International Tax Regulations: Tackling Multiple Jurisdictions and Regulatory Compliance

Aunalisa Arellano

Illustration of people at an airport, with a man walking reading about international tax regulations on his mobile.

Expanding to new jurisdictions is a huge milestone for most companies, but it also introduces an array of new obligations. That’s especially true if you 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 you shouldn’t assume your current plan will be compliant in other jurisdictions.

With Shareworks Global Intelligence, a global compliance software, you can easily identify and track information about certain legal and tax obligations no matter where in the world your plan participants are located, though you should consult with lawyers and tax professionals in the applicable state or country about how these obligations apply to your company’s situation.

Here, you’ll find a high-level summary of how Global Intelligence can help you meet local legal and tax obligations, get your employees up to speed about the tax implications of receiving equity and keep your global team coordinated.

Setting up for success

Have you ever gone online to research the tax rules that apply to equity plans in different locations? If so, you know that they are hard to find and they change depending on whether your company is private or public, how many employees you have in each jurisdiction, the type of awards you offer, your plan structure and your tax policies. This makes it very challenging to pinpoint your company’s obligations.

Global Intelligence helps to cut through that complexity by enabling you to configure the application to your specific situation. During set-up, the system will prompt you to include details such as where your company is headquartered, where it’s listed (if you’re public), where you offer equity, how many employees you have in each jurisdiction, whether you have tax-approved status and your recharge position in each country which enables the global compliance tool to pinpoint how these company-specific detail may affect your obligations and presents information tailored to you.

When you’re done, you’ll have a fully customized global tax management dashboard that will guide you through information about certain legal and tax obligations in every jurisdiction where you offer equity. And if your status changes (for instance, if your private company goes public or if you add new employees in a certain jurisdiction), you can simply update the system to help you stay on top of any new obligations you may need to meet.

Considering local legal requirements

If you plan to offer equity in various jurisdictions, your first question will likely revolve around how to comply with local laws. With Shareworks Global Intelligence, you’ll have access to information about local legal requirements. By selecting a specific jurisdiction and plan type, you’ll see summary information about certain securities laws, exchange controls and plan rules that may be applicable to you. You can generate a checklist of action items, identify laws you may need to comply with and even access certain country-specific wording you may need to include in your grants agreements for participants.

Best of all, you can rest assured that there is a robust process to update the information. In partnership with local law firms around the world, Shareworks tracks the changing laws and tax regulations in 177 countries and counting. Our team also regularly reviews government sites, competitive information and client feedback to update the global compliance database. This is critical given the disparate laws that govern equity plans around the world.

Tackling tax regulations

As your business expands farther afield, the international tax considerations that govern your equity plans may change apace. In fact, taxable events, withholding rules and reporting obligations can be entirely different depending on where you operate, your plan and award type and your chargeback position in certain jurisdictions. In the U.S., for instance, some types of options are taxable on exercise, but in other locations tax only applies to their sale.

Fortunately, Shareworks Global Intelligence can help you keep track of these tax rules as well. A recharge database shows you what tax obligations may exist depending on your transfer pricing policies and alerts you if local rules change. Tax notes help you identify unique tax information specific to that country, while country-specific tax tables show you what taxation looks like from a withholding and reporting perspective – along with relevant deadlines.

Simplifying employee communications

One of the biggest challenges plan administrators face is helping employees understand the tax regulations of receiving equity. That task becomes even more complex when you offer 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 you keep your employees informed?

Global Intelligence can help. With a few clicks, you can pull together an easy-to-understand employee tax guide that aligns with your organization’s brand. A templated approach lets you choose what information to include or exclude. You can even add your own content to answer frequently asked questions or configure the details to your employees’ needs.

Once they’re complete, you have the option to save the guides as static documents that you can distribute by PDF or post on your intranet. But the real power and benefit comes from building a tax guide portal. When you host your tax guides on the portal, the information remain dynamic, and Shareworks Global Intelligence helps keep the information up-to-date as local rules or your company policies change.

Looping in your 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 you’ll need to coordinate activities with multiple people in different locations around the world. Once again, Global Intelligence has you covered.

That’s because the system can automatically generate reminders, alerts and action items to keep you on top of your legal and tax obligations. As reminders come up, you can assign responsibilities to different team members, track activity progress and see all your due dates in a calendar view so you are reminded of an important filing or reporting date.

Need to loop in external team members? That’s no problem either. As obligations are flagged, you can send them to your internal team or to external counsel.

Go global with confidence

All in all, Global Intelligence gives you key information to help manage the due diligence of your global equity plans – from legal summary, tax rates, tax withholding and reporting tables too, recharge feasibility tables and participant tax guides. Custom compliance calendars let you keep track of your tax and legal obligations and alerts remind you about critical deadlines. It is, quite literally, a world of information at your fingertips.

If you’d like to learn more about Shareworks Global Intelligence, reach out!

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© 2020 Solium Capital ULC and its affiliates (“Shareworks”). All rights reserved. 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 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.

CRC 3367961 (12/2020)