Expanding to new jurisdictions is a huge milestone for most companies, but it also may introduce an array of new obligations. That’s especially true if companies offer equity to employees in multiple states or countries. After all, the laws and international tax regulations that apply to equity plans differ from place to place and a company’s current plan may not be compliant in other jurisdictions.
With Global Intelligence, companies can easily identify and track information about important legal and tax obligations in the more than 170 countries in our global equity compliance database, though companies should consult with lawyers and tax professionals in the applicable state or country about how these obligations apply.
Here, you’ll find a high-level summary of how Global Intelligence can help companies identify local legal and tax obligations, get employees up to speed about the international tax implications of receiving equity and help keep global teams coordinated.
Setting up for success
Finding the tax rules that apply to equity plans in different jurisdictions online may be difficult. They also may differ depending on if a company is private or public, the type of awards it offers, its plan structure, and its tax policies. Pinpointing a company’s obligations through solely online research can be challenging.
Global Intelligence helps to cut through that complexity by enabling a company to configure the application to its specific situation. During set-up, the system prompts users to include details such as where their company is headquartered, where it’s listed (if it’s public), where it offers equity, how many employees it has in each jurisdiction, whether it has tax-approved status in any country as well as its recharge position in each country. This data enables the global intelligence tool to pinpoint how these company-specific details may affect obligations and present information tailored to the company.
The global intelligence tool then gives users a fully customized global tax management dashboard that guides them through information about certain legal and tax obligations in each jurisdiction where the company offers equity. And if the company’s status changes (for instance, if a private company goes public or if a company adds new employees in a certain jurisdiction), users can simply update the system to help them stay on top of any new obligations the company may need to satisfy.
Considering local legal requirements
If a company plans to offer equity in multiple jurisdictions, its first question may revolve around how to comply with local laws. With Global Intelligence, companies have access to information about key local legal requirements. By selecting a specific jurisdiction and plan type, users see summary information about certain securities laws, exchange controls and plan rules that may be applicable to the company. Users can generate a checklist of action items and identify laws their company may need to comply with within the platform.
Companies can reasonably use global intelligence information as a first step in understanding a company’s compliance needs. Working with local law firms around the world, Global Intelligence tracks the changing laws and tax regulations in over 170 countries. Our team also regularly reviews government sites, competitive information and client feedback to update the global compliance database. This is important given the disparate laws that govern equity plans around the world.
Tackling tax regulations
As a business expands farther afield, the international tax considerations that govern global equity plans may change apace. In fact, taxation rules, including, withholding and reporting obligations, can be entirely different depending on where a company operates, its equity plan and award type, and its chargeback position in certain jurisdictions. In the U.S., for instance, options may be taxable at exercise, but in other locations, tax only applies at the time of sale.
Fortunately, Global Intelligence can help you keep track of these tax rules as well. Additionally, the recharge database shows users what tax obligations may arise depending on a company’s transfer pricing policies and alerts users if local rules change. Tax notes help users to identify unique tax information specific to a given country, while country-specific tax tables show users what taxation looks like from a withholding and reporting perspective – along with relevant deadlines.
Simplifying employee communications
One of the biggest challenges plan administrators may face is helping employees understand the tax implications of receiving equity. That task becomes even more complex when a company offers equity in multiple jurisdictions. Think about it: employee obligations at grant, vesting, exercise, and sale could differ in every location and can change year to year. How do can a company keep its employees informed?
Global Intelligence can help. With a few clicks, users can pull together an easy-to-understand employee tax guide that aligns with their organization’s brand. A templated approach lets users choose what information to include and exclude. They can even add their own content to answer frequently asked questions and configure the details to employees’ needs.
Once complete, users have the option to save the tax guides as static documents that they can distribute by PDF or post on their company intranet. But the real power and benefit of Global Intelligence comes from building a tax guide portal. When a company chooses to host its tax guides on the portal, the information remains dynamic, and Global Intelligence helps to keep the information up-to-date as local rules or company policies change.
Looping in the team
By now it’s pretty clear that there are a lot of moving parts when it comes to managing a global equity plan. Chances are a company will need to coordinate activities with multiple people in different locations around the world. Once again, Global Intelligence has companies covered.
That’s because the system can automatically generate reminders, alerts and action items to keep users on top of their company’s potential legal and tax obligations. As reminders come up, users can assign responsibilities to different team members, track activity progress and see due dates in a calendar view so they are reminded of important filing or reporting dates.
Need to loop in external team members? That’s no problem either. As obligations are flagged, users can send them to an internal team or to external counsel.
Go global with confidence
All in all, Global Intelligence gives companies key information to help manage the due diligence of its global equity plans – from legal summaries, tax rates, tax withholding and reporting tables to recharge feasibility tables and participant tax guides. Custom compliance calendars let companies keep track of its tax and legal obligations and alerts remind companies about critical deadlines. It is, quite literally, a world of information at a company’s fingertips.
If you’d like to learn more about Global Intelligence, reach out!