Employee Participation Plans and Swiss Stamp Tax: a Toxic Combination?

According to the Swiss Federal Stamp Duty Act (FSDA) transfer stamp tax applies if four conditions are met: there must be a: 1) transfer of ownership 2) of a taxable document 3) against consideration and 4) with the involvement of a Swiss security dealer. In the context of an employee incentive plan, the question of whether transfer stamp tax applies arises when a company acts as a security dealer (for itself or as an intermediary) when issuing shares to its own employees or employees of the group. The definition of securities dealer includes not only financial institutions but also companies holding more than CHF10 million of taxable securities in their balance sheet. Large holding companies therefore typically come within the scope of the tax.

Following the Federal Supreme Court ruling, the SFTA in February 2026 published a change in its practice clarifying the application of the FSDA rules on the five most common types of employee incentive plans, for companies that qualify as a securities dealer.

Employee participation plan with performance share units (PSUs) and restricted share units (RSUs)

Under these plans, employees receive ’units’ that entitle them – usually after a vesting period – to receive a specified number of shares free of charge. Units granted as PSUs or RSUs are not taxable securities within the meaning of art. 13 §2 FSDA, and this puts them outside the scope of transfer stamp tax. Upon vesting of these units, and according to the Federal Court and the new practice, no transfer stamp tax is payable on the allocation of shares, as the transfer is made without payment of any consideration by the employees.

Employee participation plan with shares at preferential rates

With these plans, employees are granted the opportunity to purchase a specified number of shares at a discounted price (preferential rate). Transfer stamp tax is payable, but only on the amount actually paid by the employee or deducted from his/her salary. The difference between the market value of the shares and the agreed discounted purchase price generally constitutes a taxable employment benefit and is not subject to transfer stamp tax.

Employee participation plan with free shares

With this type of plan employees receive a predetermined number of shares from their employer and all of them are free of charge. The transfer of these shares is made without payment, since there is no deduction from the employee’s salary and no payment is made by the employee. According to Federal Court the absence of any payment equals to the absence of a consideration for stamp tax purposes; therefore no liability for transfer stamp tax arises on the issue of these shares.

Employee stock options plan

Employees may be granted call options by their employer. Within a specified time period or on a predetermined date, they can exercise these options to purchase a predetermined number of shares at a pre-agreed strike price. Options do not constitute taxable securities within the meaning of art. 13 §2 FSDA. However, a liability to pay transfer stamp tax arises when (and if) the option is exercised. In such cases, a transfer stamp tax is due on the price paid by the options holder to acquire the shares. The benefit realised from the difference between the market value of the shares and the option strike price generally constitutes a taxable employment benefit and is not subject to transfer stamp tax.

Compensation with payment made in shares

In compensation arrangements involving payment in shares, employees receive their agreed remuneration (e.g., salary, bonus) wholly or partly in the form of shares. With this type of employee participation plan, the value of the shares is clearly determined as it is the amount deducted from the employee’s total remuneration, with any remaining balance paid in cash. In such cases, and in accordance with the argumentation of the Federal Court, the amount deducted from the employee’s salary represents a consideration against the share acquisition, since such amount is linked to the past work and can be clearly determined. In such cases, the transfer stamp tax is payable on the agreed value of the shares.

Authors

• Bernhard Schopper, Partner, Swiss Tax & Legal
• Natalya Claivaz, Senior Manager, Swiss Tax & Legal