“I am not saying that I don’t want to pay taxes to SKAT. I am very happy to pay taxes when this money is in my f*****g bank account!”? These two lines perfectly sum up Nico Blier-Silvestri's (or Nico) ongoing predicament.?? Nico moved to Denmark from France 10 years ago and worked at Trustpilot, Falcon.io and Unity, building their #recruitment and attracting top international talent to Denmark. He is currently the owner of Platypus, an HR and recruitment tool.?? He has been a crucial part of the Danish start-up ecosystem for the last 10 years. A veteran in attracting and retaining international talent to Denmark. Hence, his story is quite important for the diverse workforces in our #startup ecosystem.?????? At Unity, he was granted 15,000 warrants at $2.50 strike price. He vested those warrants for 4-5 years and didn’t buy them after leaving Unity.? In September 2020, Unity was valued at $13.7 billion at their IPO.? He exercised his #shares last year in September when the share price was $131. He now owned shares worth 13.9 million DKK.? However, he never sold those shares. Hence, there was no profit or money in his bank account. He only owned the shares.?? Fast forward to mid-2022, the market crashed and the value of Unity shares also dropped.?? Around this time, SKAT contacted Nico. They considered the 13.9 million DKK worth of shares to be a bonus or salary for him.? It didn’t matter to them whether he had sold these shares or not.? It didn’t matter to Skat whether he had money in his bank account or not.?? As per Skat, 13.9 million DKK is Nico’s salary or bonus and they taxed him 6.8 million DKK on it. Presently, Nico doesn’t have that kind of money. The current value of his Unity shares is around 4.6 million DKK. The value of Unity stock as of this writing is $45.76. So, even if he sells all his Unity shares, he will still be 2.2 million DKK in Danish tax debt.? To say Nico’s situation is dire would be an understatement. He is literally on the brink of losing everything. He is considering divorcing his wife. So, his wife could retain their house. To buy some time, he has formed a deal with Skat. Skat has agreed to let Nico pay his tax debt 560,000 DKK per month over the course of a year. Nico is selling parts of his 15,000 shares to manage his instalments. Meanwhile, he hopes for Unity share price to increase in value. Even the $67 share price can help Nico break-even. If Nico fails to pay 6.8 million DKK to Skat, he might never take out a loan, never own a business, or lose his house.?? To put these numbers into perspective, Nico has made an interesting calculation.?? “6.8 million DKK, the tax amount Skat wants me to pay on the profit that I never made, on the money that was never in my bank account, is the tax amount a person pays who earns 40,000 DKK per month over the course of 40 years”. Paying #taxes is never the issue. Being blindsided by the system is.??? It is outrageous and preposterous! Part 1/2 Stay tuned for part 2!
Sounds like the same problem as Martin Thorborg experienced 22 years ago: "Dengang kunne man kun blive betalt i aktier, s? selv om vi hellere ville have kontanter – 100 millioner euro var rigeligt, og s? var der ingen risiko – s? fik vi 100 millioner euro i deres aktier med krav om ikke at m?tte s?lge i det f?rste halve ?r. Kort efter ramte dot.com-krakket. [...] SKATs opfattelse var, at hvis vi havde solgt for 100 millioner euro i aktier, s? skulle der svares dansk skat af 100 millioner euro. Vi forklarede, at aktierne jo allerede nu var faldet til det halve. S? er vi jo faktisk ude i, at vi skal have penge op af lommen, det vil sige, at vi skal betale alt, hvad vi nogensinde har f?et og mere til. [...] I sidste ende fik vi ret i Ligningsr?det. Det kostede os en million i de bedste jurister og r?dgivere. De sagde aldrig undskyld. Det var bare den totale arrogance hele vejen igennem." https://www.berlingske.dk/samfund/martin-thorborg-blev-mere-og-mere-presset-han-havde-solgt-jubii-for-100 So there should be a case which you can refer to. Consider contacting Martin Buch Thorborg for details about the consultants he used.
I'm so sorry to hear about your predicament, Nico Blier-Silvestri. How can we help? This is one of several embedded flaws/externalities of Nordic stock incentive plans and second- and third-order tax consequences that unwittingly and retrospectively punish founders and employees for years of hard work and investment. I faced a similar situation in 2000 during the first dot-com bubble. Thankfully my US employer grossed up my equity grant for the large imputed tax bill. When the shares collapsed in 2001, I got saddled with nothing more than a large IRS tax loss carryforward, against which I can offset income until I die (or have a large exit). The tech bubble didn't bankrupt me; nor should it have. I'm not saying that US share incentive plans are perfect, but they've been around for decades, have solid GAAP standing, and are studied by a cadre of tax lawyers (who are worth their weight in gold). Analyze them, or consider incorporating as a Delaware C corp. We advise many of our founders to do the same. Our friends at Startup Network Europe just hosted a webinar with Christoffer Vikersveen Herheim at Optio Incentives on the topic of share-based incentives in Europe. DM me or Adam Patrick Fulham or Henry Sung for the replay.
Aren't you recommended to sell a portion of your RSUs to cover taxes when they vest? How is this blindsiding when the law already exists and there are best practices on paying taxes on your RSUs. This is more of a case where you blindsided yourself. Look at the flipside, if the stock would have gone up, you would have made money on what you owed in taxes. By not selling you are taking a bet using money (that is not yours at this point) that the stock will continue to go up. Also this is the reason why you are recommended to vest your warrants over time and not at once. Its good to read a bit about tax laws before taking on a comp that involves stock options. And just get a tax advisor once you start making financial decisions for ~2M usd.
Thank you for the mention and the support!
This is an insane outcome of a complex and broken tax system that taxes unrealised gains. Taxation of unrealised gains (be it ESOP, founder share reallocations or otherwise) is a pan-Nordic systemic failure that needs to be addressed ASAP by politicians and tax policy makers in Sweden as well as Denmark if we are sincere in the ambition of creating a top tier growth ecosystem.
Embarrassed on Denmark's behalf to see this unfolding. Truly concerned when thinking about long-term implications for the innovation ecosystem meant to create tomorrow's jobs here. And very sad on behalf of all employees hit by this praxis. Cannot begin to imagine having that hanging over my head. Impressed with how you navigate it Nico. Jonathan Schacht Halling Nielsen - perhaps something for Aktive Ejere - Active Owners Denmark to get involved in.
+1 here, Nico. Unfortunately I am going through the exact same situation. Although it is not at the magnitude that Nico Blier-Silvestri is experiencing, it is nearly 1 million kroner that I owe, and similar to Nico it was also money that I did not have sitting in my bank account but had to borrow. The value of this stock I received from a previous employer tanked (as most stock has) so I would literally have to sell all the stocks + pay a huge out of pocket amount just to pay off a tax bill for money I never received. I have worked in Denmark for over 10 years and I have never had an issue paying my taxes (happy to do it actually!), but this scenario really threatens professionals and the startup sector in general, and in Nico's case his livelihood and marriage. I have tried multiple times to reach the tax authorities to ask for delays in paying the bill and in general give them an insight on the negative impact, but not surprisingly there was no flexibility whatsoever. I am certain there are many others out there in the exact same situation. I hope this is raised to a higher level and can be changed.
The definition of slavery is being forced to give the fruits of your production to non-producing individuals. If you are forced to give 100% to a mafia, it is slavery. But where is the boundary? 90%, is that not slavery? Then the egyptians that built the pyramids should not be called slaves. 80%? 75%? Where does the fine line end between slavery and being forced to contribute to a system you cannot leave? Just food for thought. I have personally always wanted to contribute to my society. But after studying philosophy and observing the system I am contributing to, where “all animals are equal, but some are more equal than others”, I have come to the solemn realization that I, like 99% of all individuals are modern day slaves where laws only apply to us that are less equal than the elite class. Checkmate. I would advise Nico to move out of Denmark, work partly remote and spend 180 days a year in the country, avoiding being robbed and condemned to a modern day slave.
VP MLOps and Growth @ DataRobot
2 年I don't think this is a very sympathetic case - exercise of options/warrants counts as income in the vast majority of western countries - even in the US there are ISO/NSO distinctions and AMT to pay. This isn't a Denmark or SKAT problem at all - his case would be flagged in nearly every country - US, UK, Sweden, Germany, France, etc. If your employer gives you a house, you don't get to live in it until you sell it to figure out how much tax you pay. Same applies when you take ownership of shares by exercising (when it counts as income).