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V0789-25 6 May 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimiento del trabajo en especie

Exercise of a share sale option may be treated as income from work and capital gain

A lawyer consults on the tax treatment of selling shares in his company after retiring under a share purchase option contract. The DGT responds that granting a share sale option to employees constitutes income from work in kind, with the difference between market value and transfer value being income, and the difference between market value and acquisition value being a capital gain.

The question raised

Taxation of the transaction in the taxpayer's Personal Income Tax (IRPF).

The DGT's ruling

The free granting of a put option to employees due to their status as such is considered employment income in kind. This income accrues upon the exercise of the option and is valued by the positive difference between the agreed transfer value and the market value of the share. The difference between the market value and the acquisition value constitutes a capital gain or loss. Such income may benefit from the reduction provided in Article 18.2 of the Personal Income Tax Law (LIRPF) if the requirements regarding the generation period and quantitative limits are met.

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