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Grant
- There are no income or social security taxes.
Exercise
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Income Tax is payable up to a maximum rate of 30%, withheld by the Local Company. Income Tax is levied at progressive rates from 0% to 30%.
- The taxable amount is the amount by which the market value of the shares on exercise exceeds the exercise price.
Sale
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Capital Gains Tax is payable on the growth in value of the shares up to a maximum rate of 15%, payable by the Participant. There are no withholding or reporting obligations for the Local Company.
Other / Notes
Tax Advantaged Arrangements
There are no specific tax advantaged arrangements available beyond the treatment stated above. It may be the case that a more tax beneficial approach is available using an alternative structure. Please speak to the ShareReporter team for further advice.
Dividends
Once a Participant has acquired shares in the Company, they will pay tax at 10% (where the Participant holds a tax ID) or at 15% otherwise. There are withholding obligations for the Local Company.
Corporate Tax Deduction
A Corporate Tax Deduction will not be available in respect of equity Awards on the basis that the cost of Awards are not a permitted expense and so cannot be provisioned as a cost in the Local Company's accounts.
Non-Employees
If the Participant is engaged as an employee through a Professional Employer Organisation (PEO) or other Employer of Record (EoR) then the above tax treatment will typically apply save that the PEO or EoR will be responsible for accounting to the tax authorities for any withheld taxes. The terms of the engagement between the Company and the PEO or EoR should provide for how these taxes will be accounted for.
If the Participant is engaged as a consultant then, typically, all taxes arising in connection with the Award should ordinarily be for the account of the Participant and there should be no withholding obligation. The Participant should be encouraged to seek independent advice on their own tax position. Before adopting this tax treatment, however, the Company should carefully consider the correct status of the Participant: it is a question of fact whether the Participant is engaged as an employee or a consultant and the tax authorities may seek unpaid withholding taxes if the Company gets this wrong.
Special employee tax advantaged arrangements are not generally available either to consultants or to employees engaged via a PEO or EoR.