Shareworks Global Intelligence Newsletter January 2020

January 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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Country Updates

Canada: Canada and Quebec Pension Plan Contribution Rates for 2020

As published by the Canada Revenue Agency, the employer and employee contribution rates to the Canada Pension Plan will increase from 5.1% to 5.25% on January 1, 2020. The maximum annual contribution for both employers and employees will also increase from CAD 2,748.90 to CAD 2,898.00. 

In Quebec, where a separate pension plan is operated, the current contribution rate of 5.55% will increase to 5.7% on January 1, 2020 for both employees and employers. The maximum annual contribution will increase as well, from CAD 2,991.45 to CAD 3,146.40.

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

 

Canada: Changes to the Taxation of Employee Stock Options Postponed 

On December 19, 2019, the Canadian federal government announced that the planned amendments to the taxation of employee stock options will not come into effect on January 1, 2020 as previously announced, but that the revised plans will be included in the next budget.

The new effective date of the changes in the tax law, which will be introduced in the 2020 budget, will allow stakeholders enough time to review and adjust their processes to accommodate the new rules. 

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

 

Croatia: Income Tax Amendments for 2020

In November 2019, the government passed the following amendment relating to individual income taxation, with effect from January 1, 2020. Employees up to 25 years old will be eligible for a 100% tax deduction, and employees between 25 and 30 years old will be eligible for a 50% tax deduction from their individual income tax base up to HRK 360,000 (approximately EUR 48,500).

This information has been provided by our collaborating law firm in Croatia, Gjurgjan & Sribar Radic (contact: Ivan Gjurgjan at ivan.gjurgjan@gsr.hr).

 

Finland: Social Security Contributions for 2020

The social security contributions payable in Finland by employees and employers in 2020 will be as noted below.

Contributions payable by employees:

  • Health insurance contributions, consisting of
    • a health care payment  at the rate of 0.68%;  special increased rate 1.65% (in 2019, the corresponding figures were 0% and 1.61%);
    • a daily allowance payment at the rate of 1.18% on annual employment income amounting to at least EUR 14,574 (in 2019, the rate was 1.54% on income at the minimum of EUR 14,282).
  • Earnings-related pension insurance contribution at the rate of 7.15% / 8.65% for employees aged 53 to 62 (in 2019, the corresponding figures were 6.75% and 8.25%).
  • Unemployment insurance contribution: 1.25% (in 2019, 1.50%).

Contributions payable by employers:

  • Health insurance contribution at the rate of 1.34% (in 2019, 0.77%).
  • Earnings-related pension insurance contribution, in average payable at the rate of 16.95% (in 2019, 17.35%).
  • Unemployment insurance contribution at the rate of 0.45% / 1.70% on total payroll amounts exceeding EUR 2,125,500; (in 2019, the corresponding figures were 0.5% and 2.05 with a threshold of 2,086,500).
  • Accident insurance, in average at the rate of 0.70 % (in 2019, 0.70%).
  • Group life insurance: in average at the rate of 0.07% (in 2019, 0.07%).

This information has been provided by our collaborating law firm in Finland, Krogerus (contact: Sanna Lindqvist at sanna.lindqvist@krogerus.com).

 

Greece: New Tax Bill on Taxation of Stock Options

On December 6, 2019, a new tax law was enacted in Greece. Under the new law, effective as of January 1, 2020, stock options will be exempt from salaried income taxation and instead taxed as capital gains at a rate of 15% (plus a special solidarity contribution at progressives rates of up to 10%), provided the shares are held for at least 24 months following exercise. Additionally, in the case of small start-up entities, such gains will be taxed at a reduced rate of 5%, provided shares are held for at least 36 months and certain other conditions are satisfied. 

Various issues, including the social security treatment of such options, remain to be clarified by the Tax Administration. 

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

 

Ireland: Amendments to KEEP for 2020

Effective January 1, 2020, the following amendments will be introduced to the Key Employee Engagement Program ("KEEP"), a tax favourable incentive arrangement for SMEs offering equity plans to their employees:

  • additional company group structures will now be able to qualify for KEEP; local advice is recommended to determine whether a group structure will be eligible for KEEP;
  • employees moving within a “qualifying group” may continue to qualify for KEEP; and
  • employees working part-time or on flexible working hours may also qualify for KEEP.

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

 

Israel: Possibility of Moving Taxation Point from Sale to Vesting

Taxation of employees’ option plans under the “Non-trustee route” in Israel is usually at sale of the underlying shares with a withholding obligation of taxes by the employer. Under this route the local employer has a tax withholding liability at the time of sale of the shares. In cases where the employee is no longer working for the company, tracking such sale can be difficult for the employer.

Recently, the Israeli Tax Authority (“ITA”) approved a tax ruling for a company offering restricted stock units (RSU) under the “Non-trustee route” to change taxation point at vesting and not at sale. With this ruling, the company will meet the withholding tax obligations with no difficulty. 

Companies may consider whether applying for similar tax rulings would ease their compliance burden.

This information has been provided by our collaborating law firm in Israel, Yair Benjamini (contact: Yair Benjamini at yair@yb.com).

 

Malaysia: Personal Income Tax Amendments for 2020

The Finance Bill we informed you about last month was passed. With effect from January 1, 2020 a new tax band for top income earners will be introduced: Individuals with taxable income in excess of MYR 2,000,000 will be taxed at 30%, a 2-percent increase from the current 28%. 

The fixed income tax rate for non-resident individuals is also increased to 30% from the current 28%.

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

 

Netherlands: Employer Social Security Rates for 2020

On November 14, 2019, the government published the new employer social security rates applicable from January 1, 2020, as follows:

  • Unemployment insurance, at the rate of either 2.94% or 7.94%, capped at annual earnings of EUR 57,232. The lower rate is applicable in case of employees with a permanent contract, while the higher rate is applicable in case of temporary employment contracts or flexible working arrangements. 
  • Basic disability insurance, at the rate of 6.77%, capped at annual earnings of EUR 57,232.
  • Childcare contribution, at the rate of 0.5%, capped at annual earnings of EUR 57,232.
  • Work resumption premium, at the rate of 1.28%, capped at annual earnings of EUR 57,232.
  • Health insurance, at the rate of 6.7%, capped at annual earnings of EUR 57,232.
  • General old-age insurance, at the rate of 17,90%, capped at annual earnings of EUR 57,232.

This information has been provided by our collaborating law firm in the Netherlands, Wieringa Advocaten (contact: Maartje Oliemans at oliemans@wieringa.nl).

 

Norway: Amendments to the Employee Share Option Tax Scheme

On November 20, 2019, amendments to a tax favoured Norwegian employee share option tax scheme were announced, with effect from January 1, 2020 (with an expiration date of December 31, 2029). 

The current tax scheme, originally introduced in December 2017, applies to private companies providing share options to their employees and fulfilling certain conditions, as follows:

  • they have been operating for less than 6 years,
  • have 10 or fewer employees
  • annual turnover not greater than NOK 16 million (approx. EUR 1.6 million).

The scheme allows for the deferral of social security contributions and income tax payments (and withholding obligations) until, in most cases, the sale of the shares. 

Pursuant to the recent amendments, the maximum headcount will be increased from 10 to 12, and the maximum option benefit that each employee can obtain under the scheme will be increased from NOK 500,000 to NOK 1 million. 

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

 

Sri Lanka: New Personal Income Tax Bands for 2020

Pursuant to the notice issued by the Sri Lanka Inland Revenue on November 27, 2019, personal income tax bands will change as follows, effective January 1, 2020.

Annual income (LRK)

Tax rate

0 - 3,000,000

0%

3,000,001 - 3,250,000

6%

3,250,001 - 3,500,000

12%

3,500,001 - up

18%

Currently, the maximum income tax rate is 24%, and the first LKR 600,000 of income is exempt from income tax. 

This information has been provided by our collaborating law firm in Sri Lanka, John Wilson Partners, Attorneys-at-Law & Notaries Public (contact: John Wilson atjohn@srilankalaw.com).

 

Switzerland: Social Security Reform 

Effective as of January 1, 2020, new legislation will introduce a small increase to the old age insurance contribution rates in Switzerland. 

Specifically, old age insurance, currently at the rate of 4.2%, will increase to 4.35%, payable both by the employer and employee.

Disability insurance at the rate of 0.7%, unemployment insurance at the rate of 1.1% and military insurance at the rate of 0.225%, all of which are payable by both the employee and the employer, will continue to be taxed at the same rates for 2020.

  This information has been provided our collaborating law firm in Switzerland, Rihm Attorneys (contact: Thomas Rihm at thomas.rihm@rihm-law.ch).

 

United States of America: Social Security Changes for 2020

The Social Security Administration has published the applicable federal Social Security wage base for 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%) will remain unchanged. However, effective January 1, 2020, the maximum taxable earnings for the purpose of calculating the Social Security tax will increase from USD 132,900 to USD 137,700. The Medicare tax will continue to be calculated as a flat rate without a cap, and wages in excess of USD 200,000 will continue to be subject to an additional 0.9% Medicare tax withholding.

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

 

Upcoming Filing and Reporting

Saudi Arabia: Quarterly Equity Reporting

January 10, 2020
Affects: Solium - BCN office

Companies offering share plans to employees in Saudi Arabia under the new 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. Companies should also consider reviewing any plan amendments or changes to determine whether any additional filings with the CMA may be required.

 

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

 

India: Indian Employer Tax Filings

January 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)

 

Thailand: Thai SEC Filing

January 15, 2020
Affects: Solium - BCN office

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)

 

Taiwan: Tax Withholding Statement

January 31, 2020
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 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)

 

Sweden: Swedish Annual Tax Reporting

January 31, 2020
Affects: Local Company

The employer must provide an annual information statement regarding benefits received by its employees under an employee share plan to the Swedish Tax Agency on or before January 31 of the year following the year in which the benefits are recognized.

 

This information has been provided by our collaborating law firm in Sweden, Skeppsbron Skatt (contact: Erik Frosdal at erik.frosdal@skeppsbronskatt.se)

 

Germany: Wage Tax Certificate

February 28, 2020
Affects: Local Company

German employers must issue a wage tax certificate ("Lohnsteuerbescheinigung") containing information about the calendar year income, as well as information on social security contributions. The wage tax certificate which must include 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. 

 

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, 2020
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 to employees in Malaysia 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 the 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 severus68@gmail.com)

 

Singapore: Filing for Former or Posted Employees

March 1, 2020
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)

 

Ireland: Equity Reporting

March 31, 2020
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, 2020
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)

 

 

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 or views expressed by such parties. Any views expressed in the information 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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