Shareworks Global Intelligence Newsletter August 2020

August 1, 2020 Shareworks Marketing

Icon of a globe with a network connecting countries together with the wording "Global Intelligence Newsletter" underneath.

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

Azerbaijan: Mandatory Health Insurance Premiums Postponed until 2021

The completion of the implementation of the mandatory Health Insurance program in the Republic of Azerbaijan have been postponed until January 1, 2021. 

It also should be noted that the application of the 50% discount on the amount of premiums to be paid from salaries up to AZN 8,000 in the non-oil/gas sector and the private sector will be extended until January 1, 2022.

This information has been provided by our collaborating law firm in Azerbaijan, Michael Wilson & Partners, Ltd. (contact: Michael Wilson at michael.wilson@mwp.kz)

 

China: Employee Share Plans Securities Laws Update

The amended Securities Law of China has clarified that, effective from March 1, 2020, offers of listed shares under an employee share plan will not be deemed to be a public offer under Chinese securities laws regulations, such that a publicly traded foreign parent company offering shares to the employees of its local subsidiary will not trigger any securities laws requirements in China.

Prior to this change, the general practice was for companies to apply for SAFE approval, for foreign exchange compliance purposes, and the securities laws requirements were then deemed to have been satisfied by the SAFE registration. The amended securities law does not apply to foreign private companies, who are currently unable to apply for SAFE approval for their equity programs.

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

 

Denmark: New Dividend Withholding Tax Procedure

On May 18, 2020, the Danish Government reached an agreement with the Danish financial sector on a new dividend withholding tax procedure to ensure that the correct amount of tax is levied before Danish companies paying out dividends.

The agreement obliges foreign shareholders of Danish companies to register with the Danish Tax Authority if the foreign shareholder wishes to have the correct withholding tax levied at source or, as an alternative, to seek a refund. Consequently, in case of a tax treaty being applicable in any particular case, the correct withholding tax rate can be applied directly at source. In addition, if it turns out that not enough withholding tax was levied, the tax authorities will be able to collect the underpaid tax from the Danish banks instead of trying to recover the unpaid tax from abroad.

This information has been provided by our collaborating law firm in Denmark, Kromann Reumert (contact: Michael Nørremark at mno@kromannreumert.com)

 

Greece: Amendment for the Taxation of Free-Share Awards

On July 18, 2020, the Greek government tabled a new tax bill to the Greek Parliament. This tax bill is expected pass through Parliament and be ratified into law at the end of July.

Among its other measures, this tax bill provides that the offer of free shares (i.e., restricted shares and restricted share units) by an employer to its employees can benefit from favorable tax treatment. In particular, the offer of free shares by an employer with conditions requiring the fulfilment of certain goals or the realization of certain events, will not be considered as a taxable benefit-in-kind. Instead, when the employee sells such shares, their sale value will only be subject to capital gains tax at a flat 15% rate, and to the special solidarity contribution at progressive rates of up to 10%. 

The above-mentioned provisions will be applicable for any income obtained from qualifying awards from January 1, 2020 onwards.

This information has been provided by our collaborating law firm in Greece, Kyriakides Georgopoulos Law Firm (contact: Loukas Panetsos at l.panetsos@kglawfirm.gr)

 

Taiwan: Proposed Taxation of Capital Gains from Unlisted Shares

The Minister of Finance has proposed a bill that seeks to amend the Taiwan Income Tax Act. As per the amendments, capital gains deriving from transfer of unlisted shares would become subject to capital gains tax.

Currently, capital gains derived from transfer of securities are exempt from capital taxation in Taiwan (although they may be subject to the alternative minimum tax), while dividends distributed by companies to shareholders may be subject to income tax. With the proposed amendments, the authorities wish to prevent situations where individual taxpayers could avoid taxation by transferring shares and realizing capital tax-exempt gains instead of receiving income from dividends. 

If the bill is passed, the application of capital gains tax on the sale of unlisted shares will come into effect on January 1, 2021.

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

 

United States of America: IRS Issues Guidance For Tax Withholding of Stock Awards

The U.S. Internal Revenue Service (IRS) has issued a General Legal Advice Memorandum (GLAM) and an internal procedural update, addressing a number of issues related to the timing and amount of tax withholding of certain stock awards. 

Regarding restricted stock units (RSUs) that are settled in shares, the GLAM states that, in applying the next-day deposit rule, income and FICA taxes derived from the RSUs are required to be deposited with the IRS within one business day from the date the employer initiates the payment. As per the GLAM, the payment is considered to be initiated when the employer requests the transfer of the shares to the participant. However, this approach poses challenges for employers, as often the transfer of the shares is not completed by the next business day and consequently, the withholding obligation would arise prior to the employee receiving the shares.

To clarify the issue, in a follow-up to the GLAM, the IRS issued an internal procedural update, pursuant to which the administrative waiver for penalties relating to the timeliness of tax withholding deposits has been expanded to include stock-settled RSUs as well as stock-settled stock appreciation rights (SARs). The same waiver already applies to non-statutory stock options. Under the waiver, IRS examiners may consider the actual settlement date as the liability date when determining whether there has been a late payment under the next-day rule, provided that the taxes are deposited within one business day of the settlement date of the awards and the settlement occurs within two business days of the SAR exercise date/the RSU share payment date.

The documents are available here and here.

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

Argentina: Equity Reporting for Argentinian Resident Companies

July 30, 2020
Affects: Parent Company

Argentinian resident companies must report all individuals and legal entities with ownership or voting rights in their capital or equity to the Tax Authority, as the ultimate individual beneficial owner must be disclosed. Companies resident in Argentina are also required to report any changes in top executives and board members within 10 working days of the change.

The reporting must be completed between July 28 – July 30 following the reported year, with the specific date depending on the tax ID of the reporter. For calendar year 2019, the reporting must be done between October 28 – October 30, 2020. 

This information has been provided by our collaborating law firm in Argentina, Nicholson y Cano Abogados (contact: Cecilia Martin at cmartin@nyc.com.ar and Emiliano Silva at esilva@nyc.com.ar)
 

India: Annual Report

September 30, 2020
Affects: Local Company

Indian employers relying on the terms of the General Permission enacted by the Reserve Bank of India (RBI) must file an annual report with the RBI providing details regarding the shares issued to residents of India, the number of employees who received the shares, the amount of funds remitted for the purchase of shares and amounts remitted on account of recharge arrangements, if any, during the previous tax year on a specified form. Companies are advised to file the report by September 30 at the latest.

This information has been provided by our collaborating law firm in India, Little & Co. (contact: Rajni Divkar at rajni.divkar@littlecompany.com)
 

China: SAFE Quarterly Reports

October 3, 2020
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

October 10, 2020
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)

 

India: Employer Tax Filings

October 15, 2020
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: Rajni Divkar at rajni.divkar@littlecompany.com)

 

Upcoming Events

NASPP Conference & Exhibition 2020

September 1-10, 2020

The annual National Association of Stock Plan Professionals (NASPP) Conference & Exhibition goes virtual. 

More info: https://conference.naspp.com/event/376df509-7b86-47ea-82eb-06d5178bf3a5/summary

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Shareworks Global Intelligence Newsletter July 2020

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Shareworks Global Intelligence Newsletter June 2020
Shareworks Global Intelligence Newsletter June 2020

Check out our September Global Intelligence Newsletter to stay updated on global tax and global share plan ...

Shareworks, Shareworks Global Intelligence and all product marks and logos are trademarks of Shareworks.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.