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  • 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

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 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 of 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.

In relation to stock options, the National Office for Social Security changed its position (cfr. Above). This does 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

Generally, the spread at exercise is likely subject to social insurance contributions, subject to applicable contribution ceilings.

According to Article 42 of the Labor Code, the exercise of the option by the worker would be considered remuneration. The amount of the remuneration would be equivalent to the difference between the amount paid by the worker and the value of the shares at the time of the exercise of the option. The time when the option is exercised also determines the moment when the remuneration is recognized (the current month or period when the remuneration arises). This remuneration would also be subject to social security contributions.

If the employer is not a resident in Chile, then it is the worker who is subject to the obligation to withhold and pay social security contributions for such remuneration.

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% of the employees' total compensation. If these non-salary payments exceed that 40%, 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% of salary will be the basis to calculate contributions to the social security system. However, if 70% 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
  • 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%) and employee social charges (around 25%, subject to various caps and thresholds). Said social contributions and charges are withheld by the employer.

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

The capital gain is subject to social contributions (ie, CSG-CRDS) at a global rate of 17.2% (including 6.8% 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 an employer's contribution to the social security scheme (contribution sociale patronale) of 30% with respect to stock options, on either:

  • The "fair value" of the shares as estimated when drawing up the consolidated annual accounts or
  • 25% 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 circa 45% (subject to various caps and thresholds).

There is no additional contribution if the employer provides some information to 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 portion (25%) in addition to its own portion (45%).

Germany

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

Greece

Typically, the spread is subject to social insurance at the time of exercise.

Hong Kong

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 generally are 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.

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. Ownership of securities is not taken into consideration to calculate said contribution, unless it is considered to be 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

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.