As part of new Income Tax Ordinance Regulations published on November 1, 2017, it was determined that an "involuntary sale" of employee options granted pursuant to Article 102 of the Income Tax Ordinance that occurs prior to the end of the two-year trustee holding period may entitle employees to Article 102 tax benefits in, inter alia, one the following scenarios:
- Sale of all the employees' securities as part of the sale to a purchaser who purchases at least 80% of the company's issued share capital (including the employees' shares) and is not an "affiliate" of the company or of a shareholder holding 25% or more of the company's share capital. In general, the term "affiliate" refers (with respect to the target company) to a holding company, held company and a sister company, with the holding threshold of at least 25%.
- Sale of a company's shares as part of a voluntary liquidation proceeding in connection with which the company's operations and assets were sold to a person who was not a controlling shareholder, provided there is more than 6 months between the sale of the company's operations and assets and the commencement date of the voluntary liquidation process.
In each of the aforesaid cases, the Company must apply to the Tax Authority for a pre-ruling in which the details and conditions of taxation will be determined.
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