Taxation of options in lithuania: a comparison with other oecd states

Taxation of Options in Lithuania: a Comparison with Other OECD States The author of this master thesis analyzes the taxation of employee stock options in Lithuania and three OECD countries: United States of America, United Kingdom and Germany. At the beginning of the thesis, the concept and purpose of the stock options as a form of employee financial participation are discussed and the types of employee stock options are identified. Later on, author explains the main aspects of taxation of employee stock options and distinguishes practically arising taxation issues. International double taxation is identified as one of the most problematic issues that countries encounter in the respect of the taxation of employee stock options. However, author seeks to find and name possible solutions for the avoidance of double taxation and analyzes the Double Taxation Avoidance Agreement between Lithuania and Latvia. The taxation of employee stock options in this thesis is examined from the perspective of both employee and the employer. In the context of Lithuanian tax law, the taxation of employee stock options is assessed in terms of income, social insurance and compulsory health insurance taxes, as well as the procedure for calculating and declaring the aforementioned taxes. In the context of foreign countries, author studies the legal requirements for stock option grant and the taxation of stock options. Finally, author compares the taxation of stock options in Lithuania, United States of America, United Kingdom and Germany and evaluates Lithuanian tax environment regarding employee stock options. In the conclusion, a few possible improvements for the tax legislation are proposed