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.

Employee

For options granted after July 1, 2015, generally an employee is subject to income tax on the spread upon exercise of the options, on grant. However, employees may defer the income tax for up to 15 years provided certain conditions (eg, a real risk of forfeiture) are met.

Generally, the most common time for tax to be deferred until is the exercise of the options. However, where the shares issued on exercise of such options are subject to genuine disposal restrictions, income tax will be further deferred until those restrictions cease.

Where exercise is the taxable event, the tax is the difference between the market value of the shares and the exercise price. If a taxable event occurs without a sale of the shares, and the shares are subsequently sold, generally only 50 percent of the capital gain is taxed if the shares are held by the employee (not through a company) for at least 12 months.

If a sale occurs within 30 days of a taxable event, then the sale is treated as the taxable event, and the sale price is used to calculate the tax payable.

In addition, beneficial tax treatment is available for startup companies meeting certain requirements.

Where options are granted to eligible employees, for "startup treatment" to apply, certain conditions for tax deferral must be met.

In those circumstances, the employee will only pay tax on the capital gain on the sale of the share issued on exercise.

Options granted between July 1, 2009 and July 1, 2015 are subject to a different tax regime.

Employer

Withholding & reporting

Tax withholding is not required unless the employee does not provide their tax file number to the employer.

The employer is required to report income received by an employee from an option to both the employee and to the Australian Taxation Office, and the employee is required to report such income on their annual tax return.

Option benefits received by employees in some Australian states or territories may be included in the determination of employer payroll tax and in some circumstances, in the determination of premium for workers compensation insurance.

Deduction

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

Employee

Generally, the employee is taxed on the spread (difference between exercise price at discount and market values) upon exercise.

Gains from the sale of shares acquired before January 1, 2011: if shares were held more than 12 months, generally gains are not taxable; if shares held less than 12 months gains are taxable.

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 are required upon exercise.

Deduction

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

Tax-favored

A preferential tax treatment for the benefits out of the granting itself is possible if certain circumstances are met.

Employee

The employee will be taxed upon the grant of the stock options if they accept the stock options in writing within 60 calendar days following the date of the offer. The taxable amount is a lump sum computed on the basis of a formula provided by law.

If the stock options are not accepted within 60 days from the date of offer, the employee will be taxed on the gain upon exercise.

The shares are not taxed upon sale, provided that the sale falls within the normal management of one’s private estate.

Employer

Withholding & Reporting

Withholding requirements and reporting obligations apply to Belgian entities offering stock options to employees taxable in Belgium.

If the stock options are granted by a foreign company, withholding and reporting obligations will not apply to the foreign company, but to (1) the local Belgian establishment of the foreign company (according to Belgian domestic law), and if any, or (2) the local Belgian subsidiary employing the relevant beneficiary. This reporting obligation applies notwithstanding the fact that the local Belgian subsidiary is, or is not, involved in the grant of the stock options.

Deduction

In situations where the subsidiary reimburses the parent company for the cost of the option benefits, a deduction is generally allowed, although there is recent case law where the reimbursement has been considered as a non-deductible capital loss on shares. A written reimbursement agreement is recommended.

The taxation of stock options in Brazil is subject to controversy since some practitioners take the position that the 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 options.

Employee

Usually, the grant of stock options does not give rise to a taxable event in Brazil. However, tax authorities may have a different view and charge individual income tax and social insurance contributions upon grant, particularly if clearly treated as compensation by the issuer.

Depending on the position adopted, employees may be subject to ordinary income type of taxation upon exercise of options. Employees might need to self-assess and pay for such taxes if no withholding is made, especially if it is granted by a foreign company.

If employees sell any shares acquired upon exercise of options, 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

Tax withholding and reporting by the employer in Brazil will be required if it is treated as compensation and treated as employment (ordinary) income. Otherwise, if the employer is not located in Brazil, the employee will have to self-assess and report the income tax due. Capital gains tax calculation and reporting would be the employee's responsibility.

Deduction

If options are offered to all employees in Brazil, and the subsidiary reimburses the parent company for the cost of option benefits, the subsidiary should be able to deduct such cost from its income taxes, provided that it is treated as compensation which could cause options to be deemed employment income subject to social insurance contributions.

Employee

The employee is taxed on the spread upon exercise as employment income. 50 percent of the spread may be deducted from the taxable amount if certain requirements are met (Stock Option Deduction).

Generally applicable to stock options granted on or after July 1, 2021 by certain employers with annual gross revenue of over CDN500 million (on a consolidated basis), there is a CDN200,000 annual limit on the amount of stock options eligible for the Stock Option Deduction.

Upon the sale of shares, generally only 50 percent of any gain is taxable. Where a capital loss arises, only 50 percent of the loss is deductible and it is only deductible against capital gains. Such capital losses can be carried back 3 years and carried forward indefinitely.

Employer

Withholding & Reporting

Withholding and reporting are generally required.

Deduction

Even if the subsidiary reimburses the parent company for the cost of the option benefits (eg, the spread) pursuant to a written reimbursement agreement, it is generally unable to deduct such cost in calculating its income taxes. However, the subsidiary may be entitled to a deduction for the reimbursement of the cost of the benefit that is not eligible for the Stock Option Deduction due to the CDN 200,000 annual limit if certain requirements are met, and under certain circumstances employers with annual gross revenue of over CDN 500 million (on a consolidated basis) may elect this treatment with respect to stock options below the CDN 200,000 annual limit.

Also, a deduction is available to the subsidiary if the stock option is cashed out and the employee has forgone the Stock Option Deduction.

Employee

The employee will be taxed depending on whether or not the stock option plan has been agreed in an individual or collective employment agreement.

If agreed in an individual or collective agreement, the employee will only be taxed on the capital gain derived from the sale of shares, with Personal Income Tax.

If the plan is not agreed in an individual or collective employment agreement, the employee will be levied with Employment Taxes after exercising the option to acquire the stocks. The tax basis shall be equivalent to the book value or fair market value of the stocks. The employee will also be subject to Personal Income Tax if a capital gain arises from the sale of the stocks acquired because of the stock option plan.

Employer

The employer is liable as a withholding agent for tax and social security contributions when remunerations derived from the plan as described above are paid directly by such employer, or such payment is made by a 3rd party to the eligible employee (ie, the issuing party), but later, the local employer reimburses the costs of the plan to the issuing party payer through charge-back.

Whether or not there is a charge-back in place and the compensations from the plan are paid by the issuing party, the local employee must self-withhold, declare and pay taxes accordingly (on a monthly basis).

Withholding & Reporting

If the local employer holds the position of withholding agent as explained above, it must file tax returns within the first days of the month following the payment of the remunerations or benefits derived from the plans. Otherwise, the eligible employee must self-withhold, declare and pay taxes as explained above.

Deduction

In case that remuneration derived from the plan is paid directly by the local employer, the inclusion of such benefit in the employee’s compensation (subject to the payroll process of the respective period) and the existence of supporting documentation signed by the employee (eg, annex where they acknowledged the terms and conditions of the plan) should enable the subsidiary to deduct such cost for tax purposes.

In case the remuneration from the plan is paid by the issuing company and charged back to the local employer afterwards, the inclusion of such benefits in the employee’s compensation (subject to the payroll process of the respective period), the existence of supporting documentation signed by the employee (eg, annex where they acknowledged the terms and conditions of the plan) and intercompany agreements between local employer and the issuing company, should enable the subsidiary to deduct such cost for tax purposes.

Employee

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

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 exercise.

Deduction

In principle, the option 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. This would require the subsidiary to book such costs as employee compensation and to have properly settled the related personal income tax on behalf of the employees. However, exchange control approvals generally are required.

Tax-favored

The income derived by a resident employee from the exercise of stock options is not required to be included in the employee’s comprehensive income for the relevant year, but can be treated as a separate year comprehensive income for tax purposes. This may effectively reduce the applicable tax rate and tax payable to the employee for the year. 

The above preferential tax treatment is available before December 31, 2027, based on the current tax policies. If the PRC tax authorities do not extend the policy period, starting from January 1, 2028, the stock options income derived by employees at vesting should be included in their gross salaries and wages for tax.

Employee

When the stock is granted

Colombian tax resident employees are only taxed at a progressive rate, up to 39 percent, when the stock options are vested.  The taxable income shall correspond to the difference between the FMV of the granted shares and the price paid by the employee to acquire the stock options (if any).

If vested options imply the issuance of shares in a Colombian company, and such an entity does not trade its shares in a public stock market, the FMV, unless proven otherwise, is presumed to be 130 percent 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).

When the granted stock is sold

The sale of the acquired shares by the Colombian tax resident employees would be taxable upon the difference between their cost basis (acquisition value) and their sale price. If the shares qualify as a fixed asset of the employee and have been held for more than 2 years, the profit would be deemed as a capital gain (taxed at 15 percent, instead of the progressive rates, up to 39 percent, applicable to ordinary income). The same rule applies if the non-tax resident employees sell the stock granted in a Colombian entity. If the stock is granted in a foreign entity holding, directly or indirectly, Colombian assets, the sale may trigger Colombian taxes under the Indirect Taxation Regime if certain conditions are met.

Exceptions may apply if the seller is a tax resident in a jurisdiction that has executed a tax treaty with Colombia or if the shares are publicly listed in the Colombian Stock Exchange.

Employer

When the stock is granted

Withholding & Reporting

The Colombian entity acting as the employer must apply the labor withholding tax at progressive rates, up to 39 percent.

Such withholding must be reported before the tax authorities.

Deduction

The Colombian entity acting as the employer is allowed to deduct the FMV of the granted shares, when the options are vested, provided that:

• The labor withholding tax is applied and
• Social security contributions are paid.

The abovementioned tax deduction may be recognized even if the Colombian entity is an affiliate of the entity issuing the shares, if, under the Colombian accounting standards, the value of the granted stock is registered as an expense during any given year.

Note that the Colombian Tax Code provisions do not deal with the relationship between Colombian employers and the foreign affiliates that issue and grant the stock, which must be dealt according to the accounting standard, the transfer pricing regulations and the applicable law.

Reporting is required if the Colombian company registers the abovementioned tax deduction.

Employee

The spread is taxable upon occurrence of a certain event, such as (a) employee ceases to be employed, (b) employer enters into liquidation, (c) employer or employee ceases to be tax resident in the Czech Republic, (d) transfer of share or option, (e) exercise of option, (f) exchange of share at which the total nominal value of the employee's shares changes or (g) expiry of 10 years from the date of acquisition of shares or option.

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

Employer

Withholding & Reporting

If the subsidiary deducts the cost of the option benefits (eg, the spread), withholding and reporting are required.

Deduction

A tax deduction is allowed if the subsidiary reimburses the parent company for the cost of the option benefits.

Employee

As a starting point, the spread is taxable upon exercise as salary income. If the value of the scheme is less than 10 percent of the employee’s remuneration (20 percent in startup companies) the employer and the employee may opt for a certain with the effect that 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 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. A case-by-case analysis is recommended.

In other cases, when certain criteria are not met, stock options are, as a starting point, taxable on exercise.

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 cost of the option plan and treasury shares are issued.

Employee

The spread is taxable at exercise.

The gain from the sale of shares is taxable.

Employer

Withholding & Reporting

In the event an employee pays the exercise price from within Ecuador, tax withholding is required.

Deduction

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

Employee

Upon the sale of shares, an income tax for employees shall be applicable on progressive rates and brackets the highest of which is 27.5 percent of the taxable annual income on the capital gain realized from such sale. However, if the shares are listed on the Egyptian Exchange and the employee is an Egyptian tax resident, it will be subject to flat rate of 10 percent.

Employer

Withholding & Reporting

Withholding and reporting requirements generally apply.

Deduction

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

Employee

The spread is taxed as wages at exercise and subject to progressive income tax up to approximately 56 percent.

The gain from the sale of shares is subject to tax as capital income at 30 percent up to EUR30,000 and 34 percent for the exceeding part. The loss from the sale of shares can be carried forward up to 5 years.

Employer

Withholding & eRporting

Withholding and reporting requirements apply.

Deduction

An employer may be able to claim a tax deduction for the cost of option benefits if it reimburses the parent company pursuant to a written agreement. As a minimum prerequisite, the cost must be an actual expense entered into bookkeeping.

This section describes the statutory regime.

Employee

For Stock Options granted since 09/28/2012:

For a listed company, the surplus discount (ie, the difference at the time of the grant of the option between the shares value and the purchase price which exceeds 5 percent of the value of the share) is taxable on the year when the option is exercised and is taxable as salary in accordance with the progressive scale of income tax (maximum 45-percent rate) and is subject to a special 3- to 4-percent surtax on high income.

The acquisition gain (ie, the difference between the value of the shares on the date of exercise of the option and the price of subscription or acquisition of the shares minus the surplus discount already subject to tax, if any) is taxable as salary in accordance with the progressive scale of income tax (maximum 45-percent rate) and is subject to a special 3- to 4-percent surtax on high income. The taxation is set in the year of the exercise of option, but it is taxed in the year of the sale of the shares.

The capital gain (ie, the 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 the year of the sale by application of a 12.8-percent flat tax and a special 3- to 4-percent surtax on high income.

Employer

Withholding & Reporting

Reporting requirements apply.

Only social charges on surplus discount are subject to withholding requirements.

No withholding requirements for income tax on qualifying options except, in certain cases, if the employee is non-French tax resident.

Deduction

The costs incurred in connection with the implementation of the stock option (eg, costs of repurchase of shares, share capital increase, formalities) are treated as a tax-deductible expense in France.

An employer may be able to claim a tax deduction for the cost of option benefits if it reimburses the parent company and the parent company uses treasury shares. The deduction is limited to the difference between the exercise price paid and the purchase price paid by the parent company to reacquire the shares.

Employee

The spread is taxable at exercise subject to a possible beneficial tax rate.

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.

Employee

Stock options are not taxed upon grant, or upon exercise.

Upon disposal:

If the stock acquired through the exercise of stock options is disposed within 24 months (or 36 in the case of startup companies) from the grant of such stock options, then upon the disposal of such shares, any benefit (difference between their market value upon exercise and their exercise value) is subject to personal income tax at progressive rates of up to 44 percent. In addition, in that case, upon the sale of the stock disposed before the 24-month holding period (or 36 in the case of startup companies), any capital gains (that is, the difference between the fair market value at exercise and the sales price) are taxable with capital gains tax at at a flat rate of 15 percent as per the general provisions.

If the stock acquired through the exercise of the stock is disposed after 24 months (or 36 in the case of startup companies) from the grant of such stock options, then upon disposal, any benefit (difference between their market value upon exercise and their exercise value) is subject to personal income tax at a flat rate of 15 percent (or 5 percent for startup companies).

In addition, if the disposal value of the shares is higher than their market value upon exercise, then any difference is taxable as capital gains at a flat rate of 15 percent as per the general provisions. For listed companies, such capital gains are exempt from personal income (capital gains) tax, assuming that the employee owns less than 0.5 percent of the share capital of the issuing company. For non-listed shares, such capital gains are subject to personal income tax at a flat rate of 15 percent.

Employer

Withholding & Reporting

If the subsidiary takes a local tax deduction for reimbursing the parent company for the cost of the option benefits, employer is required.

The Employer is not required to withhold any tax, however, is required to report the exercise of the stock options through the monthly withholding tax return for informational purposes. Further, the Employer is required to provide to its employees with a separate annual payroll certificate regarding the stock options that were exercised.

Deduction

A local tax deduction is allowed if the subsidiary reimburses the parent company for the cost of the option benefits.

Tax-favored

Startup companies, which are eligible for preferential tax treatment, meet the following criteria:

1) They are not listed

2) They are considered as “small” or “very small” entities (for Greek Accounting Standards purposes)

3) The stock options are granted within 5 years after their formation

4) The company has not been formed as a result of a merger and

5) The stock acquired through the exercise of the stock options has been disposed at least 36 months after the grant of such options.

Employee

The spread is taxable upon exercise. Employees shall report benefits derived from the exercise of stock options 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. Option benefits must be reported annually with the employee's salary.

Deduction

Issuing of new shares to fulfil a stock option 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 a stock option is 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 any stock options are subsequently forfeited or cancelled, any deduction previously allowed should be written back as a trading receipt and offered for assessment.

Employee

Generally, at the grant date no tax liability arises.

Proceeds from the acquisition of shares 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 option benefits (eg, the spread) should enable the subsidiary to deduct such cost from its income taxes.

Tax-favored

Favorable tax treatment may be available for options if they are offered via a special (ESOP) organization, subject to further conditions.

Employee

The spread is taxable at exercise. 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. With the shares being treated as capital assets, the sale would be subject to capital gains tax in the hands of the employee.

Employer

Withholding & Reporting

Withholding and reporting requirements apply.

Deduction

A deduction may be available if the Indian subsidiary reimburses the parent issuer for the cost of the award, but exchange control approval may be required, depending on the structure of the arrangement.

Tax-favored

Tax-favored programs are no longer available.

Employee

If the parent company is reimbursed by the subsidiary for the cost of the option benefits, an employee is taxed on the spread at exercise.

If there is no reimbursement, any tax on the spread is deferred until the shares are sold.

Any gain upon sale is subject to capital gains tax.

Employer

Withholding & Reporting

Tax withholding and reporting are generally required if the subsidiary takes a local tax deduction for reimbursing the parent company and the benefits from the option are considered part of the base salary.

Deduction

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

Employee

The spread is taxable at exercise.  No tax should arise on the grant of the option provided the option could be exercised for not more than 7 years from the date of its grant or the option is granted for an exercise price equal to the market value of the shares at the date of grant.

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 is required. The employer is required to operate Irish payroll taxes, including income tax and USC, and employees’ PRSI.  The employer is also required to report the grant and exercise of option by filing the form RSS1.

Deduction

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

Employee

Tax is imposed at the time the shares are sold or when the underlying shares are transferred from the trustee to the employee, generally based upon the difference between the sale price and the exercise price. The tax classification of the income shall depend on the tax route that applies to the options.

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 capital gains plans, preferential tax rates may apply.

Under the capital gains route, options or underlying shares must be held by a local trustee for at least the required holding period.

Employee

The spread is taxable at exercise as employment income with the marginal rate of the progressive individual income tax to be applied in a range between 23 percent and 43 percent.  Only the difference between the exercise price and market value of the shares exceeding a certain threshold (ie, EUR2,065.83) is taxed as employment income, provided that stock option plan is granted to all employees and the shares are non-transferable for a 3-year period.  The rules applicable to determine the market value depend on whether the shares are listed in a stock exchange or not.

Capital gains are subject to a substitute tax at a flat rate of 26 percent.

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 percent and 43 percent plus regional and municipal surtaxes, if applicable. In order to be qualified as a tax haven resident, the company must be subject to an actual tax rate lower than 50 percent of the applicable rate in Italy (ie, lower than 13.95 percent).

Employer

Withholding & reporting

Withholding and reporting are required.

Deduction

If the parent company is reimbursed by the subsidiary for the cost of the option benefits (eg, the spread) pursuant to a written agreement, the subsidiary should, in principle, be able to deduct such cost from its income taxes. Italian tax law provides for strict requirements to be met in order to deduct the amount of the spread on the option granted to the company's directors from corporate income tax.

Employee

The spread is taxed upon exercise. However, an employee can defer the taxation if the option is designed in accordance with several requirements (ie, so-called “Tax-Qualified Stock Options”), which include:

• Having an exercise period of more than 2 years but less than 10 years and possessing an exercise cost below or at JPY12 million per year.
• When deferral applies, any gains realized from the sale of the shares are taxable as capital gains.

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 may be permitted in the fiscal year to which the date of exercise belongs. However, when the deferral discussed above is applicable, no deduction is permitted.

In the case of option benefits received by officers or directors of the Japanese subsidiary, there are other restrictions. The scope of deduction has been expanded by the amendment promulgated in 2017.

Employee

Generally, a taxable benefit from stock options arises on the date the option to acquire shares in a company is exercised.

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

• Market value of the share on the date the scheme is exercisable or market value of share on the exercise date (whichever is lower) less exercise price.

Any gain made from the subsequent disposal of these shares by individuals is not taxable as the recent introduction of the capital gains tax regime in Malaysia only applies to the disposal of unlisted shares by companies, limited liability partnerships, cooperatives, and trust bodies.

Employer

Withholding & Reporting

Notification to the tax authorities is required. Withholding via an employee’s Monthly Tax Deduction is required unless the employee has elected in writing to the employer to remit the tax upon submission of his/her tax return for the relevant year.

Deduction

Despite public rulings issued by the Malaysian tax authorities stating that 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, the Malaysian Court of Appeal’s recent decision states in the contrary. It is now trite law following the recent Court’s decision that employers are allowed to claim a deduction on the costs incurred in relation to the issuance of share scheme provided that the primary purpose of the share scheme is an integral part of the employment package to incentivize the employee to generate income.

Employee

The spread is taxed at exercise.

The gain from 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 option benefits.

Deduction

A local tax deduction is generally allowed if the subsidiary reimburses the parent company for the cost of the option benefits under a written agreement. However, reimbursement may trigger withholding and reporting requirements for the subsidiary.

Deduction is possible but only for stock’s awards granted to managers; statutory auditors; directors; general managers; or members of the board of directors, statutory auditing committee or advisory, or any other body (ie, management employees). Deductions in Mexico should have a business reason, described under Mexican Income Tax Law as “strictly indispensability.”

Employee

As of January 1, 2023 options are in principle subject to tax upon exercise if the acquired shares are tradeable. The acquired shares are in any case considered tradeable where the shares are listed on a stock exchange. However, even if shares are not listed on a stock exchange, they may be considered tradeable if they can, for example, be traded with other employee. If the acquired shares are not yet tradeable, the options are subject to tax upon the shares becoming tradeable. In the case of the latter, the employee can, however, choose to have the options to be subject to tax upon exercise. The difference between the market value and the exercise price is taxed as income from employment at the progressive income tax rate, up to 49.5 percent.

Generally, there is no tax upon the sale of shares if the shareholder, together with their fiscal partner, has an interest less than 5 percent 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.

Employee

• The benefit to the employee is income. The benefit of stock options is generally the difference between what the employee pays on exercise (or sale) of the option and the market value of the shares on the taxing date. The taxing date is when the option is 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 employee or the employer will be fact-dependent, although the primary obligation remains with the employee

Deduction

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

Employee

The employee is taxed on income derived upon the grant of a stock option. Such income is deemed taxable, and rules relating to the personal income tax of employees shall apply. Additionally, where an employee disposes of any shares (including stock options) at a premium or profit, such disposal is subject to Capital Gains Tax (CGT) at 10 percent where proceeds of the disposal in aggregate are worth NGN100 million and above within any 12 consecutive months.

Employer

Withholding & Reporting

Upon grant of a stock option, any dividend paid to an employee as a shareholder is liable to withholding tax at 10 percent. The employer is required to deduct withholding tax due on the dividend and remit it to the relevant tax authority.

Every employer is required to file, alongside their annual return, a schedule showing the information on its employees’ share option. Additionally, an employer is required to file a return of all emoluments paid to its employees not later than  January 31 of every year in respect of all its employees in the preceding year. Returns are also required to be filed with the relevant tax authority within 90 days of the end of each fiscal year. This is to the effect that all stock options that became exercisable and were exercised at profit within the relevant period would be reported to the tax authority.

Deduction

The employer is required to compute tax on the difference between the actual share price and the exercise price and remit to the relevant tax authority. The obligation to deduct tax arises on the exercise date or the effective date of payment for phantom shares. The share price for a public limited liability company is the value for which the shares are traded on the stock market at the date of the exercise. For non-listed companies, the price per share is the net assets of the company issuing the shares divided by the number of shares. The taxable benefit for a phantom share is the cash payment made to the employee.

For listed and non-listed companies, there is an obligation to remit 10 percent on gains from the disposal of shares in a Nigerian company where proceeds of the disposal in aggregate is worth NGN100 million and above within any 12 consecutive months.

Employee

The stock option is taxed upon exercise.

Any gain on sale of shares is taxable 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 made to the parent company for the cost of the benefits, pursuant to a written agreement, should enable the subsidiary to deduct such cost from its taxable income.

Employee

The spread is taxable at exercise.

If the Philippine subsidiary reimburses the parent company for the cost of the option benefits, 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 made to the parent company for the cost of the benefits (eg, the spread), pursuant to a written agreement and compliance with withholding requirements, will probably enable the subsidiary to deduct such cost from its income taxes.

Employee

The spread is not taxable at exercise provided specific conditions are met.

The gain upon 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 option 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 option benefits (eg, the spread) from its taxable income if such benefits are deemed to be part of an employee's remuneration and the subsidiary reimburses the parent company for such remuneration.

Employee

The spread is taxed upon exercise.

The gain from the sale of shares is taxed.

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

Portugal implemented a new tax regime that may exempt 50 percent of taxable gains arising from employer incentive plans. To the extent that certain conditions are met, the effective tax rate can be 14 percent (eg, the employer is a qualifying entity and the grantee keeps the underlying securities for at least 1 year). It is also possible to defer the tax due from the time of grant or exercise to the time of sale of underlying shares under the new tax regime.

Employer

Withholding & reporting

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

Reporting requirements may apply.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the option benefits (eg, the spread) should enable the subsidiary to deduct such cost.

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.

Employee

There is no tax imposed on option benefits.

Employer

Withholding & reporting

Withholding and reporting are not required.

Deduction

A subsidiary typically is unable to deduct the cost of the benefit (eg, the spread) from its income taxes.

Employee

The spread generally is taxed upon exercise. The taxing point can be deferred if the shares acquired are subject to sale restriction. In that case, the taxing point will occur when the sale restriction ceases to apply. The taxable value is the market value of the shares at the taxing point less any amount paid by the employee.

No tax is imposed upon the sale of shares if the gain is considered capital gain.

Employer

Withholding & reporting

Generally, tax withholding is not required.

The employer is required to report income received by an employee from an option. If the employee ceases employment in Singapore, the employer is required to report any options granted during the Singapore employment which remain unvested and unexercised and withhold all monies due to the employee once the employer knows the employee will cease Singapore employment. Such options 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 options are forfeited, there is no deemed gain to be reported. The deemed gain applies to employees who are on employment passes or Singapore permanent residents who expect to leave Singapore for more than 3 months. The employer will remit the monies withheld to the IRAS when the employee’s tax matters are finalized. Any balance will then be released to the employee. If the actual gain is less, the employee can submit documentation to show the actual gain and claim a tax refund for the difference. The employee can do so within 4 years from the relevant year of assessment.

Deduction

The subsidiary should be able to deduct the cost of the option benefits from its taxable income if:

• Treasury shares are used
• The parent company incurs the costs to acquire the treasury shares [A] and recharges the amount to the subsidiary [B] and
• The deduction claimed by the subsidiary is the lower of [A] or [B] less any amount received from the employees.

Employee

Options granted before January 1, 2010 are taxed at vesting on the difference between the fair market value and the exercise price.

Options granted on or after January 1, 2010 are taxed on the spread at exercise.

Upon the sale of shares, tax is imposed on the gain.

Income from the sale or the transfer of securities accepted for trading in a regulated market or in a similar foreign regulated market where the period between the acquisition and the sale thereof is more than 1 year and when such securities were not included in the business assets of the employee is exempted from tax.

Income from the sale or transfer of securities, excluding securities included in the business assets, up to the aggregate value of EUR500 shall be exempted from tax.

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 option benefits (eg, the spread), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its taxable income.

Employee

The spread is taxable upon exercise.

The gain on the sale of shares is generally taxed.

Employer

Withholding & Reporting

Withholding and reporting are required.

Deduction

If the subsidiary reimburses the parent company for the cost of offering the options, a tax deduction could be available.

Employee

The spread is taxed at exercise as salary income.

The capital gain upon the sale of the shares generally is taxable. Capital gains of KRW2.5 million or less annually are tax-exempt.

Employer

Withholding & Reporting

Unless the parent company is reimbursed by the subsidiary for the cost of option benefits, withholding and reporting of income tax is generally not required.

However, withholding and reporting of social insurance contributions are required regardless of reimbursement.

Deduction

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

Employee

The spread (ie, the difference between exercise price and market value) is taxed at exercise. A EUR12,000-per-year exemption and a 30-percent reduction may be applicable if the relevant conditions are met.

The gain from the sale of the shares is taxable.

Employer

Withholding & reporting

Generally, withholding requirements apply.

Deduction

Even if the offering to the employee is made by the parent entity, a deductible expense arises for the employer entity.

Employee

There are 2 sets of rules on employment stock option schemes: ordinary personal options and new qualified personal options. Special exemption provisions have been introduced for so-called qualified employee stock options, which means that the benefit of an employee stock option shall not be taxed as salary income, provided that a number of conditions are all satisfied. The purpose of these tax breaks is to improve the ability of young, small businesses to recruit and retain key people.

Qualified employee stock options.

These rules state that no benefit from the option is subject to tax, provided a large number of conditions are satisfied. The option must be exercised within 3 to 10 years after the date of grant. The conditions relating to the target company group include not having carried on business for more than 10 years, the shares not being listed, the company or group having fewer than 150 employees and net sales or assets of no more than SEK280 million. If purchased before January 1, 2022, the old provisions apply of maximum 50 employees and no more than SEK80 million. As of January 1, 2022, a qualified employee stock option may be issued by the target company and give the right to a future acquisition of a share in another company within the same group. The new rules also clarify that the benefit of a qualified employee stock option includes the right to acquire shares and warrants. Additionally, the rules now include members of the board among those who can acquire qualified employee stock options. Some businesses are excluded from the scheme, among them banking and finance businesses, management of real estate and consulting. The employee may not hold any option that is valued at more than SEK3 million and the total value of all their options shall not exceed SEK75 million. The employee must on average work 30 hours a week and during a 3-year vesting period receive salary and taxable benefits at least corresponding to 13 income base amounts (SEK990,600 for 2024).

Employer

Withholding & Reporting

Withholding and reporting are required.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the benefit (eg, the spread) should enable the subsidiary to deduct such cost from its income taxes.

Employee

Options are generally taxed at exercise, pursuant to Swiss federal tax law.

If they are quoted and freely negotiable, options are taxable upon grant.

There is generally no capital gain income tax on the sale of shares, but wealth tax may apply.

Employer

Withholding & reporting

The employer must withhold and report for employees with B permits or for employees who exported their stock options (ie, have a foreign domicile at the taxable event).

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 option benefits (eg, the spread), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its income taxes.

Employee

The spread is taxed upon exercise.

The gain from the sale of the shares is not taxable but is included in alternative minimum tax (AMT) calculations. If the stock is sold at a lower price, such capital loss can be included in these calculations.

Employer

Withholding & Reporting

Reporting is generally required.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the option benefits (eg, the spread), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its income taxes.

Employee

The spread generally is taxed upon exercise.

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 option benefits, withholding and reporting are generally 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.

Employee

The spread is generally taxed upon exercise.

The gain from the sale of shares is taxable.

Employer

Withholding & Reporting

Withholding and reporting requirements apply.

Deduction

It is unclear whether the subsidiary can take a deduction for the cost of option benefits if it reimburses the parent company.

Employee

The granting of stock options to Ukrainian individuals should not trigger immediate Ukrainian tax implications for a respective individual as such individual does not immediately obtain ownership to shares.

Ukrainian tax authorities may argue that a Ukrainian individual should reflect some taxable income upon the receipt of stock options as the granting of stock options already has an intrinsic fringe benefit.

Conversion of stock options into shares will be treated as a taxable event for a Ukrainian individual if the value of shares granted is below the market value (the risk of such treatment is medium to high if the shares are listed) or are granted for free. Respective amounts will be considered as foreign income of such individual and subject to taxation. If shares are purchased at fair market value, no income arises and hence no tax is due.

Income in the form of dividends from foreign companies will be subject to tax at preferential rates.

Upon sale of shares, gain between the sale price and expenses incurred on the purchase of the shares is taxable.

Reporting and tax payment liabilities rest upon Ukrainian individuals.

Employer

Withholding & Reporting

No Ukrainian tax withholding and reporting requirements apply given the issuing company is a nonresident entity. Potentially, a Ukrainian subsidiary of the issuing company may bear withholding and reporting liabilities as a tax agent of a Ukrainian individual due to certain ambiguities in the legislation.

Deduction

Given that Ukrainian legislation contains no concept of stock-related incentives, a non-Ukrainian issuer rather than the local entity will provide awards to employees.  Hence, all costs will be borne by the non-Ukrainian issuer and no question of deduction will arise.

Employee

The spread is generally taxed at exercise.

The gain from the sale of the shares is taxable, subject to an annual exempt amount.

Employer

Withholding & reporting

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

Registration and annual reporting are required.

Deduction 

A local tax deduction may generally be allowed.

Tax-favored

Tax-favored programs are available for options.

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

A local tax deduction is generally allowed by the Venezuelan entity that assumes the cost of the plan.

Employee

The spread is generally taxed at exercise.

Tax is generally imposed on gains upon sale of shares.

Employer

Withholding & Reporting

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

Deduction

Because of foreign exchange restrictions, reimbursements made to the parent company are not likely to be available.