Update on recent tax & legal issues relating to global share plans. Andrew Moreton & Richard Wilson

Transcription

1 Update on recent tax & legal issues relating to global share plans Andrew Moreton & Richard Wilson 29 September 2016

2 Introduction 2

3 Agenda Global updates of the last six months Key trends in employee share plans Questions 3

4 Global updates 4

5 Brexit Possible impact for share plans Regulatory uncertainty Implications for share plan design: Executive plans Broad based plans Share plan financing 5

6 France Summary of key points on Macron law Employer cost benefit Increased employer flexibility Company social tax rate The required total four year acquisition/holding period has been reduced to only two years The two year required vesting period reduced to one Previous rules Current rules Previous rules Grant Release Sale 30% 20% 2 years 2 years* (minimum) * Unless release period is 4 years or more Current rules Delivery Employer social security now due at DELIVERY Grant Release Sale 1 year 1 year Grant Release Or: 1 year 1 year 6

7 France Summary of key points on Macron law Previous rules Employee Employee social tax rate Current rules 10% Exempt Income tax remains payable at the date of sale on the acquisition gain at vesting Taper relief Taper relief to remain available on capital gain but also now on acquisition gain Social surtax rate (CSG/CRDS) Previous rules 8% Previous rules 0%- 45% Income tax Current rules 15.5% Current rules Taper relief 50%/65% deduction Previous rules Grant Release Sale Acquisition gain Capital gain 10% Taper relief only available on capital gain New rules Grant Release Sale Acquisition gain Capital gain Taper relief available on acquisition gain and capital gain (starting from data of release) 7

8 New Zealand Employer reporting and withholding changes Previous position No employer reporting or withholding obligations for employee share plans. Participants are required to report share benefits and pay tax through their annual return. Updated position Voluntary withholding Mandatory reporting April

9 Vietnam Vietnamese nationals able to participate in employee share plans Conditions to allow participation of Vietnamese nationals in share plans: Share awards and options must be acquired free of charge or with preferable conditions. Plans must be registered with the State Bank of Vietnam ( SBV ) by the legal representative of the company. The legal representative will additionally have quarterly reporting requirements with the SBV. A designated bank account must be established by the legal representative for the purpose of making remittances in and out of Vietnam. Rights of Vietnamese nationals: Participants can now receive share awards and options, own and sell foreign shares, and receive dividends arising from the shares. Vietnamese nationals can use foreign currency which they hold in personal bank accounts to acquire shares, and can receive foreign currency as a result of selling foreign shares that have been acquired from participation in an employee share plan. 9

10 Denmark Reintroduction of tax advantaged share plans 7P How do the plans operate? Award types Shares. Conditional awards (RSUs). Stock options and warrants. Maximum value Employees can make a section 7P agreement to receive awards up to a total value of 10% of salary. Tax advantages Tax point is deferred up until the employee sells the shares. CGT is due on the gain. What is the impact for employers when a section 7P agreement is made? Corporate tax Payroll tax Mobile employees No corporate tax deduction No payroll tax Exit tax applies 10

11 Chile Changes to taxation of stock options Grant Exercise Sale Taxable amount is the benefit value less any payment made by the employee to acquire the stock option. Taxable amount is the FMV less exercise price and any amount subject to tax at grant. Taxable amount is the sale proceeds less the amounts subject to tax at grant and exercise. 11

12 Romania Changes to taxation of RSUs Previous position: Income tax and social security were previously due at vesting/delivery of RSUs. Tax point: Tax at sale if share settled and have a vesting period over one year. Capital gains tax. Social tax: Sale proceeds remain subject to health insurance contributions (if employee has not reached cap with other income) Conditions where previous treatment applies: Vesting prior to 1 January 2016; Cash settled RSUs; and RSUs with vesting periods less than one year. 12

13 South Africa Proposed changes to taxation of dividends and corporation tax deduction availability Taxation of dividends: All dividends received to be taxed as income and not as a dividend. Applicable to restricted shares only. Corporate tax deduction: Corporate tax deduction for share plans to be spread over the life of the award. 13

14 Trends 14

15 Share plan reporting Key country changes over the last few years Australia Belgium Czech Republic France Hungary Ireland Italy Japan Luxembourg Malaysia New Zealand Philippines Russia Vietnam Switzerland United Kingdom United States 15

16 Trailing liabilities Key country liabilities Canada Colombia Czech Republic Denmark France Germany Hong Kong Lithuania Malaysia Mexico Netherlands Poland Puerto Rico Romania Sweden Switzerland Tanzania Turkey UK US US Virgin Islands 16

17 Questions 17

18 18

19 Appendix Keeping you up to date Andrew Moreton Associate Director, Deloitte UK Tel: Richard Wilson Consultant, Deloitte UK Tel:

20 Appendix Keeping you up to date Global Rewards Updates 20

21 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ( DTTL ), a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of DTTL and its member firms. Deloitte LLP is the United Kingdom member firm of DTTL. This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication Deloitte LLP. All rights reserved. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Tel: +44 (0) Fax: +44 (0)