The Yokohama District Court on Wednesday rejected a lawsuit filed by former employees of four foreign-affiliated companies asking to rescind the imposition of higher tax rates on income earned from stock-options deals.

In levying taxes on proceeds from the sale of shares by exercising stock options, tax authorities impose the same rates applied to salary income. Such rates are higher than those imposed on nonrecurring income.

Presiding Judge Takayuki Kawakatsu said the proceeds from the transactions were the result of labor provided on the basis of an employment contract between the company and the employees, and thus amounts to salary income.

The ruling is in contrast to a decision on a similar case issued by the Tokyo District Court in 2002. About 90 similar suits involving taxation on proceeds from stock options are being tried nationwide.