Shareworks Global Intelligence Newsletter December 2020

December 1, 2020 Shareworks Marketing

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Shareworks Global Intelligence newsletter provides an overview of recent changes affecting employee share plans globally. 

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We have made some exciting changes to our monthly Shareworks Global Intelligence newsletter. Starting with this month’s newsletter, you will receive updates for all countries, regardless of your subscription.This will help you stay ahead globally!

We also want your feedback! To ensure we are continuously enhancing our products and solutions, to better help you access the information you need, we are planning to set up a few interviews with clients and our user experience (UX) team. If you would like to be a participant in our UX survey, please send us a note and we can coordinate a time that works for you. 

Please find below the Shareworks Global Intelligence overview of certain changes affecting employee share plans globally. This issue also highlights certain upcoming global filing and reporting requirements (for the parent company or local company). 

As always, please feel free to contact us if you need further assistance.

 

Country Updates

Germany: Solidarity Surcharge Changes 

Effective from January 1, 2021, the solidarity surcharge, currently payable at the rate of 5.5%, will be reduced as follows:

  • Employees earning up to EUR 61,717 annually will be exempt from the solidarity surcharge; 
  • Employees earning between EUR 61,717 and EUR 96,409 annually will pay a partial solidarity surcharge on a sliding scale until the EUR 96,409 threshold for paying the full solidarity surcharge is met; and 
  • Employees earning above EUR 96,409 annually will continue paying the solidarity surcharge at the full rate of 5.5%.

This information has been provided by our collaborating law firm in Germany, Haver & Mailaender (contact: Ulrich Schnelle at us@haver-mailaender.de)

 

Germany: Amended Social Security Thresholds 

Updated social security thresholds have been approved for 2021 in Germany.

Effective January 1, 2021, the pension insurance and unemployment insurance annual earnings threshold will increase from the current EUR 82,800 to EUR 85,200 in the old Federal States (from EUR 77,400 to EUR 80,400 in the new Federal States). The annual cap for the health insurance contribution will increase from the current cap of EUR 56,250 to EUR 58,050 in all Federal States.

This information has been provided by our collaborating law firm in Germany, Haver & Mailaender (contact: Ulrich Schnelle at us@haver-mailaender.de)

 

Luxembourg: Draft Bill on Replacing Stock Options and Warrants Regime

Currently, employees in Luxembourg can benefit from a reduction in the taxation of nontransferable stock options, up to a maximum discount of 20% of the taxable amount at the time of exercise, provided the underlying shares are subject to a lock-up period. With respect to negotiable (i.e., transferable) options, the benefit of such options (difference between the price paid by the employee and the fair market value of the option) is taxable upon the grant of the option. 

If the negotiable option is not listed, the Luxembourg tax authorities accept that the fair market value can be determined by using the Black-Scholes method or any other similar financial method. In case the valuation is not determined by the use of one of these financial methods, the Luxembourg tax authorities assume that the value of the option will generally be established at 30% of the value of the underlying stock at the time the option is granted, subject to certain conditions. 

Pursuant to the 2021 budget draft bill, the above mentioned tax benefits will be canceled effective January 1, 2021; it is not currently clear if the favorable tax treatment for existing qualifying options will be grandfathered. In replacement, the Luxembourg government would introduce a new tax-friendly participative premium regime, effective as of the start of 2021 (the “participative premium regime”). Under the new regime, if the applicable conditions are satisfied, the employee will benefit from a tax exemption on 50% of any profit-sharing bonus received. Among other requirements, the profit-sharing bonus cannot exceed 25% of an employee’s gross annual remuneration, and the total amount of the profit-sharing bonuses paid by the employer cannot exceed 5% of its prior year positive result as determined by the LuxGAAP accounts. Appropriate reporting to the local tax office will also be required. 

This information has been provided by our collaborating law firm in Luxembourg, Vandenbulke(contact: Krasimir Kehayov at krk@vdblaw.com)

 

Malaysia: Tax Measures Budget 2021 

On November 6, 2020, the Malaysian government announced the budget for 2021. Among others, the following proposals are included in the bill that, subject to approval, will become effective on January 1, 2021:

  • Income tax rate for the tax bracket of RM50,001 to RM70,000 will be reduced from 14% to 13%;
  • Employees Provident Fund: employees’ contributions will be reduced from 11% to 9% for the 2021 tax year;
  • A special flat income tax rate of 15% for non-Malaysian persons will be available for companies relocating their operations to Malaysia. This is to be granted to noncitizens holding key positions/C-Suite positions for a period of 5 consecutive years, limited to 5 noncitizens who have been granted a relocation tax incentive under the PENJANA tax initiative. The qualifying conditions include that:
    • The individual’s monthly salary is not less than RM 25,000; and
    • The individual is a Malaysian tax resident for each year of assessment. 

This information has been provided by our collaborating law firm in Malaysia, Loh Chow Tet & Associates(contact: Ann Premilla David at general@lohchowtet.com)

 

Morocco: Finance Bill 2021 

The Moroccan Ministry of Economy and Finance published the Finance Bill for 2021. Among other changes, the bill proposes the re-introduction of the social solidarity contribution (contribution sociale de solidarité, CSS) on profits and income for both companies and individuals respectively. If approved, the rate for individuals the rate will be of 1.5% on total Moroccan-source annual income equal to or higher than MAD 120,000 earned by individual taxpayers. 

For companies, the social solidarity contribution rates applicable to profits will be as follows:

Annual net profits (MAD) Rate (%)
5,000,000 - 40,000,000 2.5
40,000,000 - up 3.5

The Bill is subject to approval by parliament. 

This information has been provided by our collaborating law firm in Morocco, Hajji & Associes (contact: Amin Hajji at a.hajji@ahlo.ma)

 

Norway: Budget 2021 Tax Measures 

The Norwegian government has presented its budget for 2021. The following relevant tax measures are included in the proposal:

  • The bracket tax on personal income (trinnskat) will be reduced in in the first and second brackets (Class 1 and Class 2) from 1.9% to 1.7% and from 4.2% to 4.0% respectively. In addition, the lower threshold of the third tax bracket of 13.2% (Class 3 tax rate) will be reduced to NOK 614,900.
  • Under the current rules, an employee can purchase company stock at a discounted price under a broad-based employee share plan on a tax advantaged basis. Specifically, employees are exempt from taxation on stock purchased with a discount of up to 20%, up to a maximum amount of NOK 5,000 per year. Under the proposed rules, the maximum permissible discount will be 25% of the market value of the underlying stock, subject to maximum annual tax-free limit of NOK 7,500.

The measures are subject to a final approval.

This information has been provided by our collaborating law firm in Norway, Arntzen de Besche(contact: Marianne Sahl Sveen at mss@adeb.no)

 

Poland: Electronic Register of Shares 

Effective January 17, 2020, Poland changed the rules regarding the registration of publicly offered securities in the register maintained by the Polish Financial Supervision Authority (the “PFSA”). In response to a number of queries received regarding this change, we have summarized the amended rules below.

Before the change, all securities publicly offered in Poland and all securities and financial instruments being admitted to trading in Poland were subject to registration in the public register of securities maintained by the PFSA. Even though the register was operated as an electronic register, the notifications were made on paper.

Under the new registration regime, only equity securities are subject to the registration process, which is also now fully electronic. Registration requirements apply to shares that are:

  1. Publicly offered in Poland, or
  2. Admitted to trading in Poland on either the regulated market or in alternative trading systems.

The requirement under (1) has the practical consequence that even if an employee share purchase plan is offered to a limited group of employees in Poland and is exempt from the requirement to prepare a prospectus, the offering would nonetheless need to be registered in Poland. Shares must be entered into the register within 14 days from the date of the issuance of the shares to employees under a given offer.

The registration system is available only in Polish and requires using a method for identity verification that is in generally available only to Polish citizens or other persons residing in Poland, local assistance may be required.

This information has been provided by our collaborating law firm in Poland, Wardynski & Partners (contact: Szymon Kubiak at szymon.kubiak@wardynski.com.pl)

 

South Africa: South Africa Tax Bills for 2021 

The Minister of Finance introduced the final 2020 tax bills. Among other changes, the current 183-day threshold for the foreign tax remuneration exemptions has been reduced to 117 days in any 12-month period, for years of assessment ending on or after February 29, 2020 and on or before February 28, 2021.

The bills will become law upon assent by the President.

This information has been provided by our collaborating law firm in South Africa, Edward Nathan Sonnenbergs (contact: Megan McCormack at mmccormack@ensafrica.com)

 

Spain: Financial Transaction Tax 

The Spanish parliament approved a new financial transaction tax (FTT) of 2% on the acquisition of shares of certain Spanish companies, which will be effective from January 16, 2021, with the first reporting due by February 2021. 

The FTT is an indirect tax applicable on the acquisition of shares of publicly traded Spanish companies with a market capitalization exceeding EUR 1 million. There are exemptions from the FTT provided in the legislation. Consultation with local counsel is recommended. 

Note, however, that this new financial transaction tax is not applicable to shares issued under employee share plans.

This information has been provided by our collaborating law firm in Spain, Cuatrecasas (contact: Jaime Pavía Nocete at jaime.pavia@cuatrecasas.com)

 

Spain: 2021 Budget 

The budget bill for 2021 was released by the Spanish government, proposing various changes to the personal income tax. A new state tax bracket will be introduced at the rate of 24.5%, applicable to income exceeding EUR 300,000. In Spain, because the personal income tax rate consists of a state tax and a regional tax component, the final rate may vary by region. 

Once approved by the parliament, the measure will be effective from January 1, 2021.

This information has been provided by our collaborating law firm in Spain, Cuatrecasas (contact: Jaime Pavía Nocete at jaime.pavia@cuatrecasas.com)

 

United States of America: 2021 Income Tax Bands 

The IRS has announced the inflation adjusted individual income tax bands for 2021. The bands applicable for single filing unmarried individuals are as follows: 

Taxable income (USD) Tax rate (%)
0 - 9,950 10
9,951 - 40,525 12
40,526 - 86,375 22
86,376 - 164,925 24
164,926 - 209,425 32
209,426 - 523,600 35
Over 523,600 37

This information has been provided by our collaborating law firm in United States of America, Pillsbury Winthrop Shaw Pittman (contact: Jessica Lutrin at jessica.lutrin@pillsburylaw.com)

 

Upcoming Filing and Reporting

China: SAFE Quarterly Reports 

January 3, 2021
Affects: Local Company

Companies that have obtained SAFE approval for their equity plans in China are required to file quarterly reports with their local SAFE office within three business days following the end of the relevant quarter.

This information has been provided by our collaborating law firm in China, Martin Hu & Partners (MHP) (contact: Kevin Xu at kevin.xu@mhplawyer.com)

 

Saudi Arabia: Quarterly Equity Reporting 

January 10, 2021
Affects: Parent Company

Companies offering share plans to employees in Saudi Arabia under the revised securities law exemption must notify the Capital Market Authority (“CMA”) within 10 days after the end of the quarter following grant disclosing the total number and value of all offers made to employees during the preceding quarter. This notification can be made by an authorised person or by the company. Plan amendments or changes may also require additional filings with the CMA.

This information has been provided by our collaborating law firm in Saudi Arabia, Tamimi (contact: Grahame Nelson at g.nelson@tamimi.com)

 

Philippines: Year End Reporting Requirements 

January 10, 2021
Affects: Parent Company

Companies that have obtained a formal exemption from the Philippine Securities and Exchange Commission (“SEC”) are required to file an annual report with the SEC, providing relevant details of any equity awards granted, issued, vested, exercised or purchased, as applicable, in the preceding calendar year, along with a list of any new employees who became eligible to acquire shares under the plan. The due date for filing is January 10 following the end of the preceding calendar year. 

This information has been provided by our collaborating law firm in Philippines, Quasha Ancheta Pena & Nolasco (contact: Joel Raymond Ayson at jrra@quasha-interlaw.com)

 

India: Employer Tax Filings 

January 15, 2021
Affects: Local Company

Indian employers are required to file Form 24Q with the Indian tax authorities on a quarterly basis. These quarterly returns report information on employment income paid to employees (including from share-settled awards) as well as taxes withheld.

The quarterly returns must be submitted by:

  • May 31 for the quarter ending March 31
  • July 31 for the quarter ending June 30
  • October 31 for the quarter ending September 30
  • January 31 for the quarter ending December 31
This information has been provided by our collaborating law firm in India, Little & Co. (contact: Priyanka Pol at priyanka.pol@littlecompany.com)

 

Thailand: Thai SEC Filing 

January 15, 2021
Affects: Parent Company

The annual reporting deadline for companies that grant stock options to employees in Thailand is approaching. Companies must report any exercises of those options to the Thai SEC by January 15 following the year in which they were exercised. 

 
This information has been provided by our collaborating law firm in Thailand, International Legal Counsellors Thailand Limited(contact: Supachai Arunthamsakul at supachaia@ilct.co.th)

 

United States of America: Annual Reporting Deadline for Qualified Plans 

January 31, 2021
Affects: Local Company

The annual reporting deadline for companies that grant tax qualified incentive stock options (ISOs) or shares to an employee under a tax-qualified employee stock purchase plan (ESPP) in the U.S. is approaching. Companies that granted such tax qualified awards during the year must file annual information statements, namely Form 3921 for ISOs and Form 3922 for a tax-qualified ESPP. The forms provide details in respect of any employee or former employee who exercised an ISO, or to whom shares were transferred under a tax qualified ESPP in the relevant tax year.

Information statements must be provided to employees by January 31 (or the next business day if January 31 falls on a weekend). In addition, the statements have to be filed with the Internal Revenue Service by March 31 (if filed electronically), or by the last day of February (if filed in paper). Forms 3921 and 3922 as well as instructions on how to complete these forms are available on the IRS website.

This information has been provided by our collaborating law firm in United States of America, Pillsbury Winthrop Shaw Pittman(contact: Jessica Lutrin at jessica.lutrin@pillsburylaw.com)

 

Taiwan: Tax Withholding Statement 

January 31, 2021
Affects: Local Company

Taiwan employers must submit a non-withholding statement to the tax authorities by January 31 that includes the name, address, national ID number of each employee with awards or shares that vested, were exercised or purchased under an employee equity plan in the previous calendar year. In addition, the Taiwan employer must also issue a non-withholding statement to employees by February 10.

This information has been provided by our collaborating law firm in Taiwan, Huang & Partners (contact: Lawrence Lee at lawrence_lee@huangandpartners.com.tw)

 

Germany: Wage Tax Certificate 

February 28, 2021
Affects: Local Company

The German employer must issue a wage tax certificate ("Lohnsteuerbescheinigung") containing information of each employee's calendar year income, as well as information on social security contributions. The wage tax certificate, which must also include all employee benefits, must be sent electronically on an official form to the tax authority at which the employer is registered and a copy must also be provided to the employee. The deadline for filing is the last day in February after the end of the previous tax year (December 31). 

This information has been provided by our collaborating law firm in Germany, Haver & Mailaender (contact: Ulrich Schnelle at us@haver-mailaender.de)

 

Malaysia: Annual Reporting of Equity Awards 

February 28, 2021
Affects: Local Company

The deadline for annual reporting in respect of equity awards granted to Malaysian employees is approaching. Companies that granted such equity awards must report any stock option exercises, RSU vestings, and/or purchases under an ESPP that took place during the previous calendar year to the Malaysian Inland Revenue Board on Appendix C of the Form BT/MSSP/2012 and on the statement of remuneration (EA form) which is issued to employees.

The due date for filing is February 28 following the end of the tax year. Form Appendix C of Form BT/MSSP/2012 is available on the website of the Malaysian Inland Revenue Board.

This information has been provided by our collaborating law firm in Malaysia, Loh Chow Tet & Associates (contact: Ann Premilla David at general@lohchowtet.com)

 

Singapore: Filing for Former or Posted Employees 

March 1, 2021
Affects: Local Company

The local company must file a report on appendix 8B with the Inland Revenue Authority of Singapore in respect of all Singaporeans and Singapore permanent resident employees who have ceased employment or are posted overseas, and derived gains from the vesting, exercise, assignment, release or acquisition of any rights obtained under any employee stock option plan or employee share ownership plan which are taxable in Singapore.

The due date for both filings is March 1 following the end of the tax year.

This information has been provided by our collaborating law firm in Singapore, Low Yeap Toh & Goon LLP (contact: Low Siew Joon at infolaw@lytag.com.sg)

 

China: Request for Outbound Remittance Quota 

30 days before the SAFE renewal date.
Affects: Local Company

The local company may need to apply for approval for an annual outbound remittance quota. If an annual SAFE renewal filing is otherwise required by the local SAFE, the local company should include the request for the outbound remittance quota for the following year together in the annual filing (assuming that the quota for the year has not yet been used up). If an annual filing is not otherwise required by the local SAFE (such as in Beijing), the local company will need to apply to renew its outbound remittance quota before the validity period expires or the approved quota is used up, whichever is earlier. The application for the renewal of the annual outbound remittance quota should be done early to allow time for processing and approval of a new quota and to avoid a disruption in outbound remittances under the affected plans.

This information has been provided by our collaborating law firm in China, Martin Hu & Partners (MHP) (contact: Kevin Xu at kevin.xu@mhplawyer.com)
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