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.

Employee

Generally, an employee is taxed on the spread upon purchase. The grant of the purchase rights will be taxed in the year they are granted. However, if they are subject to a “real risk of forfeiture,” deferral of tax is possible.

The conditions for tax deferral for purchase rights are subject to certain conditions being satisfied. Where tax deferral applies, the tax may be deferred until the rights are exercised or 15 years from grant. However, where the stock issued upon purchase is subject to genuine disposal restrictions, income tax will be further deferred until those restrictions cease.

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

If a taxable event occurs without a sale within 30 days, and the stocks 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.

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 a purchase right to both the employee and the Australian tax authority and the employee is required to report such income on their annual tax return.

Purchase right benefits received by employees in some Australian states 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 benefits (ie, the discount at the time of purchase), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its taxable income provided certain criteria are satisfied.

Employee 

Generally, the benefit upon purchase is subject to tax (the difference between the reduced purchase price and the market value).

Shares acquired before January 1, 2011: gains from the sale of shares held more than 12 months generally are not taxed. If the shares were held for less than 12 months, gains are taxed.

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, especially the proof of the holding period, are required.

Deduction

Reimbursement of the parent company for the cost of the benefit (ie, the discount at the time of purchase) pursuant to a written reimbursement agreement should enable the subsidiary to deduct such cost from its income taxes.

Tax-favored

Preferential tax treatment, in the form of a designated tax-exempt amount for the given benefit, may apply if certain requirements are met.

Employee

Generally, the employee is taxed on the spread upon purchase. A reduction of the tax base may be available if the employee is not allowed to sell the shares for at least 2 years.

There is no tax when the employee sells the shares, provided that the sale falls within the normal management of one’s private estate. Note that the Belgian legislator is set to introduce a capital gains tax of 10 percent on gains that fall within the normal management of one's private estate. The capital gains tax is yet to be adopted by Belgian Parliament but would be applicable to capital gains accrued as of  January 1, 2026. An exemption may be claimed for the first tranche of EUR10,000 capital gains proceeds in one taxable period. The capital gains tax may thus be due going forward, even if 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 purchase rights to employees taxable in Belgium.

If the purchase rights 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 purchase rights.

Deduction

In situations where the subsidiary reimburses the parent company for the cost of the purchase rights, a deduction is generally allowed. A written reimbursement agreement is recommended. There exists case law based on which the risk exists that the reimbursement may qualify as a capital loss on shares and would therefore not be deductible.

From a Brazilian tax perspective, stock purchase rights are not governed by a specific statutory framework and their tax treatment depends primarily on the conditions set for the acquisition of the shares and whether the employee receives an economic benefit.

Despite being a different instrument, its rationale is very similar to the stock option program and, as such, their characterization should follow, by analogy, the criteria defined in the STJ’s leading case on stock option plans (Repetitive Theme 1,226). Under that precedent, a stock-based plan may be treated as commercial/mercantile — rather than as employment compensation — if the following criteria are met:

• Onerous Nature: Employees must pay to acquire the stock.
• Voluntary participation: Participation is optional, and the employees may choose whether to acquire the stock upon vesting.
• Risk-bearing: Employees must assume market risk after acquisition of the stock.
• Gains Linked to Stock Appreciation: Profits should result from the stock's appreciation, independent of the employment relationship.

Therefore, if the stock purchase rights program complies with such requirements, no taxes should apply, upon grant or exercise.

If the above requirements are not met, stock purchase rights program will most likely be characterized as an employment benefit/remuneration and taxed accordingly.

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 purchase rights.

Employee

Generally, if stock purchase rights utilize the employee's own funds, in the amount equivalent to the fair market value of the shares upon grant of stock purchase right, the transaction should not trigger any immediate taxation, only upon a future sale of the shares if employee accrues any gain.

However, if there’s a significant discount on the purchase price, then such a discount may be viewed as compensation and subject to ordinary income taxation. 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 stocks acquired upon exercise of purchase rights, gains will be subject to different income tax calculations depending on the location of the issuer of the stocks —whether they are issued by a foreign or a Brazilian legal entity.

1. Brazilian stocks: subject to capital gains taxation. 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 (i.e., not just the amount exceeding such threshold) at progressive rates ranging from 15 to 22.5 percent, depending on the size of the gain.
2. Foreign stocks: subject to taxation on investments held abroad, at a rate of 15 percent%, according to Law 14,754/2023.

Employer

Withholding & Reporting

Generally, withholding and reporting is required, if the amount to fund the employee's stock purchase plan. is registered as a liability in the accounts of the Brazilian Employing entity and treated as an employment income (remuneration) of the employee.

Still under this scenario, if purchase rights are granted directly by the parent company to the Brazilian employee (and not accounted as a liability of the Brazilian Employing Entity), the employee may treat them as remuneration by self-assessing and reporting the gain as ordinary income.

However, in this case, a recharge of the stocks’ costs by the Brazilian Employing Entity to the foreign grantor can increase the risk of the Brazilian Employing Entity being questioned by the tax authorities which would charge withholding income tax and social insurance contributions or having the expense disallowed as a deduction for corporate income tax purposes.

Whenever the stock purchase rights are treated as a commercial/mercantile transaction (regardless of whether it is registered as a liability in the accounts of the Brazilian Employing entity), there would be no payroll taxes upon the grant nor exercise and no withholding obligation for income tax should fall on either the Employee or the local employing entity.

Deduction

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

In case the stock repurchase rights is treated as a commercial/mercantile transaction, the deductibility by the employer in Brazil may not be warranted as this may not be seen as ordinary and necessary expense.

Employee

The employee is taxed on the discount upon purchase as employment income.

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

Generally, withholding and reporting are required.

Deduction

Even if the subsidiary reimburses the parent company for the cost of the benefit (ie., the discount at the time of purchase) pursuant to a written reimbursement agreement, it is unable to deduct such cost from its income taxes.

Employee

The employee generally is taxed on the spread upon purchase. Any gain upon the sale of shares also is subject to tax.

Employer

Withholding & Reporting

If the subsidiary supports the cost of the purchase right, withholding and reporting are required.

Deduction

Reimbursement of the parent company for the cost of the benefit (ie, the discount at the time of purchase) and inclusion of such benefits in the employee’s compensation should enable the subsidiary to deduct such cost from its income taxes.

Employee

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

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 purchase.

Deduction

In principle, the purchase right 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

There is no particular tax preferential treatment available to stock purchase rights under the current China tax regulations.

The issuance of shares in a Colombian entity upon the exercise of a stock purchase rights is subject to a registry tax at a maximum rate of 0.7 percent. The sale of the acquired shares would be taxable upon the difference between their cost basis (acquisition value) and their sale price. If the shares qualify as a fixed asset and have been held for over 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). 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.

Employee

General regime.

The relevant moment of taxation in relation to stock purchase rights is generally the moment when the stock purchase right is exercised (i.e., at the moment the shares of the employer are acquired), and the income (difference between the fair market value of the shares and the consideration paid by the employee for their acquisition) is taxed as income from employment (ie, subject to income tax and usually also a respective social security and health insurance contributions), However, it is also necessary to give due consideration to the differences in the tax treatment between transferable and non‑transferable options or rights.

Deferred regime.

The relevant moment of taxation may be also deferred and the income from the stock purchase rights may therefore be taxable upon occurrence of a certain event, such as (a) employee ceases to be employed, (b) employer enters into liquidation, (c) transfer of share or option, (d) exercise of option, (e) exchange of share at which the total nominal value of the employee's shares changes or (f) expiry of 15 years from the date of acquisition of shares or option.

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

Qualified employee stock options regime.

As of January 1, 2026, a new regime of qualified employee stock options has been introduced into Czech law, introducing significant tax benefits for both, the qualified employers and qualified employees.

Upon meeting all statutory requirements, the qualified employee stock options will be exempt of the otherwise obligatory social security and health insurance contributions, and will be taxable on exercise (ie, only once the employee sells the shares/or after the lapse of the statutory period of 15 years), which is in line with the general "No Tax Before Cash" principle.  Rules for taxation of other income will apply rather than rules on taxation of the income from employment.

However, it is important to note that the tax exemption usually applicable under Czech law to the sale of securities and shares after the lapse of statutory holding period (3/5 years) does not apply to shares obtained under the qualified employee stock options regime.

Moreover, the requirements to be met in order to use the benefits of the new regime are rather strict (for both the employees and employers). For example, only companies which (i) have an annual turnover not exceeding CZK2,500,000,000 (approx. EUR103 million) and total assets not exceeding CZK2,000,000,000 (approx. EUR82 million), based on its most recent financial statements; (ii) are not part of an qualified employer's holding or group whose annual turnover or total assets exceed these thresholds; and (iii) neither the company nor any member of the qualified employer's group is a bank, insurer or reinsurer, mining undertaking, provider of legal, tax, or audit services, may be considered as qualified employers under Czech law.

Employer

Withholding & Reporting

If the subsidiary deducts the costs of the benefits (ie, the discount at the time of purchase), withholding and reporting are required.

Deduction

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

Employee

As a starting point, the spread is taxable upon purchase. If the value of the scheme is less than 10 percent of the employee's remuneration (20 percent if the scheme is offered to 80 percent of staff members on equal terms and 50 percent in startup companies) 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 that arises 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.

Any gain from a subsequent sale of shares is subject to capital gains taxation.

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 plan costs and treasury shares are issued.

Employee

The spread is taxable upon purchase.

Any gain from the sale of shares is subject to tax.

Employer

Withholding & Reporting

In the event that an employee pays the purchase price from within Ecuador, withholding is required.

Deduction

A local tax deduction may be allowed if the subsidiary reimburses the parent company for the cost of the purchase plan benefit, 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

If the purchase price paid by an employee for the share is at least 90 percent of the share’s market value, no taxable benefit accrues, under certain conditions.

Moreover, no taxable benefit accrues if shares in a non-listed company are offered and if the price paid by the employee for the share is no less than the share’s mathematical value, under certain conditions.

If the above exceptions do not apply, the difference between the market value of the shares and the purchase price is taxed as wages and is 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 & Reporting

Withholding and reporting requirements apply.

Deduction

An employer may be able to claim a tax deduction for the cost of award 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.

Employee

The acquisition gain (ie, the difference between the value of the shares at the end of the subscription period and the price of subscription or acquisition of the shares) is taxable as salary in accordance with the progressive scale of income tax (with a maximum rate of 45 percent). The acquisition gain is taxable during the year of purchase.

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 in the year of the sale by application of a 12.8-percent flat tax⁷.

Both the acquisition and capital gains are subject to (i) the surtax on high income (3 to 4 percent) and (ii) the differential contribution on high incomes, if applicable.

Employer

Withholding & Reporting

Reporting requirements apply.

The acquisition gain on non-qualified plans is subject to withholding requirements as from 2019.

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 purchase rights if it reimburses the parent company and the parent company uses treasury shares. The deduction is limited to the difference between the purchase price paid and the price paid by the company to reacquire the shares.

⁷ Please note that the Finance Law for 2025 introduced a new management package regime applicable to securities whose disposal, sale, conversion or lease occurred on or after February 15, 2025. If the stock purchase rights falls within the scope of this new regime, the portion of the capital gain exceeding three times the company’s financial performance ratio will be treated as employment income and will be subject to the progressive income tax scale.

Employee

The spread is taxable at purchase subject to a possible exemption. A tax-exempt amount of EUR2,000 per year and a tax deferral may be available.

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 purchase plans are not taxed upon grant, or upon exercise.

Upon disposal:

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

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

If the disposal value of the shares is higher than their market value upon exercise, then any difference is taxable at a flat rate of 15 percent as capital gains 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

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

Deduction

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 Standard purposes);

3)     The stock purchase rights are granted within five years after its 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 purchase right has been disposed at least 36 months after the grant of such purchase right.

Employee

The spread is taxable upon purchase. Employees shall report benefits derived from the exercise of stock purchase rights 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. The spread in respect of purchases must be reported annually with the employee's salary.

Deduction

Issuing of new shares to fulfil a stock purchase rights 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 stock purchase rights are 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 purchase rights 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 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 benefits should enable the subsidiary to deduct such cost from its income taxes.

Tax-Favored

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

Employee

The spread is taxable at purchase. 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 costs of the award but exchange control approval may be required, depending upon the structure of the arrangement.

Tax-favored

No tax-favored programs are available.

Employee

Effective April 1, 2007, purchase rights are taxed under the fringe benefit tax rules. Taxes on fringe benefits are payable by the subsidiary. Accordingly, the employee is not taxed on the spread at purchase. In some cases, the subsidiary and the employee may agree to pass the fringe benefit tax from the subsidiary to the employee.

Any gain from the subsequent sale of shares is subject to capital gains tax payable by the employee.

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 purchase right are considered part of the base salary.

Deduction

Reimbursement of the parent company for the cost of the benefit (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 taxed at purchase.

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 are required. The employer is required to operate Irish payroll taxes, including income tax and USC, and employees’ PRSI.

Deduction

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

The tax treatment of the Stock Purchase Rights (ESPP) is governed by Section 102. ESPP grants may be made either under a trustee plan or under the non-trustee route. A tax ruling should be obtained in relation to the implementation of the ESPP plan.

Employee

For purchase rights granted under the trustee plan, tax is imposed at the time the shares are sold or transferred from the trustee to the employee, generally based on the difference between the sale price and the purchase price.

For purchase rights granted under the non-trustee route, tax will be due upon selling the shares. 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 plans, the taxable event is deferred until sale or until releasing the shares from the Trustee and preferential tax rates may apply. Purchase rights must be held by a local trustee for the required holding period (which is counted from the purchase date of the shares). Seeking a specific tax ruling is recommended.

Employee

The spread is taxable at purchase 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 subscription price and the market value of the shares exceeding a certain threshold (ie, EUR2,065.83) is taxed as employment income, provided that rights are granted to all employees and the shares are non-transferable for a 3-year period.

Capital gains are subject to a substitute tax at a 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 plan costs (ie, the discount at the time of purchase) pursuant to a written agreement, the subsidiary, in principle, should be able to deduct such costs from its income taxes.

Employee

Because purchase rights are not yet common in Japan, and tax reforms have not been undertaken, taxpayers may refer to rules applicable to general stock options to purchase rights as follows:

The spread is taxed upon purchase. An employee may not utilize the deferral approved for qualified stock options because purchase rights are often too flexible and beneficial to qualify for the deferral.

Employer

Withholding & reporting

Withholding is applicable depending on how equity compensations are granted between the foreign parent company and its Japanese subsidiary.

The Japanese employer may need to report the economic benefits arising from equity compensation granted to its officers or employees by a foreign parent or related entity.

Deduction

A deduction is permitted in the fiscal year to which the date of purchase belongs. The deduction may be partially restricted as a result of the benefits conferred upon officers or directors of the Japanese subsidiary. The scope of deduction has been expanded by the amendment promulgated in 2017.

Employee

The employee is taxable upon the exercise of the right.

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

• Market value of right on the date the right is exercised less offer 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 purchase.

The gain upon 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 purchase rights.

Deduction

A local tax deduction is generally allowed if the subsidiary reimburses the parent company for the plan costs (ie, the discount at the time of purchase) 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

In principle, stock purchase rights are 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 employees. If the acquired shares are not yet tradeable, the stock purchase rights are subject to tax upon the shares becoming tradeable. In the case of the latter, the employee can, however, choose to have the stock purchase rights 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.

The gain upon the sale of shares is not taxable 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 purchase rights is generally the difference between what the employee pays to acquire the shares and the market value of the shares on the taxing date. The taxing date is when the rights are 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 employer or the employee will be fact-dependent

Deduction

A New Zealand employer will generally be entitled to a corporate income tax deduction for share purchase rights 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 exercise of stock purchase rights, and rules relating to the personal income tax of employees shall apply.

Employees remain subject to capital gains tax on gains arising upon disposal of the of stock purchased proceeds fall under the exemption in the Nigeria Tax Act. 

Employer

Withholding & Reporting

Any dividend paid to an employee as a stock purchase right is liable to withholding tax at 10 percent.

Every employer is required to file, alongside their annual return, a schedule showing the information on its employees share option.

Deduction

The employee 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.

Employee

The spread is taxed upon exercise.

The gain from the sale of shares is taxed 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 of the parent company for the cost of the spread, 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 plan benefit, 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 to the parent company for the cost of the spread, pursuant to a written agreement and in compliance with withholding requirements, will probably enable the subsidiary to deduct such cost from its income taxes.

Employee

The spread should not be taxable at purchase provided specific conditions are met.

The gain from 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 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 benefits (ie, the discount at the time of purchase) from its taxable income, if such benefit is 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 purchase.

The gain from the sale of shares is taxed.

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

Portugal has a special tax regime (the Qualified Stock Incentive 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 the tax upon the employee's request.

Reporting requirements apply.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the benefits (ie, the discount at the time of purchase) should enable the subsidiary to deduct such cost.

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.

Employee

There is no tax imposed on purchase rights benefits.

Employer

Withholding & reporting

Withholding and reporting are not required.

Deduction

A subsidiary typically is unable to deduct the cost of the benefits (ie, the discount at the time of purchase) from its income taxes.

Employee

The spread generally is taxed upon purchase. If the shares purchased are subject to sale restriction, the taxing point can be deferred to the time when the sale restriction ceases to apply. The taxable value is the discount, if any in relation to the shares at the time of purchase.

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 a purchase right. If the employee ceases employment in Singapore, the employer is required to report any stock purchase rights granted during the Singapore employment which remains unexercised and withhold all monies due to the employee once the employer is aware that the employee will cease Singapore employment. Such stock purchase rights will be subject to tax on the discount, if any, between the market value determined one month before the date of termination of employment and the purchase price (deemed gain). If the rights 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 benefit from its taxable income if:

• Treasury shares are used
• The parent company incurs the costs of acquiring 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

The spread is taxed upon purchase.

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

Income from the sale or 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 benefits (ie, the discount at the time of purchase), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its taxable income.

Employee

The spread is taxable upon purchase.

The gain from the sale of shares generally is taxed.

Employer

Withholding & Reporting

Withholding and reporting are required.

Deduction

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

Employee

The spread is taxed at purchase as salary income.

The capital gain from the sale of the shares is generally 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 plan benefits, withholding and reporting generally are not required.

Deduction

If the subsidiary reimburses the parent company for the cost of offering the purchase rights, 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 Spanish employer entity.

Employee

The spread is taxed at exercise.

The gain upon the sale of the shares is taxable.

Employer

Withholding & Reporting

Withholding and reporting are required.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the benefits should enable the subsidiary to deduct such cost from its income taxes.

Employee

The spread is generally taxed at purchase, pursuant to Swiss federal tax law. The gain from the sale of shares is generally not subject to income tax.

Employer

Withholding & reporting

The employer must withhold and report for employees with B permits. 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 benefits (ie, the discount at the time of purchase) should enable the subsidiary to deduct such cost from its income taxes.

Employee

The spread is taxed upon purchase.

The gain upon 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 generally is required.

Deduction

Reimbursement of the parent company by the subsidiary for the cost of the benefits (ie, the discount at the time of purchase), pursuant to a written agreement, should enable the subsidiary to deduct such cost from its income taxes.

Employee

The spread is generally taxed upon purchase.

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 benefits, withholding and reporting generally are 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 subject to tax at purchase. However, income tax exemptions may apply to shares granted to employees by technology startup companies officially designated by the Ministry of Industry and Technology, provided the grant meets specific legal criteria.

Employer

Withholding & Reporting

Withholding and reporting requirements apply.

Deduction

It is unclear whether the subsidiary can take a deduction for the cost of purchase rights, even if it reimburses the parent company.

Employee

The granting of stock purchase rights to Ukrainian Individuals should not trigger immediate Ukrainian tax implications for a respective individual since such individual does not immediately obtain ownership to shares.

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

If an individual purchases shares below their fair FMV, there is a risk that the discount (the difference between the FMV and the exercise price) may be taxed at 18 percent personal income tax and 5 percent military levy. This risk is higher if public grantors are involved. This assessment is based on clarifications from tax authorities, even though the Tax Code of Ukraine does not directly require taxation of the discount upon exercise. Additionally, the Tax Code of Ukraine does not allow taxpayers to credit taxes paid on the discount when calculating tax obligation upon sale of shares, creating a risk of double taxation on the difference between the FMV and the exercise price.

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

Upon the sale of shares, gain between the sale price and expenses incurred on 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 be claimed to 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 a 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

Any discount to market value at purchase is generally taxed at purchase.
The gain upon the sale of the shares is taxable, subject to an annual exempt amount.

Employer

Withholding & reporting

Withholding is required in respect of any discount to market value at purchase if shares are "readily convertible assets."

Registration and annual reporting are required.

Deduction

A local tax deduction may generally be allowed to the extent of any discount in the purchase price.

Tax-favored

Tax-favored programs are available for certain purchase rights in limited circumstances.

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

Because of foreign exchange restrictions, reimbursement of the parent company and a related tax deduction are not likely to be available.

Employee

The spread is generally taxed at purchase.

Tax is generally imposed on gains upon sale of shares.

Employer

Withholding & Reporting

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

Deduction

Because of foreign exchange restrictions, reimbursement of the parent company and a related tax deduction are not likely to be available.