Generally, stock awards in public companies are subject to securities law restrictions, and currently there is no special exemption for the offering to the employees. Special rules and additional restrictions exist for offering of securities and other financial instruments by non-Russian issuers.

Stock awards in Russian private companies are not common, and may be subject to different securities law restrictions depending on the nature of such private companies.

Last modified 26 May 2023

Russian residents generally are allowed to remit foreign currency to purchase shares of foreign corporations. Provided certain restrictions and reporting requirements are met, employees generally may hold foreign currency in banks located outside of Russia. However, proceeds from a sale of the foreign stock must always be transferred to the bank accounts of Russian currency control residents, opened with a Russian bank.

Last modified 26 May 2023

Employee

The spread generally is taxed upon exercise.

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 option benefits (eg, the spread) from its taxable income.

Last modified 26 May 2023

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

Last modified 26 May 2023

Obtaining employee consent for processing and transferring personal data is required.

Last modified 26 May 2023

Although not common, plan benefits may be considered part of the employment relationship and may be included in the calculation of severance or retirement payments. To reduce the risk of entitlement claims, employees should expressly agree in writing that:

• Participation in the plan is discretionary and
• Termination of employment will result in the loss of unvested rights

If stock awards are provided by an affiliated company of a Russian employer, it is essential to ensure that the employment agreement entered into between such Russian company and its employee does not contain any references to the stock awards.

Last modified 26 May 2023

Although not legally required, it is recommended that documents regarding employee option plans be translated. Any filing with the government must be translated.

Last modified 26 May 2023

Generally, employee stock purchase rights in public companies are subject to securities law restrictions and currently there is no special exemption for the offering to the employees. Special rules and additional restrictions exist for offering of securities and other financial instruments by non-Russian issuers.

Stock awards in Russian private companies is not common and may be subject to different securities law restrictions depending on the nature of such private companies.

Last modified 26 May 2023

Russian residents generally are allowed to remit foreign currency to purchase shares of foreign corporations. Provided certain restrictions and reporting requirements are met, employees generally may hold foreign currency in banks located outside Russia. However, proceeds from a sale of foreign shares must always be transferred to the bank accounts of Russian currency control residents, opened with a Russian bank.

Last modified 26 May 2023

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.

Last modified 26 May 2023

Unless the offer of purchase rights is deemed to be an employment benefit, the spread generally is not subject to social insurance contributions.

Last modified 26 May 2023

Obtaining employee consent for processing and transferring personal data is required.

Last modified 26 May 2023

Although not common, plan benefits may be considered part of the employment relationship, and may be included in the calculation of severance or retirement payments. To reduce the risk of entitlement claims, employees should expressly agree in writing that:

• Participation in the plan is discretionary
• Termination of employment will result in the loss of unvested rights

If stock awards are provided by an affiliated company of a Russian employer, it is essential to ensure that the employment agreement entered into between such Russian company and its employee does not contain any references to the stock awards.

Last modified 26 May 2023

Although not legally required, it is recommended that documents regarding employee purchase plans be translated. Any filing with the government must be translated.

Last modified 26 May 2023