What Bill 8782 Would Change for Startup Option Plans

Luxembourg’s Bill 8782 remains a proposal, not an enacted stock-option tax regime, as of 5 October 2026. The parliamentary dossier labels it En commission (in committee). Filed on 1 July and referred to the Finance Committee on 9 July, its latest recorded activity is a Chamber of Commerce opinion on 30 September. Founders can prepare for it, but should not promise employees that the proposed treatment is available. Parliamentary status

The proposed change would remove the income-tax charge at grant and exercise for qualifying options, with tax instead arising when employees dispose of the acquired shares, at a reduced rate. As filed, the bill would apply to options granted from tax year 2027—not automatically to existing grants exercised in 2027. Bill text and explanatory memorandum

Enter the exercise payment, sale proceeds and overall tax rate to illustrate the proposed disposal tax.

Tax Would Move From Grant or Exercise to Share Disposal

Under the current framework, freely transferable options are generally taxed at grant; non-freely transferable options are generally taxed at exercise. That can leave an employee owing tax before they can sell private-company shares. Goodwin’s analysis

The proposed young innovative company regime would work differently:

Stage	Proposed Treatment
Grant	No tax charge
Exercise	Employment benefit valued at €0; no tax charge at that stage
Share disposal	Gain taxed at one-quarter of the employee’s overall tax rate

The proposed gain is the disposal price minus the amount paid to acquire the shares. This is not a flat 25% tax. The overall rate is the ratio of tax to adjusted taxable income, not simply the employee’s marginal rate. For illustration, an overall rate of 32% would become 8% under the quarter-rate mechanism. The applicable rate still requires an individual calculation.

Suppose an employee pays €10,000 to exercise and later sells the shares for €100,000. The proposed taxable gain would be €90,000. Deferring tax addresses the tax-before-liquidity problem; it does not fund the €10,000 exercise payment, guarantee a buyer or protect against loss.

Company Eligibility Requires Size and Documented R&D Tests

“Startup” is not enough. The employer would need to satisfy the proposed legal, size and innovation tests.

Test	Proposed Requirement
Employer structure	Fully taxable Luxembourg-resident capital company or cooperative, or qualifying EEA-resident capital company or cooperative with a Luxembourg permanent establishment
Age	Incorporated for fewer than 10 years
Employees	Fewer than 150 employees on a full-time-equivalent basis
Financial size	Balance-sheet total or turnover no higher than €30 million; fails only if both exceed the threshold
Innovative activity	At least two people working on an FTE basis, plus qualifying R&D expenditure of at least 15% of operating expenses in at least one of the preceding three financial years

Age, headcount and financial size would generally be assessed at the preceding financial year-end, with special rules for first-year grants. For group companies, those three tests would apply at group level. The bill’s group definition includes partner and linked enterprises under EU rules—not just wholly owned subsidiaries.

The R&D ratio would require certification by an approved statutory auditor or chartered accountant. Group headcount and financial-size tests would also require certification. Eligibility provisions

For a software founder, the distinction is between building software and documenting qualifying R&D. The bill defines R&D and allows relevant personnel and equipment costs, apportioned where use is mixed. Do not assume the entire engineering budget qualifies.

For an EEA employer with a Luxembourg permanent establishment, the innovative-activity test applies at that establishment. For a Luxembourg employer with an establishment abroad, it applies at the Luxembourg head office. Exclusions include specified legal, audit/accounting and real-estate businesses, SICARs, entities with securities admitted to a regulated market, and entities formed through specified mergers or demergers. R&D, territorial provisions and exclusions

Founder Ownership and Option Design Can Exclude Recipients

The favourable treatment would cover options that are neither listed nor freely assignable and confer rights to actual participation interests in the employer or a group entity. Cash-settled phantom options would not qualify.

Recipients must receive employment income from the employer. They must not have held, directly or indirectly, more than 25% of capital, voting rights or profit rights in the employer or a group entity at grant or during the previous 24 months. This can exclude founder-employees despite company eligibility.

Options also cannot replace all or part of annual remuneration, including benefits. Company eligibility alone therefore does not establish that every employee or every equity plan qualifies. White & Case’s detailed analysis

The Employer Would Need a Plan Election and Timely Filing

The employer would elect separately for each plan and submit the required information electronically before 1 March following the grant year. For a qualifying 2027 grant, that means before 1 March 2028.

The filing would include recipient names, grant dates, option numbers, exercise prices and, where relevant, the group chart. Missing the deadline would leave the plan under the ordinary regime. A €0 benefit at exercise would still need to be declared in the monthly payroll calculation. Filing and payroll requirements

Before promising the benefit, build an eligibility file covering incorporation dates, group structure, financials, FTE calculations and support for the R&D ratio. Engage the accountant responsible for certification. Review recipients’ ownership lookback and employment status alongside the remuneration-substitution restriction and whether the instruments deliver real shares.

Assign responsibility for the plan election, electronic filing and payroll declaration before grants begin. These are conditions of the proposed treatment, not administrative tasks to resolve only when an employee exercises.

Hiring Promises Should Remain Conditional

Keep the proposed tax treatment separate from the economics of the equity offer. Model exercise costs, vesting, leaver terms and dilution in the cap table. Ask counsel to check cross-border recipients separately rather than assuming Luxembourg treatment resolves their position elsewhere.

The thresholds remain open to legislative change. The Chamber of Commerce’s September opinion recommends, among other adjustments, extending the age limit to 15 years; that is a recommendation, not the filed rule. Chamber of Commerce opinion

Prepare the plan and compliance process now, but describe the proposed tax treatment as conditional in hiring discussions until the final law and implementation requirements are settled.