Q&A – altshare

What is Section 102 and How Does It Affect Me?

Section 102 of the Israeli Income Tax Ordinance allows companies to grant employees options or shares under preferential tax conditions, through a trustee, provided legal requirements are met. In this track, the tax on the sale of shares is divided into two components:

Ordinary Income Tax (Work Income): Calculated based on the difference between the exercise price and the share value on the date of grant (based on the average of the 30 trading days preceding the grant).
Capital Gains Tax (25%): Calculated based on the difference between the share value on the date of grant (30-day average) and the actual sale price.

Note: To benefit from the Capital Gains track, you must complete a 24-month "holding period" from the date of allocation, during which the options/shares cannot be sold. Selling before the end of these 24 months disqualifies you from the Capital Gains tax benefits.

Capital Gains Track (Section 102) vs. Ordinary Track

Section 102 Track: Uses the two-component calculation mentioned above (Work Income + 25% Capital Gains).
Ordinary Track: Taxed entirely as work income based on your personal income tax bracket.
Eligibility: To enjoy Capital Gains benefits, the 24-month holding period must be completed.

What is a Vesting Schedule?

A vesting schedule describes when each portion of your restricted options/shares "matures." Once vested, you are entitled to exercise them (for options) or they become fully yours (for RSUs).

Are the options in my portfolio already worth money?

Not necessarily. They only have tangible value if they have vested AND the current share price is higher than your exercise price. (Idea: The bot will automatically calculate the value based on the grantee's data).

What happens if I leave the company before my options vest?

Unvested options are usually cancelled. For vested options, you are typically given a specific window of time to exercise them before they expire.

Exercise vs. Sale: What’s the difference?

Exercise: The act of converting an option into a share (even if you don't sell it yet).
Sale: Actually selling the share for cash.
Same Day Sale: When both steps happen simultaneously.

What taxes will I pay when I sell?

As per Section 102:

Ordinary Income component: Taxed as salary (the "spread" at grant).
Capital Gains component: Taxed at 25% (the growth from grant to sale). (Failure to meet the 24-month holding period results in the entire profit being taxed as ordinary income).

Can I exercise only part of my options?

Yes, you can usually exercise a portion of your vested options, subject to the company's plan and regulations.

When should I exercise or sell?

There is no single right answer. It depends on the share price, tax implications, and personal financial goals. We recommend consulting with a CPA or investment advisor.

What is my specific tax rate?

Under the Section 102 Capital Gains track, the 25% rate applies to the capital gain portion. Under the Ordinary track, it depends on your marginal income tax bracket. A summary report detailing all tax deductions will be sent to you after the sale is completed.

Can I get details for my mother/father/brother?

Unfortunately, we cannot disclose personal information to anyone other than the account holder.

Tax difference between Exercise and Sale

Section 102: Exercising (without selling) is generally not a taxable event. Tax is only triggered upon sale.
Section 3(i): Tax is triggered immediately upon exercise.

How does living abroad affect my tax?

Taxation depends on your residency status during the vesting period. You may be eligible for partial exemptions or have independent reporting obligations. This must be checked case-by-case with a CPA.

Why don't I see all my options in the system?

Some may not have been reported to the trustee yet. Please contact your company's point of contact for clarification.

How do I contact the Trustee?

Email: ContactUs@altshare.com
Phone: +972-73-20-99999

How long do I have to exercise after leaving the company?

Usually 90 days, but this varies by company. Check your grant agreement or ask your HR department.

Options vs. Restricted Stock Units (RSUs)

RSUs are actual shares granted to you (usually at no cost). Options require an "exercise" payment to become shares. They often have different tax treatments.

What happens during an IPO?

There is often a "Lock-up" period where you cannot sell shares for a certain amount of time (e.g., 180 days). After this, you can perform sales.

How do I receive the money from a sale?

We transfer the funds to your bank account after legal tax deductions. If there is a "Work Income" component, that portion is transferred to your employer to be processed via payroll (since they have your specific income tax brackets).

Can I transfer options to a spouse or heirs?

Generally, options are non-transferable during your lifetime. In the event of death, inheritance is subject to the plan's terms and company/trustee approval.

What is the Exercise Price (Strike Price)?

The set price you must pay to convert one option into one share. This is determined by the company in your grant agreement.

What if the share price is lower than my exercise price?

The options are "Under Water" or "Out of the Money," and it is usually not financially beneficial to exercise them.

I have foreign citizenship—how does it affect me?

You may have reporting obligations in another country (e.g., the US). Consult an international tax advisor.

Are there fees for actions taken with the Trustee?

(Fee details for the grantee will be provided based on the specific company agreement).

Technical & Support FAQ

What is a "Same Day Sale"? Exercising and selling in one action. Example: You have 1,000 options at a 1 NIS strike price. You exercise (costing 1,000 NIS) and immediately sell for 10,000 NIS. Your profit is 9,000 NIS. The trustee deducts the exercise cost and taxes, then transfers you the net amount.
The website isn't working: Ensure the URL is correct. If you see a white screen, disable auto-translate in your browser.
What is my User Code? Your ID number (Teudat Zehut). Try entering it with and without a leading zero. For foreign residents, the code is in the initial welcome email.
I need a Tax Confirmation (Form 857): Form 857 is an annual certificate of tax withheld at source. We report capital gains tax withheld through us. These forms are usually available in late March or early April for the previous tax year.