Global Equity News: Summer/Fall 2012 Edition
Global Equity News is designed to share specific and timely topics, new developments affecting equity award programs, as well as to provide you with an overview of some of the more significant tax and regulatory efforts adopted by governments from around the world.
The Summer/Fall 2012 edition covers a range of topical issues that companies need to stay on top of, including:
United Kingdom: Budget 2012 / Reducing tax rate
On March 21, 2012, the UK government announced that the highest rate of income tax in the UK, (which applies to individuals with income exceeding £150,000), will fall from 50 percent to 45 percent. This reduction takes effect from April 6, 2013.
No measures were included in this Budget to prevent or restrict deferral of income to 2013 or later years. Indeed an estimate of the cost of deferral in terms of lost tax revenue has been built into HM Treasury’s forecasts for 2012 and 2013. Therefore, this rate reduction presents a real opportunity for employees to save tax by moving income from this tax year into later years.
People's Republic of China (PRC) What is the impact of Circular 7 on the use of equity incentives in China
As many companies will be aware, in order to roll out a share plan in China, the plan must be registered with the State Administration of Foreign Exchange ("SAFE"). With a growing volume of plans registered, and with increased interest in equity incentives as part of local remuneration strategies, the authorities have recently released updated guidance on the SAFE registration process (Circular 7), standardizing procedures and broadening the types of plans that can be offered in China.
France: Update on Trusts
Many global companies use an employee benefit trust to hold shares to satisfy equity-based compensation awards.
The French tax authorities (FTA) recently issued guidance on new trustee reporting obligations.
The law, effective July 31, 2011, introduced major changes aimed at taxing assets held through foreign trusts when there is a link with France (i.e. the settlor or at least one beneficiary is a French tax resident, or French assets are held in trust). The new rules, which deal with wealth tax, inheritance tax, and income tax, introduce a 0.5 percent ‘‘specific trust levy’’ to ensure that assets in a trust that have not been taxed as assets of the settlor for wealth tax purposes are subject to an equivalent tax.
Global share plans legal issues - Striking the right balance
Before making share plan awards to employees overseas, it is essential to understand the legal issues which might apply. Navigating through the issues and really understanding what they mean for your share plan can seem daunting, so I have tried to get behind the issues and put them in context. If you can understand what is driving the issues, it is easier to know how they are likely to affect your share plan. They tend to fall into two camps, which can loosely be described as the “show-stoppers” and the “risks.”
United States: Reporting requirements to US Treasury Department and IRS
Global companies operating share plans in which U.S. employees can participate may wish to make these participants aware of new reporting obligations.
U.S. persons who participate in a non-U.S. headquartered company sponsored employee equity or stock option plan may have to report their participation to the U.S. authorities by completing and filing Form TD F 90-22.1 and Form 8938. This article provides some guidance on these requirements and how to comply.
The Netherlands: An update on developments in relation to equity plans
In the Netherlands developments in tax law and jurisprudence have changed the way in which employee equity plans are taxed. Below, we have briefly summarised the most important changes and possible opportunities as a result of these changes.
France: New French regulations on International Employees' equity compensation
On March 13, 2012 the French tax authorities published two sets of long-awaited regulations on the equity compensation of internationally mobile employees.
The first set, which spent many years in draft form, basically confirms the OECD position that taxation rights on equity compensation should be attributed to the country in which the employment activities are carried out during the vesting period (OECD sourcing principles).
The second set clarifies the procedure for applying new article 182 A ter of the French Tax Code, which imposes a withholding tax on income derived by nonresidents from French-source stock options and free share awards (restricted stock units, or RSUs) as of April 1, 2011. Article 182 A ter was hastily introduced in December 2010 and, although only a few paragraphs long, it created uncertainties about the responsible withholding party and the basis for withholding.
2012 Deloitte global share plan survey
We recently conducted the 2012 Deloitte Global Share Plan Survey and are delighted to report that more than 100 companies have responded to our survey. The companies surveyed are all large multinational public or private companies and are headquartered in 13 different countries across the world.
All participants of the 2012 Deloitte Global Share Plan Survey will receive a free copy of the final report, with an analysis of the responses. We again want to thank all companies that have completed the survey.