Startup warrants to staff: fairness and taxes

[Argayu]

Hi all! I have joined an EU tech startup earlier this year [through my UK Ltd company] and they have just offered me a warrant package. The startup has been around for about three years and it is starting to generate revenue.

I have the right to purchase X number of warrants at -rounding up numbers here- €20 per warrant.
The current stock price is €240 and the strike price is €360. The warrant term is three years.

Does this sound right? I am a bit confused, as I usually understand that the strike price is a discounted price, so it should not be above the current €240 figure.

Also, does this warrant option have an implication from the UK tax point of view? Thanks!

 

[Newchodge]

What is a warrant package?

 

[Argayu]

What is a warrant package?

Pretty similar to a stock options package, the main difference is that warrants have to be purchased within a specific time [e.g. 30 days] whereas stock options can be bought at a later stage.

More info.

 

[Newchodge]

Pretty similar to a stock options package, the main difference is that warrants have to be purchased within a specific time [e.g. 30 days] whereas stock options can be bought at a later stage.

More info.

I'm not sure anyone in UK Employment/HR will be able to help. You may be better off in General Business Forum, I'll get you moved.

 

[WaveJumper]

Have a little read here:

Understanding Warrants: High-Return Investment Risks

Explore warrants as high-risk, high-reward investments with company-issued options to buy securities at set prices. Learn about types, benefits, and inherent risks.

www.investopedia.com

 

[Rawlinson Pryde]

You should seek professional advice here, so they can read the documents. There could be other issues with IR35 that you may or may not have considered.

Off-payroll working for clients

When to apply the off-payroll working rules (IR35) if you receive services from a worker through their intermediary.

www.gov.uk

 

[Argayu]

You should seek professional advice here, so they can read the documents. There could be other issues with IR35 that you may or may not have considered.

Off-payroll working for clients

When to apply the off-payroll working rules (IR35) if you receive services from a worker through their intermediary.

www.gov.uk

Thanks for the note @Rawlinson Pryde and apologies for the slow answer. Somehow the message alert slipped through.

I checked this back in the day with my accountant and he is still unclear in regards to the tax question, as the client is EU-based.

As per regards to the fairness of the strike price, the accountant of course has no benchmark.

IR35 does not apply here as I have other clients too. Thanks again for the help!