In a judgment on September 11, 2024, the 1st Section of the Superior Court of Justice (“STJ”) issued an extremely important decision in favor of taxpayers, understanding that the taxation of stock options will only occur at the time of sale of the shares, if there is a gain of capital.

Stock options, or share purchase options, are a benefit that some companies offer their employees to encourage retention and attract new talent. With stock options, employees can purchase company shares at a price below the market, which can be a source of potential profit.

There was an understanding by the Federal Revenue that, at the time of acquisition of shares, Personal Income Tax (“IRPF”) should be levied, the rate of which is up to 27.5%. In this case, the stock options would be considered immediate remuneration linked to the employment contract, and would therefore be subject to IRPF taxation on the progressive table at the time of acquisition of the shares.

As now decided by the STJ, the understanding is consolidated that stock options have a strictly commercial nature, given that there would be no increase in assets in favor of the acquirer “when the effective acquisition of shares from the company granting the purchase option” , as highlighted in the vote for the Reporting Minister, Sérgio Kukina. Taxation then only occurs on capital gains when and if the shares are effectively sold at a profit.

As this decision by the 1st Chamber of the STJ was made in the context of a repetitive appeal, it must from now on be applied to all actions that deal with the topic.