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EFES NEWSLETTER - DECEMBER 2020

  Fiscal engineering

What company doesn't dream of doubling its profitability?

This is what the ESOP employee share ownership plan can achieve in most European countries, depending on the corporate income and dividend tax rates.

It is well known that each type of business ownership has its own particular forms of fiscal engineering. Whether it's the large international group, the individual boss or the family ownership, they all have their own methods.

On the other hand, it is generally overlooked that employee ownership provides particularly effective mechanisms for SMEs.

As a result, the existing tax system may encourage employee share ownership and the reduction of wealth inequalities. And this without any particular new legislation.

This particularity is at the root of the success of ESOP employee share ownership plans.

Indeed, the ESOP plan makes it possible to clear out the company's profits in the form of supplementary pension contributions for the employee-owners of the company. Once the profit has been disposed of, there is no longer any tax on the profit or on the dividends. It's as simple as that.

This is what makes the ESOP plan simpler and more effective than any other for employee ownership in SMEs and for providing them with equity capital.

This has been one of the two keys to the success of ESOP plans in SMEs in the US since 1974.

That is why there are 14 million employee shareholders in ESOP plans in the USA, compared with barely one million employee shareholders in SMEs in Europe, even though the US population is half as small as ours.

Fiscal engineering is often decried. In many cases, it reduces taxes to benefit private interests at the expense of the public interest.

With the fiscal engineering of employee share ownership, it's a different matter altogether. This benefits all employees and the public interest. Indeed, all studies show that it contributes to general well-being and the reduction of inequalities.

The fiscal engineering of employee share ownership is a virtuous fiscal engineering.

Read more  

Press review
We have a selection of 34 remarkable articles in 10 countries in November 2020: Austria, Belgium, Canada, Germany, France, Ghana, Italy, Norway, UK, USA.
Austria: Employee share ownership is organised through dedicated private foundations in a growing set of companies.
Belgium: Proposal to generalize employee share ownership in Belgium.
Canada: New report on the potential for employee ownership in Canada.
Germany: The tax incentives should be multiplied by 10, from 360 to 3,600 per year.
France: Elections in France: According to the new "Pacte Law", the employee shareholders' representatives must be chosen by election. The fury of the AASGO association at Orange. New employee share plan for CapGemini.
Ghana: Employee share ownership plan for MTM.
Italy: New employee share plan for Atlantia.
Norway: Fiscal incentives in Norway.
UK: The switch to Employee Ownership Trusts is increasing in British SMEs. John Lewis Partnership to cut 1.500 head office jobs.
USA: The New York Times extols the virtues of employee ownership through employee stock ownership plans (ESOPs). And trade groups for employee-owned businesses note bipartisan Congressional support for ESOPs.

The full press review is available on:
              http://www.efesonline.org/PRESS REVIEW/2020/November.htm 

 


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   With best regards

 

 
 

Marc Mathieu
Secretary General
EFES - EUROPEAN FEDERATION OF EMPLOYEE SHARE OWNERSHIP
FEAS - FEDERATION EUROPEENNE DE L'ACTIONNARIAT SALARIE
Avenue Voltaire 135, B-1030 Brussels
Tel: +32 (0)2 242 64 30 - Fax: +32 (0)2 791 96 00
E-mail: efes@efesonline.org
Web site: www.efesonline.org
EFES' objective is to act as the umbrella organization of employee owners, companies and all persons, trade unions, experts, researchers, institutions looking to promote employee share ownership and participation in Europe.