THE STOCK OPTION TAXATION SCHEME OF BRAZILIAN EXPATRIATED TO THE UNITED STATES

Abstract

The objective of the present study is to examine the possible tax effects from the perspective of the Brazilian personal income tax considering a case analysis of a tax resident in Brazil who participates in a stock option plan of a transnational company abroad (parent or associated of the Brazilian employer) and who, after vesting and exercise of an option in Brazil, is expatriated or repatriated (transferred to work) to the United States and sells the shares there. The lack of specific regulatory provision in Brazil on stock-based compensation brings great discussion about the tax impacts of the plans. CARF (Brazilian Tax Administrative Appeals Court) recently announced decisions addressing issues concerning to the timing of the occurrence of the income taxable event in situations involving stock option plans. Thus, this study aims to contribute to solidify the understanding of the legal nature of share-based benefits, as well as their effects related to international income taxation, especially regarding the phenomenon of legal double taxation considering these recent CARF decisions.