, it may imply the existence of a PE. 5. Ancillary activities: Tax authorities also consider whether the company engages in certain supporting or auxiliary activities that are preparatory or auxiliary to its main business activities. Examples include storage, delivery, or maintenance of goods or equipment. It's important to note that each country may have its own specific rules and interpretations of these criteria. Additionally, tax treaties between countries may provide additional guidance on how to determine the existence of a PE.

Are you conducting business in Germany? As we approach the end of 2023, there are several new tax updates that you should be aware of. Highlights include: - Improvements and changes regarding company car taxation - Updates regarding losses from the sale of GmbH shares - Changes in taxation rules regarding social security contributions in arrears These updates reflect the evolving landscape of German tax regulations, and it is crucial to stay informed. Discover the details behind these updates and more, complete with background information and examples, by reading the latest article on our website: https://lnkd.in/griQWrYG #germanytax #taxupdate #germany