The differrence between shares & depositary receipts
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Overview of shares & depositary receipts
There are quite a few differences and similarities between shares and depositary receipts. To help you make a choice, we've listed the most important points below.
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What does it mean?
Shares are ownership rights in a company. The owner of shares participates in the profit the company makes.
Certificates of shares are financial instruments issued by a foundation administration office (STAK). This creates a separation between the economic rights (dividend) and the legal rights (voting rights).
How does it work financially for employees?
Shares allow employees to directly benefit from the increase in the company's value.
Certificates of shares allow employees to directly benefit from the increase in the company's value.
What about employee engagement?
Shares create the highest form of engagement, as employees are involved in the decision-making process through voting rights.
With share certificates, employees have voting rights in a foundation that stands between the company and the employee. This means that employees do not have direct influence in the company, but rather it goes through the foundation (STAK).
What about tax implications for the employee?
If the employee buys <5% of the shares, they pay no tax on purchase or sale. However, the employee does pay box 3 tax. If the employee buys >5% of the shares, the shares are taxed in box 2.
When the employee buys shares below market value, the tax authorities consider the difference as income. Income tax must be paid on this amount.
What are the costs?
In addition to the share plan, shareholders' agreements must be signed, and everything must be recorded through a notary.
Setting up and maintaining a foundation is an expensive process for share certificates.
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