Hamburger
  • Restricted stock and RSUs

    Securities

    As long as:

    • The offer is not advertised or publicized
    • The stock is not traded in Argentina
    • The offer is limited to employees
    • The offer is intended to compensate employees and not to raise capital, no securities law requirements apply

    Foreign exchange

    There are no foreign exchange restrictions applicable to restricted stock or RSUs.

    Tax

    Employee

    The employee is taxed on restricted stock upon grant and on RSUs upon vesting (may include personal assets tax).

    The employee is subject to a flat tax of 15% on any net gain resulting from the sale of the shares by Argentine Tax residents, or, alternatively, 13.5% on the gross sale price by non-residents.

    Employer

    Withholding & reporting

    Tax withholding and reporting are required upon grant for restricted stock and upon vesting of RSUs.

    Deduction

    Argentine subsidiaries are allowed to deduct the amount reimbursed to the parent company for the cost of the benefits if a Reimbursement or Recharge Agreement is in place.

    Social insurance

    Social insurance contributions are generally payable by the employee and employer.

    Data protection

    Obtaining an employee's written consent for the processing and transfer of his or her personal data is the most common approach to comply with certain aspects of data protection requirements. The employer also is required to register any database that includes an employee's personal data with the Argentine privacy authorities.

    Labor

    Benefits received from restricted stock or RSUs may be considered part of the employment relationship and included in a severance payment if the awards are repeatedly granted to an employee. Upon involuntary termination of employment, an employee may be entitled to continued vesting and other rights with respect to his or her award. In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that vesting of restricted stock or RSUs ceases upon termination of employment, and that the plan and any awards under it are discretionary.

    Communications

    Although plan materials are not required to be translated into Spanish, it is recommended, to ensure that employees understand the terms of their awards. Award materials should be addressed to individual employees in order to avoid securities law requirements.

  • Stock options

    Securities

    As long as:

    • The offer is not advertised or publicized
    • The stock is not traded in Argentina
    • The offer is limited to employees
    • The offer is intended to compensate employees and not to raise capital, no securities law requirements apply

    Foreign exchange

    There are no foreign exchange restrictions applicable to option plans.

    Tax

    Employee

    The employee is taxed on the spread upon exercise (including personal assets tax, if applicable). 

    The employee is subject to a flat tax of 15% on any net gain resulting from the sale of the shares by Argentine Tax residents, or alternatively 13.5% on the gross sale price by non-residents.

    Employer

    Withholding & reporting

    Tax withholding and reporting are required upon exercise.

    Deduction

    Argentine subsidiaries are allowed to deduct the amount reimbursed to the parent company for the cost of the benefits if a Reimbursement or Recharge Agreement is in place.

    Social insurance

    Social insurance contributions are generally payable by the employee and employer when an option is exercised.

    Data protection

    Obtaining an employee's written consent for the processing and transfer of his or her personal data is the most common approach to comply with certain aspects of data protection requirements. The employer is also required to register any database that includes an employee's personal data with the Argentine privacy authorities.

    Labor

    Benefits received from an option may be considered part of the employment relationship and included in a severance payment if options are repeatedly granted to an employee. Upon involuntary termination of employment, an employee may be entitled to continued vesting and other rights with respect to his or her option. In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary.

    Communications

    Although plan materials are not required to be translated into Spanish, it is recommended, to ensure that employees understand the terms of their awards. Award materials should be addressed to individual employees in order to avoid securities law requirements.

  • Stock purchase rights

    Securities

    As long as:

    • The offer is not advertised or publicized
    • The stock is not traded in Argentina
    • The offer is limited to employees
    • The offer is intended to compensate employees and not to raise capital, no securities law requirements apply

    Foreign exchange

    There are no foreign exchange restrictions applicable to stock purchase rights.

    Tax

    Employee

    The employee is taxed on the spread upon purchase.

    The employee is subject to a flat tax of 15% on any net gain resulting from the sale of the shares by Argentine Tax residents, or, alternatively, 13.5% on the gross sale price for non-residents.

    Employer

    Withholding & reporting

    Tax withholding and reporting are required upon purchase.

    Deduction

    Argentine subsidiaries are allowed to deduct the amount reimbursed to the parent company for the cost of the benefits if a Reimbursement or Recharge Agreement is in place.

    Social insurance

    Social insurance contributions are generally payable by the employee and employer when the shares are purchased.

    Data protection

    Obtaining an employee's written consent for the processing and transfer of his or her personal data is the most common approach to comply with certain aspects of data protection requirements. The employer also is required to register any database that includes an employee's personal data with the Argentine privacy authorities.

    Benefits received from a purchase right may be considered part of the employment relationship and included in a severance payment if purchase rights are repeatedly granted to an employee. Upon involuntary termination of employment, an employee may be entitled to continued participation in the plan. In order to reduce the risk of employee claims, the offer document signed by an employee should provide, among other things, that participation in the plan ceases upon termination of employment, and that the plan and any awards under it are discretionary.

    In light of restrictions on payroll deductions, alternative arrangements may be necessary for contributions to the plan.

    Labor

    Not applicable.

    Communications

    Although plan materials are not required to be translated into Spanish, it is recommended, to ensure that employees understand the terms of their awards. Award materials should be addressed to individual employees in order to avoid securities law requirements.

  • Key contacts
    Guillermo Cabanellas
    Guillermo Cabanellas
    Senior Partner DLA Piper (Argentina) [email protected] T +5411 41145500 View bio
    Augusto Nicolás Mancinelli
    Augusto Nicolás Mancinelli
    Of Counsel DLA Piper (Argentina) [email protected] T +5411 41145500 View bio
    Dean Fealk is the global contact for Global Equity.
    Dean Fealk is the global contact for Global Equity.
    [email protected] View bio

Restricted stock and RSUs

Tax

Argentina

Employee

The employee is taxed on restricted stock upon grant and on RSUs upon vesting (may include personal assets tax).

The employee is subject to a flat tax of 15% on any net gain resulting from the sale of the shares by Argentine Tax residents, or, alternatively, 13.5% on the gross sale price by non-residents.

Employer

Withholding & reporting

Tax withholding and reporting are required upon grant for restricted stock and upon vesting of RSUs.

Deduction

Argentine subsidiaries are allowed to deduct the amount reimbursed to the parent company for the cost of the benefits if a Reimbursement or Recharge Agreement is in place.

Australia

Employee

Generally, an employee is taxed on the spread upon purchase of restricted stock and the spread upon vesting/exercise on RSUs.

Restricted stock is generally subject to income tax upon the earlier of vesting, termination of employment or 15 years from grant.

Broadly speaking, RSUs are treated, for taxed purposes, like options. Employees will be able to defer the tax payable until  termination of employment or 15 years from grant, provided certain conditions are met.

Upon sale, generally only 50% of the capital gain is taxed if the shares are held by the employee (not through a company) for at least 12 months.

Also, beneficial tax treatment will be available for startup companies meeting certain requirements. Where the requirements are met, the employee will only pay tax on the capital gain on the sale of the shares.

Restricted stock and RSUs granted between July 1, 2009 and July 1, 2015 are subject to a different tax regime.

Employer

Withholding & reporting

Tax withholding is not required unless the employee does not provide his or her employee tax file number.

The employer is required to report income received by an employee from restricted stock and RSUs to both the employee and the Australian tax authority, and the employee is required to report such income on his or her annual tax return.

Benefits received by employees in some Australian states may be included in the determination of employer payroll tax.

Deduction

Reimbursement made to the parent company for the cost of the benefits, pursuant to a written agreement, should enable the subsidiary to deduct such cost from its taxable income.

Austria

Employee

Benefits from restricted stock are taxed upon grant. RSUs are taxed upon vesting.

Shares acquired before January 1, 2011: gains from the sale of shares held more than 12 months generally are not taxed. If the shares were held less than 12 months gains are taxed.

Gains from the sale of shares acquired on or after January 1, 2011 are subject to tax irrespective of the holding period.

Employer

Withholding & reporting

Tax withholding and reporting are required.

Deduction

Reimbursement of the parent company for the cost of the benefit pursuant to a written reimbursement agreement should enable the subsidiary to deduct such cost from its income taxes.

Tax-favored

In case of a direct participation in the company and economic ownership of the employee (not only by means of a funds) preferential tax treatment may apply if certain requirements are met.

Belgium

Employee

Generally, restricted stock is taxed upon grant on the value of the stock.

Generally, RSUs are taxed on the value of the stock upon vesting.

A reduction of the tax base may be available if the employee is not allowed to sell the shares for at least two years.

Employer

Withholding & reporting

Generally, withholding requirements apply if the subsidiary is involved with the delivery of the award or the underlying shares or if it is involved in the administration of the plan. Reimbursement by the subsidiary of the costs of the benefits may qualify as sufficient involvement.

Reporting is required if a withholding obligation exists.

Deduction

In situations where the subsidiary reimburses the parent company for the cost of the benefits, a deduction is generally allowed. A written reimbursement agreement is recommended. Reimbursement may result in income tax and social insurance withholding. Based on recent case law, the risk exists that the reimbursement may qualify as a capital loss on shares and would therefore not be deductible.

Brazil

Employers and employees are encouraged to consult with their own tax advisors regularly to determine the consequences of taking or not taking any action concerning restricted stocks and RSUs, and to determine how the tax, social insurance, or other laws in Brazil apply to their specific situation.

Employee

Usually, the grant of restrict stock units does not give rise to a taxable event in Brazil. However, Brazilian tax authorities may have a different view, and understand that this could be seen as taxable event for employees, particularly if clearly treated as compensation by the issuer.

Upon vesting, the restricted stock units will be converted into shares and usually seen as income earned by employees, which shall result in the recognition of taxable income at the fair market value of the shares acquired and treated as employment (ordinary) income.

If employees sell any shares purchased under the plan, gains will be subject to capital gains taxation.

Employer

Withholding & reporting

Tax withholding and reporting by the employer will be required if it is treated as compensation and treated as employment (ordinary) income. Capital gains tax calculation and reporting would be the employee's responsibility.

Deduction

If restricted stock and RSUs are offered to all employees in Brazil and the subsidiary reimburses the parent company for the cost of the benefits, the subsidiary should be able to deduct such cost from its income taxes provided that it is treated as compensation, which could cause restricted stock and RSUs to be deemed employment (ordinary) income subject to social insurance contributions.

Canada

Employee

Restricted stock is taxed upon grant as employment income at a 100% inclusion rate. The timing of recognition of the income differs in Canada and in the United States so that foreign tax credits may become unavailable, unless a special election is filed.

If properly structured (including a vesting period of no more than three years), RSUs are taxed only upon vesting.

Upon the sale of shares, generally only 50% of any gain is taxable. Where a capital loss arises, only 50% of the loss is deductible and it is only deductible against capital gains. Such capital losses can be carried back three years and carried forward indefinitely.

Employer

Withholding & reporting

Generally, withholding and reporting are required.

Deduction

Even if the subsidiary reimburses the parent company for the cost of the benefit of Restricted Stock or share settled RSUs pursuant to a written reimbursement agreement, it is unable to deduct such cost from its income taxes. However, the subsidiary is entitled to a deduction for the reimbursement of the cost of the benefit of RSUs that can be settled in cash and/or shares at the company's discretion.

Chile

Employee

Restricted stock generally is taxed upon grant. RSUs are taxed upon vesting.

Since January 1, 2017, the awards constitute a higher remuneration for employees, and it taxes according to the second category tax or income tax of the labor, with rates up to 35%.

Employer

Withholding & reporting

If the subsidiary deducts the cost of the award, withholding and reporting are required.

Deduction

Reimbursement of the parent company for the cost of the benefit (eg, the spread) and inclusion of such benefits in the employee's compensation should enable the subsidiary to deduct such cost from its income taxes. Reimbursement will trigger employer tax withholding.

China

Employee

Restricted stock and RSUs are taxed as salaries and wages income upon vesting.

Capital gains tax is imposed upon the gains recognized from the sale of shares.

Employer

Withholding & reporting

Withholding and reporting are required on the vesting of restricted stock and RSUs.

Deduction

In principle, the restricted stock and RSU benefits, if reimbursed to the parent company for the cost of such benefits, should be a deductible expense for the subsidiary's income tax purposes. However, exchange control approvals generally are required for such reimbursement arrangement.

Tax-favored

Generally a public company that offers restricted stock or RSUs is required to submit applicable documents translated into Chinese to the relevant local tax authority through its China subsidiary for preferential tax treatment to employees in accordance with the requirements of Circular 35, which permits employees to enjoy favorable tax treatment in connection with their awards. The documents that must be submitted vary by region, but typically include: an application form, the plan, award agreement and grant notice. Private companies are not entitled to the favorable tax treatment.

Colombia

Employee

When the stock is granted

Granted stock to Colombian tax resident employees is taxed as labor income at a progressive rate, up to 35%. The taxable income must correspond to the fair market value (FMV) of the stocks.

If the Colombian company granting the stocks does not trade them in a public stock market, the FMV, unless proven otherwise, is presumed to be 130% of the intrinsic value of the Colombian entity. However, tax authorities are entitled to apply different valuation methods to determine the FMV (ie, present value of the future earnings or EBITDA multiples).

When the granted stock is sold

The sale of the granted stock by the Colombian tax resident employees would be taxable upon the difference between their cost basis (acquisition value taxed as labor income) and their sale price. If the shares qualify as a fixed asset of the employee, and have been held for more than two years, the profit would be deemed as a capital gain (taxed at 10%, instead of the progressive rates, up to 35%, applicable to ordinary income). Same rule applies if the non-tax resident employees sell the stock granted in a Colombian entity.

Employer

When the stock is granted

Withholding & reporting

The Colombian entity (acting as the employer) must apply the labor withholding tax at progressive rates, up to 35%. Such withholding must be reported before the tax authorities.

Deduction

The Colombian entity (acting as the employer) is allowed to deduct the FMV of the granted stock, provided that:

  • The labor withholding tax is applied and
  • Social security contributions are paid

The above entioned tax deduction can be recognized even if the Colombian entity is an affiliate of the entity issuing and granting the stock, if under the Colombian accounting standards to value of the granted stock is registered as an expense during any given year.

Note that the Colombian Tax Code provisions do not deal with the relationship between Colombian employers and the foreign affiliates that issue and grant the stock, which therefore has to be dealt according to the accounting standard, the transfer pricing regulations and the applicable law.

Reporting is required if the Colombian company registers the above mentioned tax deduction.

Czech Republic

Employee

Restricted stock and RSUs are likely taxed upon vesting.

Upon the sale of shares, the gain is taxable except under certain circumstances.

Employer

Withholding & reporting

If the subsidiary deducts the cost of the benefits, withholding and reporting are required.

Deduction

A tax deduction is allowed if the subsidiary reimburses the parent company for the cost of the benefit.

Denmark

Employee

As a starting point, restricted stock is taxed upon vesting. The taxable amount is taxed as salary income. If the value of the scheme is less than 10 percent of the employee’s remuneration (20 percent in start-up companies), the employer and the employee may opt for a certain with the effect that the spread is taxable under the rules applicable to capital gains. Consequently, the time of taxation of the employees is deferred until the time when such shares are sold by the employees. There is no taxation at the time of grant or vesting. Certain requirements to both the relevant securities and the award agreement apply to utilize the incentive tax scheme. Case-by-case analysis is recommended.

RSUs, which are not covered by the employee incentive schemes, are, as a starting point, taxable upon grant, eg, performance conditions, continued employment, etc. However, it should be noted that a sole provision of continued employment, though not in all cases, can imply that the time of taxation of the employees is deferred.

Any gain from the sale of shares is subject to capital gains taxation.

Employer

Withholding & reporting

Reporting is required. There are no withholding tax requirements.

Deduction

A local tax deduction is allowed if the subsidiary reimburses the parent company for the cost of the restricted stock or RSUs, and treasury shares are issued.

Ecuador

Employee

Since restricted stock and RSUs are not contemplated by the Ecuadorian law, foreign restricted stock and RSUs should not be taxable in Ecuador.

However, in general, any gain obtained by Ecuadorian based persons, national or foreign, is taxable; hence, the gain from the sale of shares is taxable.

Employer

Withholding & reporting

As long as the employee does not pay anything for restricted stock or RSUs, no withholding is required.

Deduction

A local tax deduction may be allowed if the subsidiary reimburses the parent company for the cost of the benefit, provided the percentage requirements are met.

Egypt

Employee

Restricted stock likely is taxed upon grant.

RSUs likely are taxed upon vesting.

Proceeds from the sale of shares are taxable.

Employer

Withholding & reporting

Withholding and reporting requirements generally apply.

Deduction

It is uncertain whether the subsidiary may claim a local tax deduction.

Finland

Employee

Restricted stock and RSUs are taxed upon delivery and subject to progressive income tax up to 56%.

The gain from the sale of shares is subject to tax as capital income at 30% up to EUR 30,000 and 34% for the exceeding part. The loss from the sale of shares can be carried forward up to 5 years.

Employer

Withholding & reporting

Withholding and reporting requirements apply.

Deduction

An employer may be able to claim a tax deduction for the cost of award benefits if it reimburses the parent company pursuant to a written agreement. As a minimum prerequisite, the cost has to be an actual expense entered into bookkeeping.

France

This section covers favorable regimes applicable to qualifying plans.

Employee

For restricted stock and RSUs granted pursuant to a plan authorized as of 01/01/2018

The acquisition gain (which corresponds to the value of the free shares on the date of their acquisition) is taxable on the year of the sale in accordance with the progressive scale of income tax (up to a 45% maximum rate), with a 50% rebate applicable to the part of the acquisition gain below €300,000 and is subject to a special surtax on high income (3% to 4%).

The capital gain deriving from the transfer of the shares (which corresponds to the difference between the transfer price and the value of the shares on the date of their acquisition) is subject to a 12.8% flat tax, and to a special surtax on high income (3% to 4%).

Employer

Withholding & reporting

Reporting requirements apply. No withholding of income tax.

Deduction

The costs incurred in connection with the implementation of the Restricted stock or the RSU (ie, costs of repurchase of shares, share capital increase, formalities, etc.) are treated as a tax-deductible expense in France.

An employer may be able to claim a tax deduction for the cost of restricted stock and RSU benefits if it reimburses the parent company and the parent company uses treasury shares.

Germany

Employee

Restricted stock is generally taxed upon grant, provided economic power of disposal is obtained at such point in time. In case of uncertainty, as is often the case, strategies to prevent liability risks for the employer would generally include an application by the employer for a wage tax ruling.

RSUs are generally taxed upon vesting.

The sale of shares is subject to tax at a special capital gains tax rate.

Employer

Withholding & reporting

Tax withholding and reporting requirements apply.

Deduction

Reimbursement of the parent company for the cost of the benefit pursuant to an advance written agreement should enable the subsidiary to deduct such cost from its income tax.

Greece

Employee

Restricted stock is taxed upon grant.

RSUs are taxed upon vesting.

Tax is imposed upon sale of the stock.

Employer

Withholding & reporting

If the subsidiary takes a local tax deduction for reimbursing the parent company for the cost of the restricted stock or RSU benefits, employer withholding and reporting are required.

Deduction

A local tax deduction is allowed if the subsidiary reimburses the parent company for the cost of the restricted stock and RSU benefits.

Hong Kong

Employee

Restricted stock is taxed upon grant.

RSUs are taxed upon vesting. If RSUs are not subject to vesting, then they will be taxed upon grant.

Restricted stock and RSUs are not subject to tax upon sale.

Employer

Withholding & reporting

There are no withholding requirements. Restricted stock and RSU benefits must be reported annually with the employee's salary.

Deduction

Issuing of new shares to fulfill the restricted stock and RSU obligations are not deductible. Where the obligation is met by acquiring shares from the market, the costs are deductible when the vesting conditions have been satisfied. When the restricted stock and RSUs are discharged by recharge arrangement between group companies, provided that there is a written recharge agreement and that certain requirements are met, deduction maybe allowable. Note that where the shares are subsequently forfeited or cancelled, any deduction previously allowed should be written back as trading receipt and offered for assessment.

Hungary

Employee

Restricted stock and RSUs are taxed upon vesting.

Proceeds from the acquisition of shares and the subsequent sale of shares are subject to tax.

Employer

Withholding & reporting

Withholding and reporting requirements may apply if the subsidiary provides the benefits to the employees. Nonetheless, if the parent company provides the benefits, the subsidiary may opt for fulfilling withholding and reporting obligations.

Deduction

Reimbursement of the parent company for the cost of the benefits should enable the subsidiary to deduct such cost from its income taxes.

Tax-favored

Favorable tax treatment is available for restricted stock and RSUs if they are issued under an employee stock ownership plan. If the stock is issued via a special employee stock ownership plan organization, the taxation is even more favorable. The favorable tax treatment is subject to further conditions.

India

Employee

Restricted stock and RSUs are taxed upon vesting. However, this amount must be determined in accordance with the fair market value of the shares as determined by a licensed Indian Merchant Banker.

Proceeds from the sale of shares are subject to tax. The shares being treated as capital assets, the sale would be subject to capital gains tax in the hands of the employee.

Employer

Withholding & reporting

Withholding requirements apply.

Deduction

A deduction may be available if the Indian subsidiary reimburses the parent-issuer for the costs of the award, but exchange control approval may be required, depending upon the structure of the arrangement.

Tax-favored

No tax-favored programs are available.

Indonesia

Employee

Restricted stock likely is taxed upon grant.

RSUs are taxed upon vesting.

Any gain from sale is subject to capital gains tax.

Employer

Withholding & reporting

Tax withholding and reporting generally are required if the subsidiary takes a local tax deduction for reimbursing the parent company, and the benefits from the restricted stock and RSUs are considered part of base salary.

Deduction

Reimbursement of the parent company for the cost of the benefits in accordance with a written agreement should enable the subsidiary to deduct such cost from its income taxes.

Ireland

Employee

Restricted stock likely is taxed upon grant.

RSUs likely are taxed upon vesting, unless the shares or cash pass to the employee at an earlier date.

The proceeds from the sale of the shares are taxable, although some exemptions (eg, the annual exemption of EUR1,270) may apply.

Employer

Withholding & reporting

Withholding and reporting are required.

Deduction

If the subsidiary reimburses the parent company for the cost of the restricted stock or RSU benefits pursuant to a written agreement, it may be able to deduct such cost from its taxable income.

Israel

Employee

Tax treatment is determined by whether restricted stock or RSUs were granted under an approved plan via a trust arrangement in Israel.

  • Restricted stock with no trustee: tax and social security are due at time of grant; the employee will also be taxed at the time of sale of the shares.
  • Restricted stock under a trustee plan: the employee will be taxed at the time of sale of the shares; part of the sale proceeds may be taxed as work-related income, and part as capital gains, based on the difference between the fair market value at grant and the sale price, provided other conditions under this tax route are met; social security is payable based on the work-related income portion.
  • RSU with no trustee: tax and social security due at time of sale of the shares.
  • RSU under a trustee plan: the employee will be taxed at the time of sale of the shares or when the shares are transferred from the trustee to the employee. Part of the sale proceeds may be taxed as work-related income, and part as capital gains, depending on the difference between the fair market value at grant and the sale price, provided other conditions under this tax route are met; social security is payable based on the work-related income portion.
  • Exit taxes may also be imposed on the stock award values if the employee terminates residency in Israel.

Employer

Withholding & reporting

Withholding and reporting are required.

Deduction

A tax deduction may be available for an approved trustee plan if a written recharge agreement is in place.

Tax-favored

Under Section 102 trustee plans, the taxable event is deferred until sale or until releasing the shares from the trustee. Under the capital gains route, Restricted stock and RSUs must be held by a local trustee for at least the required holding period.

Italy

Employee

Restricted stock is taxed upon grant. Only the amount of the granted shares exceeding a certain threshold (ie, EUR 2,065.83) would be taxed as employment income, provided that restricted stock are granted to all employees and the shares are non-transferable for a 3-year period.

RSUs are taxed upon vesting. Only the amount of the shares granted upon vesting (ie, the market value of the shares on vesting, less any price paid by participants) exceeding a certain threshold (ie, EUR 2,065.83) would be taxed, provided that RSUs are granted to all employees and the shares are non-transferable for a 3-year period.

A general rule governing employment income taxation set out by Italian tax law is that employment income must be computed on a cash basis, ie, income must be taxed once it has been actually received by the individual concerned. Employment income represented by the value of the RSUs, granted upon vesting, must be taxed with reference to the FY during which the RSUs concerned are actually delivered and received by the individual taxpayer. From the moment of vesting until the moment of actual delivery and receipt of the RSUs, the individual taxpayer holds a mere expectation which cannot qualify as taxable income, as clarified by the Italian Tax Administration.

Both restricted stocks and RSUs may not be taxed if they are granted as a form of productivity bonus, provided that the other law requirements are met.

Until December 31, 2018, the gain at sale is taxed as capital gain at 26% in case the shareholding represents a percentage of voting rights exercisable at the ordinary shareholders' meeting not exceeding 20% and a participation in the capital not exceeding 25% (for a private company).

Capital gains realized from January 1, 2019 are subject to a substitute tax at a rate of 26% (despite of the represented percentage of voting rights and the participation in the capital).

Please consider that if the shares are issued by a tax haven company the entire capital gain amount is subject to personal income tax (IRPEF) at the applicable progressive rates between 23% up to 43% (plus regional and municipal surtaxes if applicable). In order to be qualified as tax haven resident, the company has to be subject to an effective tax rate lower than 50% of the virtual Italian effective tax rate (ie, taxes to be paid it the company were Italian-tax-resident) or to a nominal tax rate lower than 50% of the applicable rate in Italy (ie, lower than 13.95%).

Special step-up rule may be annually introduced lowering capital gain taxation.

Employer

Withholding & reporting

Withholding and reporting are required.

Deduction

If the parent company is reimbursed by the subsidiary for the cost of the benefits, the subsidiary should be able to deduct such costs from its income taxes.

Japan

Employee

Restricted stock is taxed upon the restriction cancellation date, so long as certain factual conditions are satisfied. For example, one of the conditions is that the stock granted in exchange of an employee's claim payment is returned to the Japanese subsidiary if the employee or the company's performance fails to meet certain requirements or the employee fails to continue to work for certain required period.

RSUs are taxed when vesting of RSUs is fixed, depending on the details of the RSUs.

Employer

Withholding & reporting

Withholding is applicable depending on how equity compensations are granted between the foreign parent company and its Japanese subsidiary.

Deduction

A deduction is permitted within the fiscal year to which the restriction cancellation date belongs. A deduction may be  permitted for restricted stock if certain conditions are met such as  time schedule of notification to the tax authorities. The scope of deduction has been expanded by the amendment promulgated in 2017, and it includes RSUs.

Malaysia

Employee

Restricted stock and RSU are taxable perquisites and are taxed at the point of vesting. The taxable value of RSU / restricted stock is the market value of the shares on the date of vesting less the amount paid for the shares (if any). Any gain made from a subsequent disposal of these shares is not taxable as it represents a capital gain.

Employer

Withholding & reporting

Notification to the tax authorities is required. Withholding is required unless the employee has elected in writing to remit the tax upon submission of his or her tax return for the relevant year.

Deduction

If the shares acquired by the employee are newly issued shares, the local subsidiary will not be entitled to claim a deduction for any costs incurred in relation to such new shares.

However, if the shares offered under the scheme are treasury shares of the holding company, then the local subsidiary is eligible to claim a special deduction for costs incurred in acquiring the treasury shares.

Alternatively, if the options are settled in cash where no shares are transferred to the employee, the amount paid to the employee by the local subsidiary (treated as a cash bonus) is deductible to the local subsidiary.

Mexico

Employee

Restricted stock and RSUs are taxed upon vesting.

The gain upon the sale of the shares is taxable.

Employer

Withholding & reporting

Tax withholding and reporting are generally not required unless the Mexican subsidiary reimburses the parent company for the cost of the restricted stock or RSU benefits.

Deduction

A local tax deduction generally is allowed if the subsidiary reimburses the parent company for the cost of the restricted stock and RSU benefits under a written agreement. However, reimbursement may trigger withholding and reporting requirements for the subsidiary.

Netherlands

Employee

Restricted stock is taxed upon grant as income from employment at the progressive income tax rate up to 51.75%.

RSUs are taxed upon vesting as income from employment at the progressive income tax rate up to 51.75%.

Generally, there is no tax upon the sale of shares if the shareholder (together with his fiscal partner) has an interest less than 5% in the nominal subscribed share capital (determined per class of shares).  However, an annual tax on deemed return on investment may apply.

Employer

Withholding & reporting

Withholding and reporting requirements apply.

Deduction

A local tax deduction is not allowed.

New Zealand

Employee

  • The benefit to the employee is income. The benefit of restricted stock/RSUs is generally the difference between what the employee pays and the market value of the shares at the taxing date. The taxing date is when an employee holds the shares like any other shareholder (eg, there is no material risk that the employee will lose the shares and there is no downside protection)
  • From April 1, 2017, an employer is required to report the value of the benefit at the taxing date through payroll reporting
  • Whether tax on the benefit is returned by the employee or the employer will be fact-dependent, although the primary obligation remains with the employee
  • The tax implications of holding the shares and selling the shares after the taxing date will be fact-dependent, although New Zealand does not have a general capital gains tax, applications of holding the stock and of selling it will be fact-dependent

Employer

Withholding & reporting

  • From April 1, 2017 an employer is required to report the value of the benefit at the taxing date through payroll reporting
  • Whether tax on the benefit is returned by the employee or the employer will be fact-dependent, although the primary obligation remains with the employee

Deduction

A New Zealand employer will generally be entitled to a corporate income tax deduction for restricted share awards by reference to the amount on which the employee is taxed and the deduction arises at the time the employee is taxed.

Norway

Employee

Restricted stock is taxed upon grant.

RSUs are taxed upon vesting.

The gain upon the sale of shares is taxed. The shares also may be subject to annual wealth tax.

Employer

Withholding & reporting

Withholding and reporting are required.

Deduction

Reimbursement made to the parent company for the cost of the benefits, pursuant to a written agreement, should enable the subsidiary to deduct such cost from its taxable income.

Philippines

Employee

Restricted stock is likely taxed upon vesting.

RSUs are generally taxed upon vesting.

If the Philippine subsidiary reimburses the parent company for the cost of the award benefit, it is required to pay a fringe benefit tax on any such benefits received by non-rank-and-file employees of the Philippine subsidiary.

The gain upon the sale of shares is taxed.

Employer

Withholding & reporting

Withholding and reporting by the Philippine subsidiary are generally not required, unless the Philippine subsidiary reimburses the parent company for the cost of the benefit.

Deduction

A Philippine subsidiary's reimbursement to the parent company for the cost of the benefits, pursuant to a written agreement and in compliance with withholding requirements, will probably enable the subsidiary to deduct such cost from its income taxes.

Poland

Employee

Restricted stock is not taxed upon grant, provided  specific conditions are met.

RSUs are not taxed upon vesting, provided specific conditions are met.

The gain from the sale of shares is taxed.

Employer

Withholding & reporting

Withholding and reporting may be required, if the subsidiary reimburses the parent company for the cost of the restricted stock and RSU benefits, and thus the benefits are deemed part of the local employment relationship.

Deduction

The subsidiary should be able to deduct the cost of the benefits from its taxable income if such benefit is deemed to be part of an employee's remuneration and the subsidiary reimburses the company for such remuneration.

Portugal

Employee

Restricted stock is taxed upon grant.

RSUs are taxed upon vesting.

The gain from the sale of shares is taxed.

Employer

Withholding & reporting

Tax withholding is not required. However, the employer can withhold the tax upon the employee's request.

Reporting requirements may apply.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the benefits should enable the subsidiary to deduct such cost.

Russia

Employee

On the condition that restricted stock and RSUs qualify as shares (securities) or "termed finance instruments" (as defined under the Russian law), they are taxed upon vesting.

Tax is imposed from the sale of shares.

Employer

Withholding & reporting

Employers generally must comply with reporting and withholding requirements on any income paid to Russian taxpayers.

Deduction

Generally, the subsidiary will not be able to deduct the cost of the benefits from its taxable income.

Saudi Arabia

Employee

There is no tax imposed on restricted stock and RSU benefits.

Employer

Withholding & reporting

Withholding and reporting are not required.

Deduction

A subsidiary typically is unable to deduct the cost of the benefits from its income taxes.

Singapore

Employee

Restricted stock and RSUs are generally taxed upon vesting. For restricted stock subject to restriction on sale, the taxing point can be deferred to the time when the restriction ceases to apply.

No tax is imposed upon the sale of shares if the gain is considered as capital gain.

Employer

Withholding & reporting

Tax withholding is not required. The employer is required to report income received by an employee from restricted stock and RSUs. If the employee ceases employment in Singapore, any RSUs granted during the Singapore employment which remain unvested will be subject to tax on the market value, determined one month before the date of termination of employment ("deemed gain"). If the RSUs are forfeited, there is no deemed gain to be reported.

Deduction

The subsidiary should be able to deduct the cost of the benefit from its taxable income if:

  • treasury shares are used
  • the parent company incurs the costs of acquiring the treasury shares [A] and recharges the amount to the subsidiary [B] and
  • the deduction claimed by subsidiary is the lower of [A] or [B] less any amount received from the employees

Slovak Republic

Employee

Restricted stock and RSUs are taxed at vesting.

Upon the sale of shares, tax is generally imposed on the gain .

Employer

Withholding & reporting

Withholding and reporting generally are required.

Deduction

A Slovak subsidiary's reimbursement made to the parent company for the cost of the benefits, pursuant to a written agreement, should enable the subsidiary to deduct such cost from its taxable income.

South Africa

Employee

Restricted stock and RSUs are likely taxed upon vesting.

The gain on the sale of shares is generally taxed.

Employer

Withholding & reporting

Withholding and reporting are required.

Deduction

If the subsidiary reimburses the parent company for the cost of offering the awards, subject to South African Reserve Bank approval, a tax deduction will be available.

South Korea

Employee

Restricted stock is taxed upon the date when it is delivered to the employee's account as salary income.

RSUs are taxed upon the date of payment.

The capital gain from the sale of the shares is generally taxable (capital gains of KRW 2,500,000 or less, annually, are tax exempt).

Employer

Withholding & reporting

Unless the parent company is reimbursed by the subsidiary for the cost of restricted stock and RSU benefits, withholding and reporting generally are not required.

Deduction

If the subsidiary reimburses the parent company for the cost of offering the restricted stock or RSUs, and other conditions are satisfied, including exchange control approval for such reimbursement, a tax deduction is available.

Spain

Employee

Restricted stock is generally taxed at grant. A EUR 12,000/year exemption may be applicable if the relevant conditions are met. Dividends received by the employee are taxable.

RSUs are taxed upon vesting. Same EUR 12,000/year exemption and an additional 30% reduction may be applicable if the relevant conditions are met.

The gain from the sale of the shares is taxable.

Employer

Withholding & reporting

Generally, withholding requirements apply.

Deduction

Reimbursement of the parent company for the cost of the benefits, pursuant to a written agreement, should enable the subsidiary to deduct such cost from its income taxes.

Sweden

Employee

Restricted stock is taxed upon grant.

RSUs are taxed upon vesting.

The gain upon the sale of the shares is taxable.

Employer

Withholding & reporting

Withholding and reporting are required.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the benefits should enable the subsidiary to deduct such cost from its income taxes.

Switzerland

Employee

Restricted stock is likely taxed upon grant.

RSUs are taxed upon vesting.

There is generally no capital gains income tax on the sale of shares, but wealth tax may apply.

Employer

Withholding & reporting

The employer must withhold and report for employees with B permits or for employees who exported their RSUs (ie, have a foreign domicile at the taxable event).

Reporting is required on an annual salary statement for employees with C permits and residents.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the benefits, pursuant to a written agreement, should enable the subsidiary to deduct such cost from its income taxes.

Taiwan

Employee

Restricted stock is taxed upon grant.

RSUs are taxed upon vesting.

The gain upon the sale of the shares is not taxable, but is included in calculations of Alternative Minimum Tax (AMT). If the stock is sold at a lower price, such capital loss can be included in calculations of AMT.

Employer

Withholding & reporting

Reporting is generally required.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the benefits, pursuant to a written agreement, should enable the subsidiary to deduct such cost from its income taxes.

Thailand

Employee

Restricted stock is taxed at grant.

RSUs are taxed at vesting.

The gain from the sale of the shares is taxable if repatriated by a Thai tax resident.

Employer

Withholding & reporting

Unless the subsidiary reimburses the parent company for the cost of the plan benefits, withholding and reporting generally are not required.

Deduction

Tax deduction is likely available, if the Thai subsidiary reimburses the parent company for costs of the award, and certain other requirements are met.

Turkey

Employee

Restricted stock is taxed upon grant.

RSUs are taxed upon vesting.

The gain from the sale of shares is taxable.

Employer

Withholding & reporting

Withholding and reporting requirements apply.

Deduction

It is unclear whether the subsidiary can take a deduction for the cost of either type of award, even if it reimburses the parent company.

United Kingdom

Employee

Restricted stock is taxed upon vesting, provided the vesting period is five years or shorter, subject to an election to be taxed at acquisition.

Restricted stock is taxed upon grant, if it will not vest within five years.

RSUs are generally taxed on delivery of shares upon vesting.

The gain from the sale of the shares is taxable, subject to an annual exempt amount.

Employer

Withholding & reporting

Withholding is required if shares are "readily convertible assets."

Registration and annual reporting is required.

Deduction

A local tax deduction generally may be allowed.

Venezuela

Employee

Restricted stock is taxed upon grant.

RSUs are taxed upon vesting.

The gain from the sale of the shares is taxable.

Employer

Withholding & reporting

Withholding and reporting requirements do not apply.

Deduction

Because of foreign exchange restrictions, reimbursement of the parent company and a related tax deduction are not likely to be available.

Vietnam

Employee

Restricted stock is likely taxed upon grant.

RSUs are likely taxed upon vesting.

Tax is generally imposed on gains upon sale of shares.

Employer

Withholding & reporting

Implementing entities (as employers) are generally required to withhold and report.

Deduction

Because of the foreign exchange restriction, reimbursement made to the parent company are not likely to be available.