{"id":6521,"date":"2026-10-14T14:15:41","date_gmt":"2026-10-14T14:15:41","guid":{"rendered":"https:\/\/ypsilon.group\/selling-shares-in-u-s-companies-up-to-usd-15-million-of-gain-tax-exempt\/"},"modified":"2026-10-15T10:31:25","modified_gmt":"2026-10-15T10:31:25","slug":"selling-shares-in-u-s-companies-up-to-usd-15-million-of-gain-tax-exempt","status":"publish","type":"post","link":"https:\/\/ypsilon.group\/en\/selling-shares-in-u-s-companies-up-to-usd-15-million-of-gain-tax-exempt\/","title":{"rendered":"Selling Shares in U.S. Companies: Up to USD 15 Million of Gain Tax-Exempt?"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"6521\" class=\"elementor elementor-6521 elementor-6492\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-89f67e9 e-flex e-con-boxed e-con e-parent\" data-id=\"89f67e9\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t<div class=\"elementor-element elementor-element-30ab8d5 e-con-full e-flex e-con e-child\" data-id=\"30ab8d5\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t<div class=\"elementor-element elementor-element-7c95d0a e-con-full e-flex e-con e-child\" data-id=\"7c95d0a\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-416aab77 elementor-widget elementor-widget-text-editor\" data-id=\"416aab77\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW51129335 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW51129335 BCX0\">I was there for Clark Schaefer Hackett and at the invitation of QCA Ventures. What resonated with me most was the session by FBT Gibbons on &#8220;<\/span><span class=\"NormalTextRun SCXW51129335 BCX0\">E<\/span><span class=\"NormalTextRun SCXW51129335 BCX0\">quity <\/span><span class=\"NormalTextRun SCXW51129335 BCX0\">A<\/span><span class=\"NormalTextRun SCXW51129335 BCX0\">wards,&#8221; i.e., the issuance of equity as compensation for employment or services. At its core, it <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW51129335 BCX0\">was about<\/span><span class=\"NormalTextRun SCXW51129335 BCX0\"> the tax exclusion for Qualified Small Business Stock (QSBS) and how it interacts with the so-called Section 83(b) election. I took a closer look at the rules and compared them with Sec. 19a of the German Income Tax Act (<\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW51129335 BCX0\">EStG<\/span><span class=\"NormalTextRun SCXW51129335 BCX0\">)<\/span><span class=\"NormalTextRun SCXW51129335 BCX0\">:<\/span><\/span><span class=\"EOP Selected SCXW51129335 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-f31c5b4 e-con-full e-flex e-con e-child\" data-id=\"f31c5b4\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-bb31266 elementor-toc--minimized-on-desktop elementor-widget elementor-widget-table-of-contents\" data-id=\"bb31266\" data-element_type=\"widget\" data-e-type=\"widget\" data-settings=\"{&quot;headings_by_tags&quot;:[&quot;h4&quot;],&quot;exclude_headings_by_selector&quot;:[],&quot;icon&quot;:{&quot;value&quot;:&quot;&quot;,&quot;library&quot;:&quot;&quot;},&quot;no_headings_message&quot;:&quot;Es wurden keine \\u00dcberschriften auf dieser Seite gefunden.&quot;,&quot;minimized_on&quot;:&quot;desktop&quot;,&quot;marker_view&quot;:&quot;bullets&quot;,&quot;minimize_box&quot;:&quot;yes&quot;,&quot;hierarchical_view&quot;:&quot;yes&quot;,&quot;min_height&quot;:{&quot;unit&quot;:&quot;px&quot;,&quot;size&quot;:&quot;&quot;,&quot;sizes&quot;:[]},&quot;min_height_tablet&quot;:{&quot;unit&quot;:&quot;px&quot;,&quot;size&quot;:&quot;&quot;,&quot;sizes&quot;:[]},&quot;min_height_mobile&quot;:{&quot;unit&quot;:&quot;px&quot;,&quot;size&quot;:&quot;&quot;,&quot;sizes&quot;:[]}}\" data-widget_type=\"table-of-contents.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div class=\"elementor-toc__header\">\n\t\t\t\t\t\t<h6 class=\"elementor-toc__header-title\">\n\t\t\t\tIndex\t\t\t<\/h6>\n\t\t\t\t\t\t\t\t\t\t<div class=\"elementor-toc__toggle-button elementor-toc__toggle-button--expand\" role=\"button\" tabindex=\"0\" aria-controls=\"elementor-toc__bb31266\" aria-expanded=\"true\" aria-label=\"Open table of contents\"><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-fas-chevron-down\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M207.029 381.476L12.686 187.132c-9.373-9.373-9.373-24.569 0-33.941l22.667-22.667c9.357-9.357 24.522-9.375 33.901-.04L224 284.505l154.745-154.021c9.379-9.335 24.544-9.317 33.901.04l22.667 22.667c9.373 9.373 9.373 24.569 0 33.941L240.971 381.476c-9.373 9.372-24.569 9.372-33.942 0z\"><\/path><\/svg><\/div>\n\t\t\t\t<div class=\"elementor-toc__toggle-button elementor-toc__toggle-button--collapse\" role=\"button\" tabindex=\"0\" aria-controls=\"elementor-toc__bb31266\" aria-expanded=\"true\" aria-label=\"Close table of contents\"><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-fas-chevron-up\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M240.971 130.524l194.343 194.343c9.373 9.373 9.373 24.569 0 33.941l-22.667 22.667c-9.357 9.357-24.522 9.375-33.901.04L224 227.495 69.255 381.516c-9.379 9.335-24.544 9.317-33.901-.04l-22.667-22.667c-9.373-9.373-9.373-24.569 0-33.941L207.03 130.525c9.372-9.373 24.568-9.373 33.941-.001z\"><\/path><\/svg><\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<div id=\"elementor-toc__bb31266\" class=\"elementor-toc__body\">\n\t\t\t<div class=\"elementor-toc__spinner-container\">\n\t\t\t\t<svg class=\"elementor-toc__spinner eicon-animation-spin e-font-icon-svg e-eicon-loading\" aria-hidden=\"true\" viewBox=\"0 0 1000 1000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M500 975V858C696 858 858 696 858 500S696 142 500 142 142 304 142 500H25C25 237 238 25 500 25S975 237 975 500 763 975 500 975Z\"><\/path><\/svg>\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-5a22133 e-con-full e-flex e-con e-child\" data-id=\"5a22133\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-5fa35b6 elementor-widget elementor-widget-heading\" data-id=\"5fa35b6\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h4 class=\"elementor-heading-title elementor-size-default\">Qualified Small Business Stock (QSBS) <\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-f69df00 elementor-widget elementor-widget-text-editor\" data-id=\"f69df00\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span data-contrast=\"auto\">The &#8220;magic number&#8221; of USD 15 million comes from the tax exclusion in IRC Sec. 1202, through which the U.S. legislature aims to encourage long-term investments in innovative companies. If all requirements are met, gain from the sale of the stock remains tax-free at the federal level (federal income tax), up to a cap. Many states conform, while others, such as California, go their own way.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><b><i><span data-contrast=\"auto\">Note:<\/span><\/i><\/b><i><span data-contrast=\"auto\"> All information refers to stock issued after July 4, 2025. Different rules apply to older stock, which I deliberately do not cover here.<\/span><\/i><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e66c084 elementor-widget elementor-widget-heading\" data-id=\"e66c084\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h5 class=\"elementor-heading-title elementor-size-default\">The requirements at a glance: <\/h5>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6ecbe99 elementor-widget elementor-widget-n-accordion\" data-id=\"6ecbe99\" data-element_type=\"widget\" data-e-type=\"widget\" data-settings=\"{&quot;default_state&quot;:&quot;expanded&quot;,&quot;max_items_expended&quot;:&quot;one&quot;,&quot;n_accordion_animation_duration&quot;:{&quot;unit&quot;:&quot;ms&quot;,&quot;size&quot;:400,&quot;sizes&quot;:[]}}\" data-widget_type=\"nested-accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"e-n-accordion\" aria-label=\"Accordion. Open links with Enter or Space, close with Escape, and navigate with Arrow Keys\">\n\t\t\t\t\t\t<details id=\"e-n-accordion-item-1160\" class=\"e-n-accordion-item\" open>\n\t\t\t\t<summary class=\"e-n-accordion-item-title\" data-accordion-index=\"1\" tabindex=\"0\" aria-expanded=\"true\" aria-controls=\"e-n-accordion-item-1160\" >\n\t\t\t\t\t<span class='e-n-accordion-item-title-header'><div class=\"e-n-accordion-item-title-text\"> Cap <\/div><\/span>\n\t\t\t\t\t\t\t<span class='e-n-accordion-item-title-icon'>\n\t\t\t<span class='e-opened' ><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-down\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M125.1 208h197.8c10.7 0 16.1 13 8.5 20.5l-98.9 98.3c-4.7 4.7-12.2 4.7-16.9 0l-98.9-98.3c-7.7-7.5-2.3-20.5 8.4-20.5zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t\t<span class='e-closed'><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-right\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M176 354.9V157.1c0-10.7 13-16.1 20.5-8.5l98.3 98.9c4.7 4.7 4.7 12.2 0 16.9l-98.3 98.9c-7.5 7.7-20.5 2.3-20.5-8.4zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t<\/span>\n\n\t\t\t\t\t\t<\/summary>\n\t\t\t\t<div role=\"region\" aria-labelledby=\"e-n-accordion-item-1160\" class=\"elementor-element elementor-element-ecbe5c1 e-con-full e-flex e-con e-child\" data-id=\"ecbe5c1\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0b1324a elementor-widget elementor-widget-text-editor\" data-id=\"0b1324a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW220181354 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW220181354 BCX0\">The exclusion per taxpayer and issuing company is limited to the greater of USD 15 million (inflation-indexed from 2027) or ten times the original cost basis (aggregate adjusted basis). <\/span><span class=\"NormalTextRun SCXW220181354 BCX0\">Anyone who invested significantly early on can therefore exclude far more than USD 15 million.<\/span><span class=\"NormalTextRun SCXW220181354 BCX0\"> The exclusion is available to individuals, not corporations. Investing through a fund or partnership may also qualify in some circumstances<\/span><span class=\"NormalTextRun SCXW220181354 BCX0\">.<\/span><\/span><span class=\"EOP SCXW220181354 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/details>\n\t\t\t\t\t\t<details id=\"e-n-accordion-item-1161\" class=\"e-n-accordion-item\" >\n\t\t\t\t<summary class=\"e-n-accordion-item-title\" data-accordion-index=\"2\" tabindex=\"-1\" aria-expanded=\"false\" aria-controls=\"e-n-accordion-item-1161\" >\n\t\t\t\t\t<span class='e-n-accordion-item-title-header'><div class=\"e-n-accordion-item-title-text\"> Holding Period <\/div><\/span>\n\t\t\t\t\t\t\t<span class='e-n-accordion-item-title-icon'>\n\t\t\t<span class='e-opened' ><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-down\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M125.1 208h197.8c10.7 0 16.1 13 8.5 20.5l-98.9 98.3c-4.7 4.7-12.2 4.7-16.9 0l-98.9-98.3c-7.7-7.5-2.3-20.5 8.4-20.5zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t\t<span class='e-closed'><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-right\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M176 354.9V157.1c0-10.7 13-16.1 20.5-8.5l98.3 98.9c4.7 4.7 4.7 12.2 0 16.9l-98.3 98.9c-7.5 7.7-20.5 2.3-20.5-8.4zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t<\/span>\n\n\t\t\t\t\t\t<\/summary>\n\t\t\t\t<div role=\"region\" aria-labelledby=\"e-n-accordion-item-1161\" class=\"elementor-element elementor-element-4a85853 e-con-full e-flex e-con e-child\" data-id=\"4a85853\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-2d5fc15 elementor-widget elementor-widget-text-editor\" data-id=\"2d5fc15\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW74164482 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW74164482 BCX0\">The<\/span><span class=\"NormalTextRun SCXW74164482 BCX0\"> exclusion is tiered: 50% of the gain after three years, 75% after four <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW74164482 BCX0\">years<\/span><span class=\"NormalTextRun SCXW74164482 BCX0\"> and 100% after five years. The non-excluded <\/span><span class=\"NormalTextRun SCXW74164482 BCX0\">portion<\/span><span class=\"NormalTextRun SCXW74164482 BCX0\"> is taxed at 28% (plus the net investment income tax). In some cases, gain from an early sale can be rolled over tax-free into another QSBS company<\/span><span class=\"NormalTextRun SCXW74164482 BCX0\">.<\/span><\/span><span class=\"EOP SCXW74164482 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/details>\n\t\t\t\t\t\t<details id=\"e-n-accordion-item-1162\" class=\"e-n-accordion-item\" >\n\t\t\t\t<summary class=\"e-n-accordion-item-title\" data-accordion-index=\"3\" tabindex=\"-1\" aria-expanded=\"false\" aria-controls=\"e-n-accordion-item-1162\" >\n\t\t\t\t\t<span class='e-n-accordion-item-title-header'><div class=\"e-n-accordion-item-title-text\"> Entity Type and Size <\/div><\/span>\n\t\t\t\t\t\t\t<span class='e-n-accordion-item-title-icon'>\n\t\t\t<span class='e-opened' ><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-down\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M125.1 208h197.8c10.7 0 16.1 13 8.5 20.5l-98.9 98.3c-4.7 4.7-12.2 4.7-16.9 0l-98.9-98.3c-7.7-7.5-2.3-20.5 8.4-20.5zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t\t<span class='e-closed'><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-right\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M176 354.9V157.1c0-10.7 13-16.1 20.5-8.5l98.3 98.9c4.7 4.7 4.7 12.2 0 16.9l-98.3 98.9c-7.5 7.7-20.5 2.3-20.5-8.4zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t<\/span>\n\n\t\t\t\t\t\t<\/summary>\n\t\t\t\t<div role=\"region\" aria-labelledby=\"e-n-accordion-item-1162\" class=\"elementor-element elementor-element-6adace1 e-con-full e-flex e-con e-child\" data-id=\"6adace1\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-a405d42 elementor-widget elementor-widget-text-editor\" data-id=\"a405d42\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"NormalTextRun SCXW124721275 BCX0\">The company must be a U.S. C<\/span><span class=\"NormalTextRun SCXW124721275 BCX0\">&#8211;<\/span><span class=\"NormalTextRun SCXW124721275 BCX0\">corporation (S<\/span><span class=\"NormalTextRun SCXW124721275 BCX0\">&#8211;<\/span><span class=\"NormalTextRun SCXW124721275 BCX0\">corporations are out; LLCs qualify only if taxed as corporations). Its aggregate gross assets must not have exceeded USD 75 million (inflation-indexed from 2027) before and <\/span><span class=\"NormalTextRun SCXW124721275 BCX0\">immediately<\/span><span class=\"NormalTextRun SCXW124721275 BCX0\"> after the stock issuance<\/span><span class=\"NormalTextRun SCXW124721275 BCX0\">.<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/details>\n\t\t\t\t\t\t<details id=\"e-n-accordion-item-1163\" class=\"e-n-accordion-item\" >\n\t\t\t\t<summary class=\"e-n-accordion-item-title\" data-accordion-index=\"4\" tabindex=\"-1\" aria-expanded=\"false\" aria-controls=\"e-n-accordion-item-1163\" >\n\t\t\t\t\t<span class='e-n-accordion-item-title-header'><div class=\"e-n-accordion-item-title-text\"> Active Business Requirement <\/div><\/span>\n\t\t\t\t\t\t\t<span class='e-n-accordion-item-title-icon'>\n\t\t\t<span class='e-opened' ><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-down\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M125.1 208h197.8c10.7 0 16.1 13 8.5 20.5l-98.9 98.3c-4.7 4.7-12.2 4.7-16.9 0l-98.9-98.3c-7.7-7.5-2.3-20.5 8.4-20.5zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t\t<span class='e-closed'><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-right\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M176 354.9V157.1c0-10.7 13-16.1 20.5-8.5l98.3 98.9c4.7 4.7 4.7 12.2 0 16.9l-98.3 98.9c-7.5 7.7-20.5 2.3-20.5-8.4zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t<\/span>\n\n\t\t\t\t\t\t<\/summary>\n\t\t\t\t<div role=\"region\" aria-labelledby=\"e-n-accordion-item-1163\" class=\"elementor-element elementor-element-dd09f12 e-con-full e-flex e-con e-child\" data-id=\"dd09f12\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-381faf1 elementor-widget elementor-widget-text-editor\" data-id=\"381faf1\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW72926790 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW72926790 BCX0\">At least 80% of the company&#8217;s assets must be used in a qualified trade or business. Excluded are, among others, services in fields such as health, law, consulting or finance, banking, insurance, farming, extraction of natural resources, as well as hotels and restaurants. Tech startups, by contrast, typically fit well<\/span><\/span><span class=\"TextRun SCXW72926790 BCX0\" lang=\"DE-DE\" xml:lang=\"DE-DE\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW72926790 BCX0\">.<\/span><\/span><span class=\"EOP SCXW72926790 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/details>\n\t\t\t\t\t\t<details id=\"e-n-accordion-item-1164\" class=\"e-n-accordion-item\" >\n\t\t\t\t<summary class=\"e-n-accordion-item-title\" data-accordion-index=\"5\" tabindex=\"-1\" aria-expanded=\"false\" aria-controls=\"e-n-accordion-item-1164\" >\n\t\t\t\t\t<span class='e-n-accordion-item-title-header'><div class=\"e-n-accordion-item-title-text\"> Original Issuance <\/div><\/span>\n\t\t\t\t\t\t\t<span class='e-n-accordion-item-title-icon'>\n\t\t\t<span class='e-opened' ><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-down\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M125.1 208h197.8c10.7 0 16.1 13 8.5 20.5l-98.9 98.3c-4.7 4.7-12.2 4.7-16.9 0l-98.9-98.3c-7.7-7.5-2.3-20.5 8.4-20.5zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t\t<span class='e-closed'><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-right\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M176 354.9V157.1c0-10.7 13-16.1 20.5-8.5l98.3 98.9c4.7 4.7 4.7 12.2 0 16.9l-98.3 98.9c-7.5 7.7-20.5 2.3-20.5-8.4zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t<\/span>\n\n\t\t\t\t\t\t<\/summary>\n\t\t\t\t<div role=\"region\" aria-labelledby=\"e-n-accordion-item-1164\" class=\"elementor-element elementor-element-a9e8be9 e-con-full e-flex e-con e-child\" data-id=\"a9e8be9\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0974eb4 elementor-widget elementor-widget-text-editor\" data-id=\"0974eb4\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW17068519 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW17068519 BCX0\">The stock must be <\/span><span class=\"NormalTextRun SCXW17068519 BCX0\">acquired<\/span><span class=\"NormalTextRun SCXW17068519 BCX0\"> directly from the company, in exchange for cash, <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW17068519 BCX0\">property<\/span><span class=\"NormalTextRun SCXW17068519 BCX0\"> or as compensation for services. <\/span><\/span><span class=\"TextRun SCXW17068519 BCX0\" lang=\"DE-DE\" xml:lang=\"DE-DE\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW17068519 BCX0\">A <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW17068519 BCX0\">purchase<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW17068519 BCX0\">from<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW17068519 BCX0\">another<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW17068519 BCX0\">shareholder<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW17068519 BCX0\">does<\/span><span class=\"NormalTextRun SCXW17068519 BCX0\"> not <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SpellingErrorHighlight SCXW17068519 BCX0\">qualify<\/span><span class=\"NormalTextRun SCXW17068519 BCX0\">.<\/span><\/span><span class=\"EOP SCXW17068519 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/details>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6783308 elementor-widget elementor-widget-text-editor\" data-id=\"6783308\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW258964900 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW258964900 BCX0\">Interesting<\/span> <span class=\"NormalTextRun SCXW258964900 BCX0\">especially <\/span><span class=\"NormalTextRun SCXW258964900 BCX0\">for startup<\/span><span class=\"NormalTextRun SCXW258964900 BCX0\">s<\/span><span class=\"NormalTextRun SCXW258964900 BCX0\">: This is not limited to employees. External service providers (consultants, developers, agencies) can also be paid in such stock, which makes it a powerful tool for startups with high valuation prospects but little cash<\/span><span class=\"NormalTextRun SCXW258964900 BCX0\">.<\/span><\/span><span class=\"EOP Selected SCXW258964900 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-13bec01 elementor-widget elementor-widget-heading\" data-id=\"13bec01\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h4 class=\"elementor-heading-title elementor-size-default\">The Timing Lever: The Section 83(b) Election<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-5eae97b elementor-widget elementor-widget-text-editor\" data-id=\"5eae97b\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW217823704 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW217823704 BCX0\">In the startup world, shares are usually subject to a vesting schedule: they become non-forfeitable (&#8220;vested&#8221;) only gradually (e.g., over four years with a one-year cliff). This is where the election under IRC Section 83(b) becomes particularly important:<\/span><\/span><span class=\"EOP Selected SCXW217823704 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-485ae12 elementor-widget elementor-widget-text-editor\" data-id=\"485ae12\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"27\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Without an 83(b) election<\/span><\/b><span data-contrast=\"auto\">: Tax is imposed only upon vesting, on the then-current fair market value (FMV) less the purchase price paid. If the value rises rapidly, this creates ordinary income taxed at up to 37% at the federal level, even though no sale has taken place and no cash has been received (so-called phantom income).<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"27\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">With an 83(b) election<\/span><\/b><span data-contrast=\"auto\">: The taxpayer accelerates taxation to the grant date. They tell the IRS: &#8220;I am paying tax on today&#8217;s value even though the shares are still subject to vesting.&#8221; Because the value is usually still low, especially in the early startup phase, the tax burden is negligible. Any later appreciation is taxed at exit not as ordinary income but as capital gain (max. approx. 23.8% including the net investment income tax).<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<p><\/ul>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-75be207 elementor-widget elementor-widget-text-editor\" data-id=\"75be207\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW234691459 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW234691459 BCX0\">The bottleneck: The irrevocable election must be filed with the IRS within <\/span><\/span><span class=\"TextRun MacChromeBold SCXW234691459 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW234691459 BCX0\">30 days<\/span><\/span><span class=\"TextRun SCXW234691459 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW234691459 BCX0\"> after the share transfer. The deadline cannot be extended.<\/span><\/span><span class=\"EOP Selected SCXW234691459 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6f0864e elementor-widget elementor-widget-heading\" data-id=\"6f0864e\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h4 class=\"elementor-heading-title elementor-size-default\">The Perfect Combination: QSBS Meets 83(b)<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-07f8d73 elementor-widget elementor-widget-text-editor\" data-id=\"07f8d73\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span data-contrast=\"auto\">Combining both provisions, the 83(b) election acts like a turbo for QSBS:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ol>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"\" data-listid=\"30\" data-list-defn-props=\"{&quot;335552541&quot;:0,&quot;335559685&quot;:1080,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Immediate start of the holding period:<\/span><\/b><span data-contrast=\"auto\"> Without an election, it starts for each portion of the shares only upon the respective vesting. With the election, the entire tranche is treated as acquired on the grant date. The gross assets test is then also applied at the early issuance date, not at the later vesting date, when the company may already be larger.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<p> \t<\/p>\n<li><b><span data-contrast=\"auto\">Freezing the tax basis:<\/span><\/b><span data-contrast=\"auto\"> The tax basis is fixed at the low level of the initial grant. All later appreciation is therefore eligible for the potential QSBS exclusion.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<p><\/ol>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9cd8026 elementor-widget elementor-widget-text-editor\" data-id=\"9cd8026\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW104319427 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW104319427 BCX0\">After five years, the gain <\/span><span class=\"NormalTextRun SCXW104319427 BCX0\">remains<\/span><span class=\"NormalTextRun SCXW104319427 BCX0\"> fully tax-free within the limits. Without the combination, a considerable <\/span><span class=\"NormalTextRun SCXW104319427 BCX0\">portion<\/span><span class=\"NormalTextRun SCXW104319427 BCX0\"> of the appreciation would already have been taxed at up to 37% during vesting. Important, however: The benefit applies only to actual stock. For options, the holding period begins only upon exercise.<\/span><\/span><span class=\"EOP Selected SCXW104319427 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-bfbc50f elementor-widget elementor-widget-heading\" data-id=\"bfbc50f\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h4 class=\"elementor-heading-title elementor-size-default\">And in Germany? The Comparison with Sec. 19a EStG <\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-871a2df elementor-widget elementor-widget-text-editor\" data-id=\"871a2df\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW109629129 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW109629129 BCX0\">As a German tax advisor, I naturally like to compare such rules with our domestic provisions, in this case Sec. 19a <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW109629129 BCX0\">EStG<\/span><span class=\"NormalTextRun SCXW109629129 BCX0\">, through which the legislature aims to make employee equity participation at &#8220;young&#8221; companies more attractive. The philosophy differs from the U.S. in one important respect: Sec. 19a <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW109629129 BCX0\">EStG<\/span> <span class=\"NormalTextRun SCXW109629129 BCX0\">essentially offers<\/span><span class=\"NormalTextRun SCXW109629129 BCX0\"> &#8220;only&#8221; a deferral of tax on the benefit at grant, and no exemption of the later gain on sale<\/span><span class=\"NormalTextRun SCXW109629129 BCX0\">.<\/span><\/span><span class=\"EOP Selected SCXW109629129 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e313be8 elementor-widget elementor-widget-n-accordion\" data-id=\"e313be8\" data-element_type=\"widget\" data-e-type=\"widget\" data-settings=\"{&quot;default_state&quot;:&quot;expanded&quot;,&quot;max_items_expended&quot;:&quot;one&quot;,&quot;n_accordion_animation_duration&quot;:{&quot;unit&quot;:&quot;ms&quot;,&quot;size&quot;:400,&quot;sizes&quot;:[]}}\" data-widget_type=\"nested-accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"e-n-accordion\" aria-label=\"Accordion. Open links with Enter or Space, close with Escape, and navigate with Arrow Keys\">\n\t\t\t\t\t\t<details id=\"e-n-accordion-item-2380\" class=\"e-n-accordion-item\" open>\n\t\t\t\t<summary class=\"e-n-accordion-item-title\" data-accordion-index=\"1\" tabindex=\"0\" aria-expanded=\"true\" aria-controls=\"e-n-accordion-item-2380\" >\n\t\t\t\t\t<span class='e-n-accordion-item-title-header'><div class=\"e-n-accordion-item-title-text\"> Tax Deferral <\/div><\/span>\n\t\t\t\t\t\t\t<span class='e-n-accordion-item-title-icon'>\n\t\t\t<span class='e-opened' ><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-down\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M125.1 208h197.8c10.7 0 16.1 13 8.5 20.5l-98.9 98.3c-4.7 4.7-12.2 4.7-16.9 0l-98.9-98.3c-7.7-7.5-2.3-20.5 8.4-20.5zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t\t<span class='e-closed'><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-right\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M176 354.9V157.1c0-10.7 13-16.1 20.5-8.5l98.3 98.9c4.7 4.7 4.7 12.2 0 16.9l-98.3 98.9c-7.5 7.7-20.5 2.3-20.5-8.4zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t<\/span>\n\n\t\t\t\t\t\t<\/summary>\n\t\t\t\t<div role=\"region\" aria-labelledby=\"e-n-accordion-item-2380\" class=\"elementor-element elementor-element-6b25417 e-con-full e-flex e-con e-child\" data-id=\"6b25417\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-09aee46 elementor-widget elementor-widget-text-editor\" data-id=\"09aee46\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW241794100 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW241794100 BCX0\">If an employee receives shares at a discount or free of charge in addition to the wages otherwise owed, the non-cash benefit (less, where applicable, a tax-free allowance of EUR 2,000) is initially not taxed. The decisive point in time is the transfer, i.e., when the employee can economically dispose of the shares. Taxation instead occurs only upon sale or transfer, upon termination of employment, or after 15 years. The employer can, where applicable, avoid the latter two triggers by issuing an irrevocable liability declaration. In the U.S., by contrast, there is no such deferral until sale: there, the benefit is taxed at grant for shares without a risk of forfeiture, at vesting for shares subject to vesting without an 83(b) election, and, with the election, at the taxpayer&#8217;s choice already at grant.<\/span><\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/details>\n\t\t\t\t\t\t<details id=\"e-n-accordion-item-2381\" class=\"e-n-accordion-item\" >\n\t\t\t\t<summary class=\"e-n-accordion-item-title\" data-accordion-index=\"2\" tabindex=\"-1\" aria-expanded=\"false\" aria-controls=\"e-n-accordion-item-2381\" >\n\t\t\t\t\t<span class='e-n-accordion-item-title-header'><div class=\"e-n-accordion-item-title-text\"> Separation of capital gain from wages <\/div><\/span>\n\t\t\t\t\t\t\t<span class='e-n-accordion-item-title-icon'>\n\t\t\t<span class='e-opened' ><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-down\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M125.1 208h197.8c10.7 0 16.1 13 8.5 20.5l-98.9 98.3c-4.7 4.7-12.2 4.7-16.9 0l-98.9-98.3c-7.7-7.5-2.3-20.5 8.4-20.5zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t\t<span class='e-closed'><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-right\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M176 354.9V157.1c0-10.7 13-16.1 20.5-8.5l98.3 98.9c4.7 4.7 4.7 12.2 0 16.9l-98.3 98.9c-7.5 7.7-20.5 2.3-20.5-8.4zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t<\/span>\n\n\t\t\t\t\t\t<\/summary>\n\t\t\t\t<div role=\"region\" aria-labelledby=\"e-n-accordion-item-2381\" class=\"elementor-element elementor-element-9163fe3 e-con-full e-flex e-con e-child\" data-id=\"9163fe3\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-81c687a elementor-widget elementor-widget-text-editor\" data-id=\"81c687a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW99700253 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW99700253 BCX0\">At one of the above events, the deferred benefit is taxed as wages (compensation income) at the personal income tax rate of up to 45% plus the solidarity surcharge. After at least three years, the so-called one-fifth rule (<\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW99700253 BCX0\">F\u00fcnftelregelung<\/span><span class=\"NormalTextRun SCXW99700253 BCX0\">) may apply. Only the appreciation from the transfer onward is, depending on the size of the shareholding, subject to the flat-rate withholding tax (<\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW99700253 BCX0\">Abgeltungsteuer<\/span><span class=\"NormalTextRun SCXW99700253 BCX0\">; 25% plus solidarity surcharge) or the partial income method (<\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW99700253 BCX0\">Teileink\u00fcnfteverfahren<\/span><span class=\"NormalTextRun SCXW99700253 BCX0\">). The separation of the appreciation, treated as capital gain, from the original grant as wages therefore resembles the consequences of the 83(b) election. Unlike there, however, there is a safety net: If the shares are worth less when the event occurs than at transfer, only the lower value is taxed. With the 83(b) election, by contrast, the tax paid on the grant value stays paid even if the shares later lose value (or are even <\/span><span class=\"NormalTextRun SCXW99700253 BCX0\">forfeited<\/span><span class=\"NormalTextRun SCXW99700253 BCX0\">). A tax exemption for gain on sale like QSBS in the U.S., however, does not exist in Germany (for individuals).<\/span><\/span><span class=\"EOP SCXW99700253 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/details>\n\t\t\t\t\t\t<details id=\"e-n-accordion-item-2382\" class=\"e-n-accordion-item\" >\n\t\t\t\t<summary class=\"e-n-accordion-item-title\" data-accordion-index=\"3\" tabindex=\"-1\" aria-expanded=\"false\" aria-controls=\"e-n-accordion-item-2382\" >\n\t\t\t\t\t<span class='e-n-accordion-item-title-header'><div class=\"e-n-accordion-item-title-text\"> Several limits <\/div><\/span>\n\t\t\t\t\t\t\t<span class='e-n-accordion-item-title-icon'>\n\t\t\t<span class='e-opened' ><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-down\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M125.1 208h197.8c10.7 0 16.1 13 8.5 20.5l-98.9 98.3c-4.7 4.7-12.2 4.7-16.9 0l-98.9-98.3c-7.7-7.5-2.3-20.5 8.4-20.5zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t\t<span class='e-closed'><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-caret-square-right\" viewBox=\"0 0 448 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M176 354.9V157.1c0-10.7 13-16.1 20.5-8.5l98.3 98.9c4.7 4.7 4.7 12.2 0 16.9l-98.3 98.9c-7.5 7.7-20.5 2.3-20.5-8.4zM448 80v352c0 26.5-21.5 48-48 48H48c-26.5 0-48-21.5-48-48V80c0-26.5 21.5-48 48-48h352c26.5 0 48 21.5 48 48zm-48 346V86c0-3.3-2.7-6-6-6H54c-3.3 0-6 2.7-6 6v340c0 3.3 2.7 6 6 6h340c3.3 0 6-2.7 6-6z\"><\/path><\/svg><\/span>\n\t\t<\/span>\n\n\t\t\t\t\t\t<\/summary>\n\t\t\t\t<div role=\"region\" aria-labelledby=\"e-n-accordion-item-2382\" class=\"elementor-element elementor-element-b594caa e-con-full e-flex e-con e-child\" data-id=\"b594caa\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-c8b024e elementor-widget elementor-widget-text-editor\" data-id=\"c8b024e\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW76363859 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW76363859 BCX0\">Only employees qualify as recipients. The company may be no more than 20 years old and may not exceed twice the EU SME thresholds (revenue, balance sheet total) or four times the EU SME threshold (employees). Freelancers or external service providers, who in the U.S. can be incentivized with equity awards and QSBS without difficulty, are by contrast excluded from the benefit<\/span><\/span><span class=\"EOP SCXW76363859 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/details>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-94f3b79 elementor-widget elementor-widget-heading\" data-id=\"94f3b79\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h4 class=\"elementor-heading-title elementor-size-default\">My Thoughts on the Comparison <\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d52202c elementor-widget elementor-widget-text-editor\" data-id=\"d52202c\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<span data-contrast=\"auto\">Comparing QSBS and Sec. 19a EStG reveals clear differences. In the U.S., the later gain on sale can remain tax-free under certain conditions, while the compensation benefit is taxed at grant or vesting, with an 83(b) election at the (usually still low) initial value. In Germany, by contrast, Sec. 19a EStG defers taxation of the benefit to avoid phantom income, and the later appreciation is taxed separately as capital gain, but not exempted from tax. Both rules work toward entirely different tax outcomes and can therefore be compared only to a limited extent.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><br><br><span data-contrast=\"auto\">Nevertheless, one aspect of the U.S. rule particularly appealed to me. Startups rarely begin with much liquidity, and the budget is often initially insufficient for market-rate fees or salaries (especially when investors are lacking). In the U.S., they can therefore compensate not only employees but also external service providers such as freelancers, consultants or developers with equity. If this equity is subject to vesting, it binds the participants to the company in the long term. Combined with the QSBS exclusion and the 83(b) election, this creates a special opportunity for incentivizing and sharing in the company and its success.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><br><br><span data-contrast=\"auto\">In Germany, Sec. 19a EStG has been much discussed for years, and my impression is that the legislature is only hesitant to make employee equity participation more attractive, let alone extend the benefit to other service providers. Freelancers remain left out, even though they often play an important role in the founding phase. I therefore think it would be worthwhile to also look across the Atlantic in future reform considerations. The U.S. model will certainly not be a blueprint because of the fundamental differences, but it may well serve as inspiration.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-73e57e3 elementor-widget elementor-widget-spacer\" data-id=\"73e57e3\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"spacer.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-spacer\">\n\t\t\t<div class=\"elementor-spacer-inner\"><\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-22d5422 e-con-full e-flex e-con e-child\" data-id=\"22d5422\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t<div class=\"elementor-element elementor-element-c15348d e-con-full e-flex e-con e-child\" data-id=\"c15348d\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-18c2c50 elementor-widget elementor-widget-image\" data-id=\"18c2c50\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" src=\"https:\/\/ypsilon.group\/wp-content\/uploads\/2025\/11\/Nina-Schmidt.png\" title=\"Nina-Schmidt\" alt=\"Nina Schmidt\" loading=\"lazy\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-ca899ed e-con-full e-flex e-con e-child\" data-id=\"ca899ed\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-3f7bace elementor-widget elementor-widget-text-editor\" data-id=\"3f7bace\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun MacChromeBold SCXW117207028 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW117207028 BCX0\">I\u2019d<\/span><span class=\"NormalTextRun SCXW117207028 BCX0\"> love to hear your thoughts<\/span><\/span><span class=\"TextRun SCXW117207028 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW117207028 BCX0\">: <\/span><span class=\"NormalTextRun SCXW117207028 BCX0\">What should a good employee equity plan prioritize: avoiding tax before there\u2019s liquidity, or reducing tax on the eventual gain?<\/span><\/span> <span class=\"TextRun SCXW117207028 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW117207028 BCX0\">Should future reforms in Germany also do more to accommodate equity compensation for independent <\/span><span class=\"NormalTextRun SCXW117207028 BCX0\">service providers<\/span><span class=\"NormalTextRun SCXW117207028 BCX0\">?\u00a0<\/span><\/span><span class=\"EOP Selected SCXW117207028 BCX0\" data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6d8bd07 elementor-widget elementor-widget-button\" data-id=\"6d8bd07\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"button.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div class=\"elementor-button-wrapper\">\n\t\t\t\t\t<a class=\"elementor-button elementor-button-link elementor-size-sm\" href=\"mailto:us-tax@ypsilon.group\">\n\t\t\t\t\t\t<span class=\"elementor-button-content-wrapper\">\n\t\t\t\t\t\t\t\t\t<span class=\"elementor-button-text\">Write to me<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div 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more) of gain from the sale of stock in a U.S. company can be tax-exempt. Not per se, but, as usual, under certain conditions. That number really made me sit up at Startup Cincy Week 2026. <\/p>\n","protected":false},"author":1,"featured_media":6495,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"elementor_theme","format":"standard","meta":{"footnotes":""},"categories":[475,476],"tags":[487,486],"class_list":["post-6521","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-beyond-tax","category-business-tax","tag-comparison-of-the-83b-election-and--19a-of-the-german-income-tax-act-estg","tag-u-s-qsbs"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.8 (Yoast SEO v28.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Sale of shares in U.S. companies: Tax-free gains?<\/title>\n<meta name=\"description\" content=\"Sale of shares in U.S. companies: Information on tax-free gains of up to USD 15 million and relevant tax regulations.\" \/>\n<meta name=\"robots\" content=\"index, follow, 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