Shareworks Global Intelligence Newsletter January 2021

January 1, 2021 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

Canada: Canada and Québec Pension Plan Contribution Rates for 2021

The Canada Pension Plan (CPP) employer and employee contribution rates increased from, in both cases, 5.25% in 2020 to 5.45% in 2021. 

The maximum pensionable earnings also increased from CAD 58,700 in 2020 to CAD 61,600 for 2021. The maximum employer and employee annual contribution to the plan for 2021 will be $3,166.45 each (CAD 2,898 in 2020). The basic exemption amount for 2021 remains at CAD 3,500.

In Québec, where a separate pension plan is operated, the Québec Pension Plan (QPP) employer and employee contribution rates increased from, in both cases, 5.70% in 2020 to 5.90% in 2021. The maximum annual contribution has increased as well, from CAD 3,146.40 in 2020 to CAD 3,427.90 in 2021. The basic exemption amount for 2021 remains at CAD 3,500.

The changes became effective from January 1, 2021.

This information has been provided by our collaborating law firm in Canada, Stikeman Elliott LLP (contact: Michel Legendre at mlegendre@stikeman.com)

 

Canada: Employment Insurance Rates Announced for 2021

Employment insurance (EI) premium rates and related amounts for 2021 are as follows (outside Québec):

  • The annual maximum of insurable earnings has increased from CAD 54,200 to CAD 56,300.
  • The employee insurance contribution rate is 1.58%, no change from 2020, with a maximum contribution of CAD 889.54. 
  • The employer insurance contribution rate is 2.212%, no change from 2020, with a maximum contribution of CAD 1,245.36 per employee.

In Québec, rates differ from the above: 

  • The annual maximum of insurable earnings remains the same as for the rest of the country, CAD 56,300.
  • The employee insurance contribution rate has been reduced from 1.2% to 1.18%, with a maximum contribution of CAD 664.34.  
  • The employer insurance contribution rate has also been reduced from 1.68% to 1.652%, with a maximum contribution of CAD 930.08 per employee.

The changes became effective from January 1, 2021.

This information has been provided by our collaborating law firm in Canada, Stikeman Elliott LLP (contact: Michel Legendre at mlegendre@stikeman.com)

 

Czech Republic: Introduction of Progressive Taxation and Update of Social Security Thresholds

Effective from January 1, 2021, progressive taxation has been introduced on individual income in the Czech Republic, replacing the previous system, where a 15% flat rate and a 7% solidarity tax was applicable on gross income increased by social security and health care insurance contributions paid by the employer. Consequently, the total tax charge on employment income has decreased.

The progressive tax bands applicable to individual income are as follows:

Annual income (CZK)

Rate (%)

0 - 1,701,168

15%

1,701,168.01 - up

23%

In addition, the annual earnings threshold for employee and employer social security payment purposes has been increased from CZK 1,672,080 to CZK 1,701,168.

 

This information has been provided by our collaborating law firm in Czech Republic, KSB - Kocian Solc Balastik, advokatni kancelar, s.r.o. (contact: Helena Navratilova at hnavratilova@ksb.cz)

 

Finland: Changes to Income Bands and Social Security Contributions for 2021

The personal income bands for state tax purposes will be as follows:

Annual earnings (EUR)

Rate (%)

0 - 18,600

0

18,600.01 - 27,900

6

27,900.01 - 45,900

17.25

45,900.01 - 80,500

21.25

80,500 - up

31.25

The average municipal personal income tax rate in 2021 is 20.02% and the rates for church tax paid on personal income vary from 1% to 2.2%.

The employee social security contributions rates are as follows:

  • 7.15% Earnings-related Pension insurance contribution (8.65% for individuals aged 53 to 62)
  • 1.40% Unemployment insurance contribution
  • 1.36% Daily allowance contribution) for income more than EUR 17,766 per year); and
  • 0.68% Health care contribution (special increased rate 1.65%

The employer social security contributions rates are as follows:

  • 1.53% Health insurance contribution
  • 16.95% Average Earnings-related Pension insurance contribution
  • 0.50% (if less than EUR 2,169,00 total payroll) or 1.90% (above EUR 2,169,00 total payroll) Unemployment insurance contribution
  • 0.70% Average Accident insurance contribution
  • 0.07% Average Group Life Insurance contribution

The changes above became effective on January 1, 2021.

 

This information has been provided by our collaborating law firm in Finland, Krogerus (contact: Antti Lehtimaja at antti.lehtimaja@krogerus.com)

 

France: Finance Law 2021

Among other measures, the Finance Law 2021 includes changes to income tax table and withholding tax for non-resident individuals. 

Income Tax Brackets

Earnings (EUR)

Rate (%)

0 - 10,084

0

10,084.01 - 25,710

11

25,710.01 - 73,516

30

73,516.01 - 158,122

41

158,122.01 - up

45

Non-resident Withholding Tax 

For non-French tax residents income tax has to be withheld (at a rate up to 20%) and remitted to the tax authorities by the 15th of the month following the end of the quarter of the taxable event. The withholding brackets for non-residents are as follows:

Earnings (EUR)

Rate (%)

0 - 15,018

0

15,018.01 - 43,563

12

43,563.01 - up

20

The changes became effective January 1, 2021.

This information has been provided by our collaborating law firm in France, Berry Avocats (contact: Etienne Pujol at etienne.pujol@berrylaw.fr)

 

Kenya: Income Tax Bands for 2021

Effective from January 1, 2021, individual income tax bands have been amended in Kenya, with the maximum income tax rate increasing from 25% to 30%. The applicable bands are set out below.

Annual income (KES)

Rate (%)

0 - 288,000

10

288,000.01 - 388,000

25

388,000.01 - up

30

This information has been provided by our collaborating law firm in Kenya, Dentons Hamilton Harrison & Mathews (contact: Richard Omwela at romwela@hhm.co.ke)

 

Russia: Introduction of Progressive Individual Income Tax Rates

As previously reported, progressive individual income tax rates became effective January 1, 2021 in Russia for all resident individuals. The rates are as follows:

Earnings (RUB)

Rate (%)

0 - 5,000,000

13

5,000,000.01 - up

15

This information has been provided by our collaborating law firm in Russia, ALRUD (contact: Elena Novikova at enovikova@alrud.com)

 

Spain: Financial Transaction Tax Errata

In our previous newsletter we informed of the new financial transaction tax applicable from January 16, 2021. The correct tax rate applicable on the acquisition of shares of publicly traded Spanish companies with a market capitalization exceeding EUR 1 billion is 0.2% and not 2%.

Please note this 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)

 

United States of America: Social Security changes for 2021

The Social Security Administration published the applicable federal Social Security wage base for 2021.

The wage base for computing the social security tax in 2021 increased to USD 142,800 (USD 137,700 in 2020).

The combined tax rate of 7.65% (consisting of a Social Security tax at the rate of 6.2% and a Medicare tax at the rate of 1.45%) remains unchanged. The Medicare tax continues to be calculated as a flat rate without a cap, and wages in excess of USD 200,000 continue to be subject to an additional 0.9% Medicare tax withholding.

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

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)

 

Vietnam: Equity Reporting for Registered Plans

March 31, 2021
Affects: Parent Company

Companies that operate equity plans which have been approved by the State Bank of Vietnam must file a report providing details of any awards granted or vested as well as any options that have been exercised in the previous calendar year. The due date for filing is March 31 following the end of the tax year. 

This information has been provided by our collaborating law firm in Vietnam, Russin & Vecchi (contact: Diu Dao Hong at dhdiu@russinvecchi.com.vn)

 

Ireland: Equity Reporting

March 31, 2021
Affects: Local Company

Companies are required to report to the Irish Revenue on Form RSS1 (filed electronically) by March 31 any unapproved options and other rights to acquire shares that were granted, assigned, released and/or exercised by employees and/or directors during the preceding year.

Separate reporting requirements apply for approved save-as-you-earn plans, approved profit-sharing plans and employee share ownership trusts. The forms are available for download on the Irish Revenue website.

Failure to comply with these mandatory filing obligations will result in a penalty and, in the case of any approved schemes, may result in the withdrawal of Revenue approval for approved schemes.

This information has been provided by our collaborating law firm in Ireland, McCann FitzGerald, Solicitors (contact: Eleanor Cunningham at eleanor.cunningham@mccannfitzgerald.com)

 

Japan: Equity Reporting

March 31, 2021
Affects: Local Company

The deadline for annual reporting in respect of offshore assets for Japanese employers is approaching. Japanese companies that are majority owned by non-Japanese companies and Japanese branch offices of non-Japanese companies must file an annual report with the tax authorities, using Form 9(3), if employees have had cash or equity awards that vested or were exercised in the previous tax year.

The due date for filing is March 31 following the end of the tax year. Form 9(3) is available on the website of the Japanese tax authority.

This information has been provided by our collaborating law firm in Japan, Anderson Mori & Tomotsune (contact: Kunihiko Morishita at kunihiko.morishita@amt-law.com)

 

China: SAFE Quarterly Reports

April 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)

 

Singapore: Equity Reporting

April 15, 2021
Affects: Local Company

Under the Qualified Employee Equity-Based Remuneration Schemes (QEEBR), qualifying employees may elect to defer payment of the tax due at exercise of stock options and vesting of share awards, including RSUs, for up to 5 years, subject to an interest payment. Under the tax deferral scheme, the applicant must meet certain criteria.

A plan that meets the applicable requirements of the QEEBR legislation is automatically qualified (i.e., no approval is required).

Employees must submit an application form to defer their tax gains to the Inland Revenue Authority of Singapore, and the employer must certify on the application form that the stock plan under which the stock option and/or share award is granted qualifies for the QEEBR Scheme. The form must be submitted to the Singaporean tax authorities by April 15.

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)

 

India: Employer Tax Filings

April 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)

 

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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THIS INFORMATION IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s) as Shareworks does not provide legal or tax advice and the information is not tailored to the specific situations of your company or your employees. The information is sourced from third parties, may not be current and is subject to change without notice. Shareworks makes no representations or warranties concerning the accuracy, completeness or timeliness of the information and is not implying an affiliation, sponsorship or endorsement with/of any third parties (including those hosting and presenting at third-party events) or views expressed by such parties. Any views expressed are solely those of the third-party source. Shareworks shall have no liability arising out of, or in connection with, the information, including any loss caused by use of, or reliance on, the information. All information made available by Shareworks is subject to the terms of the written agreement entered into between Shareworks and your company.
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