My employer is part of a private equity transaction, and as mid-level manager I am offered the possibility to buy some so-called ‘sweet equity’ at fair value (corroborated with a valuation report from an independent tax advisor).
The sweet equity offered consists of ‘real shares’. However, the shareholder’s agreement comes with a whole bunch of standard good/bad leaver clauses. Essentially these shares only yield more than purchase price at issue if I stay until exit (and less if I’d commit fraud etc.).
The information I find online regarding taxation is (obviously?) not conclusive. Some sources say that capital gains on employer shares purchased at fair value are tax-exempt. Others say that the difference between fair value at issue and exit, minus a discount for all the years I can’t sell, is subject to income tax as the ability to buy these shares is obviously tied to my employment. All say an advance ruling would be recommended.
Any practical experience/references?