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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

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. An additional Medicare levy surcharge may also be imposed on an employee.

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.

Also in relation to stock options, the National Office for Social Security 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

The shares are not traded in a public stock market, the sale price has to be the FMV which, unless proven otherwise, is presumed to be 130% of the intrinsic value of the Colombian entity. However, tax authorities are entitled to apply different valuation methods to determine the FMV (ie, present value of the future earnings or EBITDA multiples).

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

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

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

Employer

Subject to social security contribution (around 45%), due by the employer.

The acquisition gain social charges are subject to withholding requirements.

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 purchase.

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.

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. 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 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 upon purchase.

Switzerland

The spread is subject to social insurance.

Taiwan

The spread is generally not subject to social insurance contributions.

Thailand

The spread is generally not subject to social insurance contributions.

Turkey

The spread is subject to social insurance contributions.

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 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.