TEXT JAVIER FERNÁNDEZ | IMAGES FREEPICK
Do you want to get your share of the action?
Articles on tax issues published in December often have a very high readership, especially when they are focused on how to pay less income tax. They remind you to make certain decisions, such as taking out a pension plan, paying into an assured pension plan, or paying off part of your mortgage before the end of the year so you can get a greater refund or at least pay a lower rate of income tax. These legal possibilities are particularly interesting for employees who pay tax on their entire work income.
In Spain, except in the Basque Country, another perhaps lesser known option is to use part of your salary to buy shares in the company you work for and/or receive them through plans organized by listed companies to increase their employees’ connection to the company’s future profits. According to current legislation, compensation received from your company in the form of shares reduces the gross amount of annual income and, consequently, your income tax. Additionally, shares that companies give as incentives are also tax-free as long as certain conditions are met.
How does it work?
Due to the conditions established in current Spanish tax legislation, the campaign is only available for Group employees in Spain. It is voluntary and is open to all those who have worked at the company for at least one year as of October 1. If you meet these requirements, you will receive an email at the start of the registration period offering you this opportunity.
You can sign up through the Self-Service tool exclusively from October 1 through November 30, 2021. Now is your chance, as there are currently no plans to repeat this campaign in subsequent years.
If you are interested in this offer, all you have to decide is how much of your annual compensation you’d like to use from your monthly paychecks to buy MAPFRE shares. The minimum amount is 300 euros per year or 25 euros per month, and the legally established maximum is 12,000 euros per year or 1,000 euros per month. The company will give you the number of shares corresponding to the amount you chose to use each month throughout 2022 (the delivery period) in a MAPFRE INVERSIÓN securities account.
The shares you receive each month are yours, and this gives you the right to receive any future dividends determined by the Board of Directors. You can also sell them whenever you want, but in order to receive the related tax benefits you must not sell the shares for at least three years from the date of purchase.
For every two SHARES you buy, MAPFRE gives you one more for free
In addition to the benefit of paying less income tax, MAPFRE will give employees even more reason to sign up for this plan by giving them one free share for every two shares that they buy and keep until March 31, 2023. For this purpose, the company has earmarked 4 million euros, an amount that in principle will be sufficient but may be prorated if demand is very high. These shares will be delivered by MAPFRE during May 2023 and become yours upon receipt, at which point you can do whatever you wish with them. However, remember that tax legislation establishes that you must keep the shares for three years from when they are received or purchased. To ensure that as many employees as possible can reap the benefits of this Plan, the incentive of receiving one free share for every two shares purchased is limited to the first 8,000 euros of gross annual salary earmarked for the purchase of shares, even though legislation on this tax incentive allows employees to receive a maximum of 12,000 euros of their compensation in company shares per year
Salary, investment, tax savings, free shares, and total shares
Someone that earns a gross salary of 24,000 euros per year and decides to earmark 25 euros each month (300 euros per year) will have saved almost 90 euros on tax, will have purchased 144 shares, and will have received 72 free shares from MAPFRE by the end of the period. In other words, by setting aside 25 euros each month, or 300 euros per year, the shares and tax savings combined give a return of 231 euros, and the employee will also own 216 shares and receive the corresponding annual dividend from MAPFRE while they own them.
With the same salary, if they set aside 50 euros per month for shares, they will have invested 600 euros within a year and will have a return of 470 euros. The employee will also own 444 shares and receive the corresponding annual dividend from MAPFRE while they own them.
Someone that earns a gross salary of 40,000 euros per year and decides to earmark 100 euros each month (1,200 euros per year) will have saved almost 445 euros on tax, will have purchased 600 shares, and will have received 300 free shares from MAPFRE by the end of the period. In other words, by setting aside 100 euros each month or 1,200 euros per year, the shares and tax savings combined give a return of around 1,050 euros, and the employee will receive the corresponding annual dividend from MAPFRE while they own them.
(€/year)
24.000
40.000
(€/MONTH)
25
50
100
300
600
1.200
231
470
445
72
148
300
16
444
900
POSIBILIDAD ÚNICA Y VOLUNTARIA de ser partícipe de la evolución de MAPFRE, recibiendo parte de tu remuneración en forma de acciones, lo que reduce tus impuestos y, cada año, percibiendo el DIVIDENDO para los accionistas
EL PLAZO ES AHORA, del 1 de octubre al 30 de noviembre, y las acciones se percibirán mensualmente a lo largo de 2022.
El MÍNIMO que puedes destinar son 300€ (25€/ mes) y el MÁXIMO, 12.000€ (1.000€ mensuales).
EL IMPORTE NO SE PODRÁ MODIFICAR y tendrás que MANTENER LAS ACCIONES sin venderlas hasta el 31 de marzo de 2023 para recibir tus acciones gratis.
En mayo de 2023, MAPFRE TE ENTREGARÁ 1 ACCIÓN GRATIS POR CADA 2 ADQUIRIDAS (hasta los primeros 8.000 euros).
EL PROCESO ES SENCILLO, SE ABRE MEDIANTE EL AUTOSERVICIO y carece de gastos de administración y custodia de los títulos. MAPFRE se ocupa de todo.
PAGARÁS MENOS IMPUESTOS y la entrega de estas acciones está exenta de tributar.
*Excepto en los territorios forales vascos.
LOS ÚNICOS REQUISITOS son tener antigüedad superior a 1 año con fecha 1/10/2021 y estar empleado en el Grupo MAPFRE en España.
How do I know if it is a good option for me?
On the previous pages we have shown you some examples so you can see the benefits in terms of taxes and shares, depending on your gross salary and the amount you set aside for this Plan. In the Self-Service tool, in addition to signing up for the Plan, you can also simulate your specific case and see the profit you will make depending on how much you want to invest.
You should know that both your decision to take part in the scheme and the amount you decide to invest cannot be changed. The Plan can only be suspended in special situations, such as when an employee leaves the company.
Receiving compensation in shares is a rather widespread practice.
Many companies promote similar compensation schemes to optimize their employees’ salary in tax terms and increase their emotional connection to the company’s objectives and strategy. Most banks regularly work with compensation plans based on shares and/or incentives that involve rewarding their workforce with company shares. In Spain, apart from banks, other companies such as Repsol, Ferrovial, Telefónica, or Gamesa offer similar compensation programs to the one being launched by MAPFRE.
MAPFRE’s annual return per dividend*
*Past returns do not guarantee future returns.
- 2017 4.9%
- 2018 5.5%
- 2019 5.7%
- 2020 8.1%
