In today's global business environment, more and more companies with operations overseas use equity-based compensation to attract, motivate, and reward employees worldwide. The benefits are great for both the employer and the employee, but many difficult issues are raised. This book is designed to help companies and their advisors address those issues, select the plan or plans that will work for them, and start down the road toward implementation. It includes a country-by-country discussion of tax and legal issues for 45 countries. Most of the material is on stock options and related plans because they are the most popular form of equity compensation in this context. In the 10th edition, the technical chapters (such as the first chapter, with its country-by-country survey) have been updated to bring them in line with current law and practice.
Table of Contents
Global Equity Compensation: Program Compliance
Implementing a Global Stock Plan
Communicating Employee Ownership Across the Globe
TeamShare at Bristol-Myers Squibb
International Phantom Stock
From Chapter 1, "Global Equity Compensation: Program Compliance"
Most countries permit a local tax deduction when the parent company is reimbursed the cost of the benefits under the plan (which generally is the spread realized upon the exercise of a stock option or purchase right, or the fair market value of the shares when the restricted stock or RSUs are granted or vest). Such a charge-back suggests that the local subsidiary is entitled to a tax deduction because, theoretically, it caused the parent company to grant stock awards to its employees in exchange for the reimbursement.
In addition, a stock recharge arrangement can effectuate the tax-free repatriation of cash from a non-U.S. subsidiary to its U.S. parent company. If the parent company and non-U.S. subsidiary comply with requirements set forth by regulations issued under Section 1032 of the Internal Revenue Code of 1986, as amended ("Section 1032"), the recharge payment will be treated for U.S. tax purposes as payment to the parent company in consideration for its stock. This means the recharge payment will not be taxable to the parent company as a dividend or otherwise. The payments for the stock plan costs by the non-U.S. subsidiary must be made "immediately" after the exercise date for stock options and "immediately" after the vesting date for restricted stock awards and the vesting and transfer dates for restricted stock units or they will not qualify for tax-free treatment under Section 1032. If the payments are not made in a timely manner, they will likely be characterized as a taxable distribution to the parent company for U.S. tax purposes.