A cross-country comparison
One response to uncertainty and transactions costs in VC-finance is to compensate founders and other key personnel with stock options under complex contracts. Entrepreneurs are granted stock options contingent on firm performance, vesting and other criteria.
While most countries tax stock options as labour earnings, the US allows them to be taxed at a low capital gains tax rate. The interaction of favourable tax treatment and inherent advantages has led to near universal use of stock options in US venture…
