Global Equity | Update—January 2024
Canada | 2024 CPP Enhancement Contribution Changes
As of 1 January 2024, the second enhanced CPP contributions have been introduced. These contributions are subject to a different income ceiling and must be reported in Box 16A (which is now available on the T4).
The Second (enhanced) CPP contributions are made by employees who earn more than the first ceiling, but up to the second ceiling at a rate of 4%. Employers will also contribute 4% on the employee’s behalf.
QPP
The first and second earning ceiling for QPP are in line with the Federal / other provincial ceilings (with the second ceiling being higher than the first ceiling by 7% in 2024 and by 14% in 2025 and future years). However, the employee and employer QPP contributions for 2024, 2025 and future years will be as follows:
The current C$3,500 exemption continues to apply to both CPP and QPP.
Germany | Future Financing Act
The “Future Financing Act” came into force from 1 January 2024, introducing a change in employee share ownership among other things.
The annual tax-free allowance for no-cost or discounted employee shareholdings from an employer to employees has increased from currently €1,440 to €2,000. For example, this is applicable to employees receiving restricted stock units as these are generally granted at no-cost to the employee.
The other requirements for wage tax exemption remain in place. The tax-free allowance can be obtained if the employee participation scheme:
Ireland | Finance Bill (No. 2)
Finance (No.2) Bill 2023 came into effect for all share option gains made on or after 1 January 2024 outlining such gains will be subject to payroll withholding. Employers will need to operate Income Tax, Income Tax, Universal Social Charge (USC) and employee social security (PRSI) on stock option gains.
Previously stock option gains were taxed via the self-assessment system and that position remains unchanged for gains made on or before 31 December 2023.
Employers will need to prepare quickly and consider:
Other clarifications will be needed from Revenue, in particular for globally mobile populations such as:
On other share option related updates, Revenue had previously identified that employees may not be fully aware of their tax obligations where they participate in an employee share scheme and this was therefore identified as an area of Revenue focus. Since that time Revenue issued an Employer Notice requesting that all employers operating share-based remuneration schemes circulate the necessary information to assist employees in meeting their obligations. Following this we are seeing a significant increase in Revenue cross-checking employer returns (Form RSS1 and Form ESA) against income tax returns submitted by employees.
Anomalies identified typically result in Revenue issuing compliance intervention letters to employees which not only result in assessments for underpayments of tax but also interest and penalties. More recently we have seen an increasing trend by Revenue in raising an interest assessment for the late payment of tax. Given the continued scrutiny from Revenue in this area, employers may wish to consider a reminder to employees of their obligations in respect of calendar year 2023 and prior years.
Italy | Government 2024 Budget Bill
On 19 December 2023 the Council of Ministers approved the final version of the Legislative Decree on International taxation providing some amendments to the Inbound tax regime, named “impatriati.”
The percentage of tax-exempt employment income is reduced from current 70% to 50% or to 60% where the major exemption applies only to employees with a child of age below 18 remaining resident in Italy with the parent employee.
An annual threshold of €600,000 has been introduced. Employment income above this limit will be fully taxed.
The current qualifying conditions are amended as follows:
o 6 tax years, where the foreign employment was not performed in favor of an Italian employer.
o 7 tax years, where the foreign employment was not performed in favor of an Italian employer.
The following condition has been added:
As for the current law provision, the tax benefit will apply for 5 years, starting from the tax year in which the taxpayer becomes an Italian tax resident. However, it will no longer be possible to extend the special tax regime for a further 5 years.
Transitory provisions
The above-mentioned changes will not apply to the taxpayers who will register with the Italian record of resident population (i.e. anagrafe) by 31 December 2023. These employees will be allowed to benefit from the current and more favorable inbound tax treatment.
In addition, those employees who will register with “anagrafe” in 2024 and become owners of an Italian residential property in the timeframe that goes from twelve months prior to their transfer in Italy and 31 December 2023, will benefit from the possibility to extend the inbound tax regime for 3 additional tax years. The extension in these cases will allow for a tax exemption on 50% of employment income capped as above while the property will need to be used as their primary residence.
Amendment of Personal income Tax rates
Current Personal tax rates are set as follows:
On 30 December 2023 the Council of Ministers introduced the new applicable income tax rates with the Legislative Decree n.216. Only for the 2024 tax period, the progressive IRPEF rates and the income brackets to be applied when determining the gross tax have been consolidated to three brackets as follows:
Taxation of Fringe benefits
For benefits offered to employees, tax exemption shall apply up to the threshold of €1,000 per year. The tax-exempt threshold shall increase to €2,000 if granted to employees with dependent children.
Netherlands | Current changes to the 30% Ruling
New changes to the 30% ruling came into effect on 1 January 2024.
The 30% ruling is now a 30 / 20 / 10% ruling (subject to transitional law). For the first 20 months, the tax free percentage will remain 30%. For the second 20 months, this will be maximally 20%. In the last 20 months, the maximum tax free percentage will be 10%. The maximum duration of the 30% ruling remains to be five years.
Transitional law
In the amendment, transitional law is included for individuals for whom the 30% ruling is applied in the last wage tax period of 2023 (usually December 2023). For these individuals, the maximum tax-free percentage remains 30% of the Dutch taxable wage during the period the 30% ruling has been granted by the Dutch tax authorities.
See for more details on the recent legislative changes our extensive update (including the changes to the partial non-resident taxpayer status that are scheduled to apply as of 1 January 2025).
Salary Cap
In addition to the above, effective 1 January 2024 the maximum salary eligible for the 30% ruling is capped at €233,000 per annum (subject to separate transitional rules), i.e. a maximum tax free amount of €69,900 (€233,000 x 30%) can be provided on an annual basis. For the portion of the income exceeding this threshold, no 30% ruling tax free allowance can be provided. This legislative change was already approved in 2022, with transitional law up to 31 December 2025 for individuals for whom the 30% ruling is applied in the last wage tax period of 2022 (usually December 2022).
Future developments
During 2024, the 30% ruling and the recent changes will be further evaluated. In the 2025 Tax Plan, depending on the outcome of the evaluation, it could be that the changes will be (partially) withdrawn, updated or that further changes will be announced.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
AmyLynn Floodamy
Partner
Marc Bosottimarc
Partner
Gemma Ludwig
Director
Further information on Vialto Partners can be found on our website: www.vialtopartners.com
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Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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