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Client Updates

Jul 13, 2016

Client Update | Tax Treatment of Retention Mechanisms of Founders and Key Employees (Reverse Vesting and Holdback)

Yesterday, July 12, 2016, the Israel Tax Authority (the "ITA") published on its website a draft circular addressing retention mechanisms of founders and key employees (the "Key Persons"), and in particular the Reverse Vesting mechanism (pursuant to which shares of Key Persons are subject to forfeiture rights which are extinguished gradually over a defined employment period) and the Holdback mechanism (pursuant to which a portion of the sale proceeds of Key Persons’ shares would be paid to them gradually over a defined period after completion of a sale transaction, subject to their continued employment with the company during such period).

To read the full update - click here