Assessment of the stock options system

10 Aug 2018


Dorothée David

Assessment of the stock options system

On 27 July 2018, the Minister of Finance, Pierre Gramegna, responded to parliamentary question no. 3948 on the Government’s assessment of the stock options system. By way of this question, deputies Diane Adehm and Gilles Roth asked the Minister for the results of the assessment of the stock options system, carried out by the Ministry of Finance. The Minister passed on the results of this assessment:

  • 3,065 employees benefited from the stock options system in 2016, and 3,704 in 2017. These employees mainly came from the financial industries.
  • The total tax loss is estimated at 112 million Euros for 2016 and 135 million Euros for 2017. For 2018, due to the modifications introduced by Circulaire L.I.R. no. 104/2 of 29 November 2017, it can be estimated that the tax loss will be significantly lower than in previous years, at somewhere between 60 and 80 million Euros.
  • A complete abolition of the stock options system would run the risk of having a negative impact on the country’s appeal to talented individuals showing a high level of potential as well as international experts. The creation of high added value positions should be encouraged within the context of implementing BEPS and Brexit, as well as to ensure the growth of the Luxembourg economy.

On the basis of these factors, the Minister clarified that:

  • The current stock options system is maintained.
  • However, in order to make it more equitable, this system will be adapted to create more of a link between the remuneration of those involved and the performance of their company or their sector: “To this end, the plan is to clarify the current Circulaire in order to restrict the scope of stock options to shares in the company or the group to which it belongs, or to representative indices for the sector in question.”

Parliamentary question and ministerial response no. 3948 - stock options