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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

    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 percent on any net gain resulting from the sale of the shares by Argentine Tax residents, or, alternatively, 13.5 percent 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 percent on any net gain resulting from the sale of the shares by Argentine Tax residents, or alternatively 13.5 percent 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 percent on any net gain resulting from the sale of the shares by Argentine Tax residents, or, alternatively, 13.5 percent 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
    Marcelo Etchebarne
    Marcelo Etchebarne
    Managing Partner DLA Piper (Argentina) [email protected] T +54 11 4114 5500 View bio

Stock purchase rights

Social insurance

Argentina

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

Australia

A Medicare levy is payable by the employee when the purchase right is subject to income tax on the amount included in taxable income. An additional Medicare levy surcharge may also be imposed on a higher-income employee without appropriate health insurance.

Austria

Social insurance contributions are payable on the spread, 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.

Additionally, in relation to stock options, the National Office for Social Security nevertheless changed its position (CFR above).

Brazil

Although the spread generally is not subject to social security contributions, regularly granting purchase rights or reimbursement of costs could result in the purchase rights being deemed employment income subject to such contributions.

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 the shares are purchased.

Chile

Generally, the spread is likely not subject to social insurance contributions, subject to applicable contribution ceilings.

Any capital gains arising from the sale of shares obtained through the exercise of an option does not constitute remuneration for labor law and social security purposes under Articles 41 and 42 of the Labor Code.

China

Social insurance contributions may be imposed on the spread.

Colombia

Considering that employee pays for the total stock price and no payment is made by the employer, no labor extralegal benefit is paid by employer.  Thus, no social taxes will be accrued.

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 as salary.

Ecuador

The spread may be subject to social insurance contributions.

Egypt

The spread is not subject to social insurance obligations.

Finland

The spread may be subject to certain social insurance contributions.

France

Employee

The acquisition gain is subject to social charges (eg, CSG-CRDS at a global rate of 9.7 percent, a social employee contribution of around 25 percent) due by the employer.

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

Employer

Subject to social security contribution of approximately 45 percent due by the employer.

Acquisition gain social charges are subject to withholding requirements.

Germany

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

Greece

Typically, according to the existing social security legislation, stock purchase plans are subject to social insurance at vesting. However, a new social security reform is anticipated and, therefore, given that there have been 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, proceeds from the acquisition of shares and the subsequent sale of shares are subject to social tax.

India

Social insurance generally is not applicable to purchase right benefits.

Indonesia

Unless the parent company is reimbursed by the subsidiary for purchase right 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 will not apply unless the award is cash-settled.

Israel

Portions of the taxable amount are subject to social insurance contributions, depending on whether granted under the trustee capital gains route.

Italy

The spread at purchase is subject to social insurance. However, a case-by-case analysis is recommended.

Japan

The spread is not subject to social insurance contributions, as long as the purchase rights are not deemed 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 purchase rights.

Netherlands

Social insurance contributions are imposed on 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 Philippine subsidiary for purchase right benefits, such benefits generally are not subject to social insurance contributions.

Poland

Unless the subsidiary is involved in the offer of purchase rights or reimburses the parent company, the spread is generally 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 purchase rights is deemed to be an employment benefit, the spread generally is not subject to social insurance contributions.

Saudi Arabia

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

Singapore

The spread generally is not subject to social insurance contributions.

Slovak Republic

The spread generally is 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 purchase.

Spain

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

Sweden

The spread is subject to social insurance contributions at exercise.

Switzerland

The spread is subject to social insurance.

Taiwan, China

If the taxable income of any employee upon each purchase exceeds TWD20,000 (approximately USD700), the entire income is subject to Taiwan social insurance contributions at 2.11 percent.

Thailand

The spread is generally not subject to social insurance contributions.

Turkey

The spread is subject to social insurance contributions.

Ukraine

Stock purchase rights are not subject to social insurance obligations, nor are dividends and proceeds from the sale of shares.

United Kingdom

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

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

Venezuela

The spread is not subject to social insurance.

Vietnam

The spread is generally not subject to social insurance contributions.