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

    Since September 1, 2019, the Argentine government reenacted FX controls and regulations. These FX regulations are applicable to certain operations.  Notwithstanding there are no foreign exchange restrictions applicable to restricted stock or RSUs, local employees may face difficulties in purchasing the foreign currency if the options are in foreign currency, or to transfer money abroad.

    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

    Since September 1, 2019, the Argentine government reenacted FX controls and regulations. These FX regulations are applicable to certain operations.  Notwithstanding there are no foreign exchange restrictions applicable to restricted stock or RSUs, local employees may face difficulties in purchasing the foreign currency if the options are in foreign currency, or to transfer money abroad.

    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

    Since September 1, 2019, the Argentine government reenacted FX controls and regulations. These FX regulations are applicable to certain operations. Notwithstanding there are no foreign exchange restrictions applicable to restricted stock or RSUs, local employees may face difficulties in purchasing the foreign currency if the options are in foreign currency, or to transfer money abroad.

    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
    Partner DLA Piper (Argentina) [email protected] T +5411 41145500 View bio

Stock options

Social insurance

Argentina

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

Australia

A Medicare levy is payable by the employee when an option is subject to income tax. An additional Medicare levy surcharge may also be imposed on an employee.

Austria

Social insurance contributions are payable on the spread and are subject to a cap. Withholding is required.

Belgium

Generally, the spread is not subject to social insurance contributions, provided at least they are not granted by the employer of the beneficiary.  The notion of "granting" should in this regard nevertheless be construed in a broad sense, and it covers both the situations where the employer directly pays the benefit, the situation where the employer indirectly pays the benefit because the parent company granting it charges the cost for doing so to the employer, but also covers the situation where the employer does not bear the financial cost of the benefit but intervenes in the granting of the benefit.  Notably in its judgment on October 10, 2016, the Belgian Supreme Court decided that social security contributions are due if all costs of the benefit are paid by a third party, but the employer decides which person receives the benefit in question.  For stock options, it might nevertheless still be possible to be exempt of social security contributions if all conditions stipulated in the Act of March 26, 1999 are met.

Additionally, in relation to stock options, the National Office for Social Security nevertheless changed its position (cfr. Above).  This does nevertheless not concern stock options in the sense of the act of March 26, 1999, as this Act expressly states that no social security contributions are due these benefits.

Brazil

Although options generally are not subject to social insurance contributions, regularly granting options or reimbursement of option costs could result in the options being deemed employment income subject to such contributions by tax authorities.

Canada

Generally, social insurance contributions, which are based on an employee's compensation and are subject to a cap, are payable on the spread when an option is exercised.

Chile

Remunerations derived from stock options plans are subject to social security contributions if, together with the remaining remunerations payable to the eligible employee in the same month period, do not exceed the capped compensation that law states as a basis for social security calculations.  For instance, if the base salary of an eligible employee suffices the capped basis, compensation from the plans paid in the same period will not be subject to social security contributions since they are over the capped basis.  Otherwise, if compensation of the plan, together with the remaining remunerations payable in the month, is lower than the capped month basis, they shall trigger social security contribution payments.  In addition, should the benefits paid directly by the issuing company with no charge-back to the local employer, it is debatable if they will trigger social security contributions obligations.

China

Social insurance contributions may be imposed on the spread.

Colombia

If the stock options are granted as a non-salary payment, they would not be included in the basis to calculate social security contributions, provided that such payments do not exceed 40 percent of the employees' monthly compensation.  If these non-salary payments exceed that 40 percent of the monthly compensation, the excess will be subject to social security contributions.

The basis to calculate contributions to the social security system (pensions, solidarity pension fund, health and professional risks) is the monthly salary earned by the employee.  If that monthly salary exceeds 25 times the minimum wage, contributions to the social security system will be calculated on the maximum basis of 25 times the minimum wage.

In case of employees earning a so-called "integral salary," 70 percent of salary will be the basis to calculate contributions to the social security system.  However, if 70 percent of the integral salary is more than 25 times the minimum wage, contributions to the social security system will be calculated on the maximum basis of 25 times the minimum wage.

Czech Republic

Social security and health insurance contributions do not apply provided that:

  • The Czech employer is not responsible for the cost of the plan (ie, there is no reimbursement of costs)
  • The shares of the Czech employer are not included in the plan and
    Payments are not made through the Czech employer.

Denmark

The spread is subject to Danish labor market contribution when the spread is taxable.

Ecuador

The spread may be subject to social insurance contributions.

Egypt

The spread is not subject to social insurance obligations.

Finland

The spread is not subject to social insurance contributions.

France

Employee

For Stock Options granted since 09/28/2012

The surplus discount, if any, is subject to social contributions (ie, CSG-CRDS at a global rate of 9.7 percent) and employee social charges (around 25 percent, subject to various caps and thresholds).  Said social contributions and charges are withheld by the employer.

Acquisition gain is subject to social contributions (ie, CSG-CRDS) at a global rate of 9.7 percent (including 6.8 percent deductible from taxable income).  It is also subject to an employee social contribution at a rate of 10 percent.

Capital gain is subject to social contributions (ie, CSG-CRDS) at a global rate of 17.2 percent (including 6.8 percent deductible from taxable income), due by the employee.

Employer

For Stock Options grant since 09/28/2012

At the time of grant of the option, the employer will be subject to a contribution to the social security scheme (contribution sociale patronale) of 30 percent with respect to stock options on either:

  • The fair value of the shares as estimated when drawing up the consolidated annual accounts or
  • 25 percent of the value of the shares that the stock options relate to, payable within a month from the grant of stock options.

The surplus discount, if any, is subject to social employer charges amounting to approximately 45 percent, subject to various caps and thresholds.

There is no additional contribution if the employer provides information to the social security administration or URSSAF (ie, the identity of the employee or manager who received shares in the last year, number and value of the shares).

In case of violation of this reporting obligation, the acquisition gain is subject to social contribution as salary.  The employer is liable for the employee's 25-percent portion in addition to its own 45-percent portion.

Germany

The spread is subject to social insurance obligations, up to a cap.

Greece

Typically, according to the existing social security legislation, restricted stock and RSUs are subject to social insurance at vesting.  However, a new social security reform is anticipated very soon and, therefore, given that there were recent changes in the tax treatment of the aforementioned benefits, similar changes may also arise in the social security treatment of same.

Hong Kong, SAR

Not applicable for this jurisdiction.

Hungary

Generally, the employee must pay social insurance/health tax on the spread at exercise.

India

Social insurance generally is not applicable to option benefits.

Indonesia

Unless the parent company is reimbursed by the subsidiary for option benefits, which are routinely granted, such benefits generally are not subject to social insurance contributions.

Ireland

The spread is subject to social insurance contributions.  Employer social insurance contributions should not apply unless the award is cash-settled.

Israel

Portions of the taxable amount are subject to social insurance contributions, depending on whether the income is classified as ordinary income or capital gains.

Italy

Social insurance contributions are generally not imposed on the spread. However, a case-by-case analysis is recommended.

Japan

The spread is not subject to social insurance contributions, as long as the options are not considered part of the employee's salary.

Malaysia

There is no social insurance scheme per se for Malaysia but there is a mandatory requirement for contributions to the Employees' Provident Fund (EPF) and Social Security Organization (SOCSO) for all employees who are Malaysian citizens. The requirement to contribute is based on a percentage of wages. So far as the plan is carved out and not made a term of the employment contract and does not form part of wages, there is no requirement to contribute to EPF or SOCSO based on the employee's entitlement to the stocks.

Mexico

The spread is likely subject to social insurance contributions if the Mexican subsidiary reimburses the parent company for the cost of the option benefits.

Netherlands

Social insurance contributions are imposed on option benefits to the extent that the employee's annual employment income has not yet exceeded the maximum income base for social security premiums.

New Zealand

New Zealand does not operate a general social insurance regime.

Nigeria

Social insurance contributions are generally payable by the employer and the employee. However, there are no specific requirements for social insurance contributions in relation to employee share and stock options.

Norway

The spread is subject to social insurance contributions at exercise.

Philippines

Unless the parent company is reimbursed by the subsidiary for option benefits, such benefits generally are not subject to social insurance contributions.

Poland

Unless the subsidiary is involved in the offer of options or reimburses the parent company, the benefits from options generally are not subject to social insurance contributions.

Portugal

Employers and employees make monthly social security contributions based on monthly earnings – as a rule, 23.75 percent of the relevant retribution for the employer and 11 percent for the employee. Ownership of securities is not taken into consideration to calculate said contribution, unless it is considered part of the employee’s remuneration.

Russia

Unless the offer of options is deemed to be an employment benefit, options generally are not subject to social insurance contributions.

Saudi Arabia

Generally, the spread is unlikely to be subject to social insurance contributions.

Singapore

Options generally are not subject to social insurance contributions.

Slovak Republic

Option benefits generally are subject to social insurance contributions and employee health insurance contributions.

South Africa

The spread is generally subject to social insurance contributions.

South Korea

The spread is generally subject to social insurance contributions upon exercise.

Spain

The spread at exercise is subject to social insurance contributions, subject to the general ceiling exemptions.

Sweden

The spread is subject to social insurance contributions upon exercise.

Switzerland

The spread is subject to social insurance.

Taiwan, China

Options are generally not subject to social insurance contributions.

Thailand

Options generally are not subject to social insurance contributions.

Turkey

The spread is generally subject to social insurance contributions.

United Kingdom

National Insurance Contributions (NICs) are due on the spread at exercise if shares are "readily convertible assets."

Through an approved Joint Election or other contractual arrangement, the employer's NICs obligation may be transferred from the employer to the employee.

Venezuela

The spread is not subject to social insurance.

Vietnam

The spread generally is not subject to social insurance contributions.