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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 purchase rights

Tax

Argentina

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.

Australia

Employee

Generally, an employee is taxed on the spread upon purchase.

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.

Employer

Withholding & reporting

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

The employer is required to report income received by an employee from a purchase right 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.

Purchase right 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 (ie, the discount at the time of purchase), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its taxable income.

Austria

Employee

Generally, the benefit upon purchase is subject to tax (being the difference between the reduced purchase price and the market value).

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, especially the proof of the holding period, are required.

Deduction

Reimbursement of the parent company for the cost of the benefit (ie, the discount at the time of purchase) pursuant to a written reimbursement agreement should enable the subsidiary to deduct such cost from its income taxes.

Tax-favored

Preferential tax treatment, in the form of a designated tax-exempt amount for the given benefit, may apply if certain requirements are met.

Belgium

Employee

Generally, the employee is taxed on the spread upon purchase. A reduction of the tax base may be available if the employee is not allowed to sell the shares for at least two years.

There is, in principle, no tax when the employee sells the shares.

Employer

Withholding & reporting

Generally, withholding is required, 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 purchase rights, a deduction is generally allowed. A written reimbursement agreement is recommended. Reimbursement may result in income tax and social insurance withholding on the spread of purchase. 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

The taxation of stock purchase rights in Brazil is subject to controversy due to its similarity to stock options, which case some practitioners sustain that any gain realized should be subject to capital gains tax because of the uncertainty of the triggering event, whereas others sustain that it should be taxed as ordinary income as part of an employee's compensation plan.

Therefore, 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 stock purchase rights.

Employee

Generally, if stock purchase rights utilize the employee's own funds, any gain will be subject to capital gains tax. However, if there’s a discount on the purchase price, then such discount may be viewed as compensation and subject to ordinary income taxation.

If employees sell any shares acquired upon exercise of purchase rights, gains will be subject to capital gains tax.

Employees may be exempt from capital gains tax if the gross proceeds from the sale of any stock during a particular calendar month are below a designated threshold. If the threshold is exceeded for the relevant month, the entire gain is subject to tax (ie, not just the amount exceeding such threshold).

Employer

Withholding & reporting

Reporting is required if the employer makes deductions from the employee's payroll to fund the employee's stock purchase plan.

Generally, withholding is required, if it is treated as compensation. If treated as an investment made by the employee, no withholding is required.

Deduction

So long as purchase rights are offered to all employees in Brazil and the subsidiary reimburses the parent company for the cost of benefits, the subsidiary should be able to deduct such cost from its income taxes. However, reimbursement could cause purchase rights to be deemed employment income subject to social insurance contributions. 

Canada

Employee

The employee is taxed on the discount upon purchase as employment income.

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 (ie, the discount at the time of purchase) pursuant to a written reimbursement agreement, it is unable to deduct such cost from its income taxes.

Chile

Employee

The employee generally is taxed on the spread upon purchase. Any gain upon the sale of shares also is subject to tax.

Employer

Withholding & reporting

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

Deduction

Reimbursement of the parent company for the cost of the benefit (ie, the discount at the time of purchase) 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

The employee is taxed on the spread as salaries and wages income at purchase.

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

Employer

Withholding & reporting

Withholding and reporting are required on the spread upon purchase.

Deduction

In principle, the purchase right 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.

Tax-favored

Generally participating employees of the China subsidiary of a public company that offers purchase rights are entitled to tax deferral treatment under Circular GuoShuiFa [1998] No. 9. A record filing form for applying the tax deferral treatment must be filed by the employer as withholding agent with the relevant tax authority within 15 days of the month following the month in which the employees exercise the right to purchase the stocks. There is no compulsory requirement for translation or registration of the plan to the relevant tax authority but subsidiaries in China must keep the documents for future reference of the Chinese tax authorities. Private companies are not entitled to the tax deferral treatment but it is also subject to the local practice of the relevant tax authorities.

Colombia

The issuance of shares in a Colombian entity upon the exercise of a stock purchase rights is subject to a registry tax at a maximum rate of 1%.

The sale of the acquired shares would be taxable upon the difference between their cost basis (acquisition value) and their sale price. If the shares qualify as a fixed asset, and have been held for over 2 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).

Czech Republic

Employee

Taxable upon exercise of the stock purchase rights.

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

Employer

Withholding & reporting

If the subsidiary deducts the costs of the benefits (ie, the discount at the time of purchase), 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, the spread is taxable upon purchase. If the value of the scheme is less than 10% of the employee's remuneration (20% in start-up companies) 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 that arises 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.

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 plan costs and treasury shares are issued.

Ecuador

Employee

The spread is taxable upon purchase.

Any gain from the sale of shares is subject to tax.

Employer

Withholding & reporting

In the event that an employee pays the purchase price from within Ecuador, withholding is required.

Deduction

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

Egypt

Employee

Upon the sale of shares, a tax of 22.5% on the capital gain tax shall be applicable unless the shares are listed on a stock exchange.

Employer

Withholding & reporting

Withholding and reporting requirements generally apply.

Deduction

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

Finland

Employee

The spread is taxable at purchase 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

Employee

The acquisition gain (difference between the value of the shares at the end of the subscription period and the price of subscription or acquisition of the shares) is taxable as salary in accordance with the progressive scale of income tax (maximum rate of 45%) and, as the case may be, is subject to a special surtax on high income (3% to 4% rate). The acquisition gain is taxable during the year of purchase.

The capital gain (difference between the sale price and the value of the shares on the date of exercise of the option), received when the shares are sold, is taxable in the year of the sale, by application of a 12.8% flat tax and of the special surtax on high income (3% to 4%).

Employer

Withholding & reporting

Reporting requirements apply.

The acquisition gain on non-qualified plans is subject to withholding requirements as from 2019.

Deduction

The costs incurred in connection with the implementation of the stock option (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 purchase rights if it reimburses the parent company and the parent company uses treasury shares. The deduction is limited to the difference between the purchase price paid and the price paid by the company to reacquire the shares.

Germany

Employee

The spread is taxable at purchase subject to a possible exemption.

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 (eg, the spread) pursuant to an advance written agreement should enable the subsidiary to deduct such cost from its income tax.

Greece

Employee

The spread is taxable upon purchase irrespective of whether the employment contract is still in effect or not.

Employer

Withholding & reporting

If the subsidiary takes a local tax deduction for reimbursing the parent company for the cost of the 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 benefits.

Hong Kong

Employee

The spread is taxable upon purchase. Employees shall report benefits derived from the exercise of stock purchase rights in their Tax Return – Individuals (BIR60) for the relevant year of assessment.

Shares are not subject to tax upon sale.

Employer

Withholding & reporting

There are no withholding requirements. The spread in respect of purchases must be reported annually with the employee's salary.

Deduction

Issuing of new shares to fulfil a stock purchase rights obligation is 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 stock purchase rights are discharged by recharge arrangement between group companies, provided that there is a written recharge agreement and that certain requirements are met, deduction may be 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

The spread is taxable at purchase.

Proceeds from the acquisition 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 may be available for purchase rights if they are offered via a special ESOP organization, subject to further conditions.

India

Employee

The spread is taxable at purchase.

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.

Employer

Withholding & reporting

Withholding and reporting 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

Effective April 1, 2007, purchase rights are taxed under the fringe benefit tax rules. Taxes on fringe benefits are payable by the subsidiary. Accordingly, the employee is not taxed on the spread at purchase. In some cases, the subsidiary and the employee may agree to pass the fringe benefit tax from the subsidiary to the employee.

Any gain from the subsequent sale of shares is subject to capital gains tax payable by the employee.

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 purchase right are considered part of the base salary.

Deduction

Reimbursement of the parent company for the cost of the benefit (eg, the spread), in accordance with a written agreement, should enable the subsidiary to deduct such cost from its income taxes.

Ireland

Employee

The spread is taxable at purchase.

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. However, where the purchase right constitutes a right to acquire an asset for Irish tax purposes, no withholding is required.

Deduction

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

Israel

The tax treatment of the Stock Purchase Rights (ESPP) is governed by Section 102. ESPP grants may be made either under a trustee plan or under the non-trustee route. A tax ruling should be obtained in relation to the implementation of the ESPP plan.

Employee

For purchase rights granted under the trustee plan, tax is imposed at the time the shares are sold or transferred from the  trustee to the employee, generally based on the difference between the sale price and the purchase price.

For purchase rights granted under the non-trustee route, tax will be due on purchase and upon selling the shares.

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, preferential tax rates may apply. Purchase rights must be held by a local trustee for the required holding period (which is considered to be the purchase date of the shares). Seeking a specific tax ruling is recommended.

Italy

Employee

The spread is taxable at purchase as employment income (marginal rate of the progressive individual income tax to be applied in a range between 23% and 43%). Only the difference between the subscription price and the market value of the shares exceeding a certain threshold (ie, EUR 2,065.83) would be taxed as employment income, provided that rights are granted to all employees and the shares are non-transferable for a 3-year period.

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%).

Employer

Withholding & reporting

Withholding and reporting are required.

Deduction

If the parent company is reimbursed by the subsidiary for the plan costs (ie, the discount at the time of purchase) pursuant to a written agreement, the subsidiary, in principle, should be able to deduct such costs from its income taxes.

Japan

Employee

Because purchase rights are not yet common in Japan, and taxation reforms have not been undertaken. Taxpayers may refer to rules applicable to general stock options to purchase rights as follows:

The spread is taxed upon purchase. An employee may not utilize the deferral approved for qualified stock options because purchase rights are often too flexible and beneficial to qualify for the deferral.

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 in the fiscal year to which the date of purchase belongs. The deduction may be partially restricted as a result of the benefits conferred upon officers or directors of the Japanese subsidiary. The scope of deduction has been expanded by the amendment promulgated in 2017.

Malaysia

Employee

The employee is taxable upon the exercise of the right.

The amount of benefit assessable to tax is based on the following formula:

  • Market value of right on the date the right is exercised less offer price

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/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

The spread is taxed at purchase.

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 purchase rights.

Deduction

A local tax deduction is generally allowed if the subsidiary reimburses the parent company for the plan costs (ie, the discount at the time of purchase) under a written agreement. However, reimbursement may trigger withholding and reporting requirements for the subsidiary.

Netherlands

Employee

At exercise of the purchase rights, the difference between the market value of the shares and the exercise price is taxed as income from employment at the progressive income tax rate of up to 51.75%.

The gain upon the sale of shares is not taxable if the shareholder (together with his or her 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 stock purchase rights is generally the difference between what the employee pays to acquire the shares and the market value of the shares on the taxing date. The taxing date is when the rights are exercised or 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) whichever is later
  • 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

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 employer or the employee will be fact-dependent

Deduction

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

Norway

Employee

The spread is taxed upon exercise.

The gain from the sale of shares is taxed in the year the shares are sold.

The shares also may be subject to annual wealth tax.

Employer

Withholding & reporting

Withholding and reporting are required.

Deduction

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

Philippines

EMPLOYEE

The spread is taxable at exercise. If the Philippine subsidiary reimburses the parent company for the cost of the plan 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 generally are not required unless the Philippine subsidiary reimburses the parent company for the cost of the benefits.

Deduction

A Philippine subsidiary's reimbursement to the parent company for the cost of the spread, 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

The spread should not be taxable at purchase 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 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 (ie, the discount at the time of purchase) from its taxable income, if such benefit is deemed to be part of an employee's remuneration and the subsidiary reimburses the parent company for such remuneration.

Portugal

Employee

The spread is taxed upon purchase.

The gain from the sale of shares is taxed.

Any gain arising from the sale of the stock purchase right is also taxed.

Employer

Withholding & reporting

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

Reporting requirements apply.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the benefits (ie, the discount at the time of purchase) should enable the subsidiary to deduct such cost.

Russia

Employee

The spread generally is taxed upon purchase.

Tax is imposed upon 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 (ie, the discount at the time of purchase) from its taxable income.

Saudi Arabia

Employee

There is no tax imposed on purchase rights benefits.

Employer

Withholding & reporting

Withholding and reporting are not required.

Deduction

A subsidiary typically is unable to deduct the cost of the benefits (ie, the discount at the time of purchase) from its income taxes.

Singapore

Employee

The spread generally is taxed upon purchase. If the shares purchased are subject to sale restriction, the taxing point can be deferred to the time when the sale 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 a purchase right. If the employee ceases employment in Singapore, any rights granted during the Singapore employment which remains unexercised, will be subject to tax on the difference between the market value determined one month before the date of termination of employment and the exercise price (deemed gain). If the rights 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]
  • the deduction claimed by the subsidiary is the lower of [A] or [B] less any amount received from the employees

Slovak Republic

Employee

The spread is taxed upon purchase.

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 (ie, the discount at the time of purchase), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its taxable income.

South Africa

Employee

The spread is taxable upon purchase.

The gain from the sale of shares generally is taxed.

Employer

Withholding & reporting

Withholding and reporting are required.

Deduction

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

South Korea

Employee

The spread is taxed at purchase as salary income.

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 plan benefits, withholding and reporting generally are not required.

Deduction

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

Spain

Employee

The spread (difference between exercise price and market value) is taxed at exercise. A EUR 12,000/year exemption and a 30% reduction may be applicable if the relevant conditions are met.

The gain from the sale of the shares is taxable

Employer

Withholding & reporting

Apart from general withholding requirements on payroll, additional withholding obligations apply over the spread at exercise.

Deduction

Reimbursement of the parent company for the cost of the benefits (ie, the discount at the time of purchase), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its income taxes.

Sweden

Employee

The spread is taxed at exercise.

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

The spread is generally taxed at purchase, pursuant to Swiss federal tax law. The gain from the sale of shares is generally not subject to income tax.

Employer

Withholding & reporting

The employer must withhold and report for employees with B permits. 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 (ie, the discount at the time of purchase), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its income taxes.

Taiwan

Employee

The spread is taxed upon purchase.

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 generally is required.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the benefits (ie, the discount at the time of purchase), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its income taxes.

Thailand

Employee

The spread is generally taxed upon purchase.

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 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

The spread is generally subject to tax at purchase.

Employer

Withholding & reporting

Withholding and reporting requirements apply.

Deduction

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

United Kingdom

Employee

Any discount to market value at purchase is generally taxed at purchase.
The gain upon the sale of the shares is taxable, subject to an annual exempt amount.

Employer

Withholding & reporting

Withholding is required for purchase rights if shares are "readily convertible assets."

Registration and annual reporting is required.

Deduction

A local tax deduction generally may be allowed, to the extent of a discount in the purchase price.

Tax-favored

Tax-favored programs are available for certain purchase rights in limited circumstances.

Venezuela

Employee

Generally, the spread is taxed upon exercise.

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

The spread is generally taxed at purchase.

Tax is generally imposed on gains upon sale of shares.

Employer

Withholding & reporting

Implementing entities (as employers) are generally required to withhold and report income tax at purchase.

Deduction

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