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 are generally 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. Starting from January 1, 2018, proceeds from disposal of the foreign stock listed at foreign stock exchange in accordance with the list of foreign stock exchanges approved by an Order of the Federal Financial Markets Service could be transferred to foreign bank account of employees – Russian currency control residents provided that such bank accounts are opened with banks of OECD or FATF member states and have been notified by currency control residents to the Russian tax authorities in accordance with the statutory procedure.

Last modified 26 May 2023

Employee

On the condition that restricted stock and RSUs qualify as shares (securities) or "termed finance instruments" (as defined under the Russian law), they are taxed upon vesting.

Tax is imposed from 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 from its taxable income.

Last modified 26 May 2023

Unless the offer of restricted stock and RSUs is deemed to be an employment benefit, they 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
• 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 stock plans be translated. Any filing with the government must be translated.

Last modified 26 May 2023

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