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Top 10 Practical Tips for Dealing with Global Payroll and Reporting Issues
SPEAKERS
Marc Younes, BNPP (FR)Colin Bernier, Ernst & Young (FR)
Agenda
What are the issues?The French specificity?Top practical Tips
« vesting »
Option Shares
Grant
« Vesting »Exercise/sale
Sale
Time line of an option
France UK India
• A mobile employee works in different countries
France UK India
• An employee may be granted SO in France, vest in the UK, exercisein India,
« vesting »
There are employer reporting and withholding as well as individual tax implications in each jurisdiction
Option Shares
Grant
« Vesting »
Exercise/sale
Taxation in India, in France and in the
UK to be examined
US UK
• An employee may be granted qualified free shares in the US which vest when he/she works in France, and ultimately he/she sells the shares when working in the UK
« vesting »
Right Shares
Grant
« Vesting »
Sale
Taxation on 50% of the gain in France, WTH
Payroll reporting and withholding in the US to be examined, no reporting in
France
France
The issues
When operating an equity plan, one of the most difficult areas is internationally mobile employees:
Different countries have varying rules on: The timing of taxation The determination of the taxable gain (the FMV and exchange rate to be
used) The payroll reporting obligations, Existence of specific additional reporting obligations Payroll income tax and / or social security withholding obligations, Sourcing of equity gain
Conclusion: Is applying a generalised/blanket approach appropriated?.
Lack of communication and lack of information
The French specificity
New French reporting obligations for issuers on employeesLTI capital gainsReport the percentage of French source gain based on the time during which beneficiaries exercised their activity in France in proportion to the reference period. The reference period is the activity period from which the right /option is derived (generally the vesting period) Individual reporting to each participant Global reporting to the French administration within the Annual Declaration of
Social Data (DADS)
French Withholding taxFrench non-residents (at the time of the sale of shares) will be taxed on the French source portion of their equity gain.
Issuers have to track their employees’mobility
Tax Evolving Context:
In the meantime, taxation on capital gains has changed and they are now subject to income tax.
Highest revenues may be taxed at more than 60%.
As a result of tax increase and additional responsabilities, some issuershave changed their type of LTI programs.
They have replaced their equity based plans by cash based programs.
Specific tax qualified regime for RSU and SOPTiming of taxation is different for qualified and non-qualified awardsTiming of employer reporting obligations are different for qualified and non
qualifiedEmployer reporting obligations are different for qualified and non-qualified
awardsBeneficiary reporting obligations are different for qualified and non-qualified
awards as well as for tax Resident and not tax ResidentWithholding income tax obligation for the bank for non tax residentSignificant risks for the local entity of not being fully compliant with regulations
French rules are different and are in constant changes
Top Practical TIPs Anticipation Dedicated team Experienced provider(s) Experienced plan administrator Location survey for the mobile employees and for the beneficiaries during
the vesting period Knowledge of the tax rules and of the reporting/withholding obligations for
the local entity and the beneficiaries Involvement of the local contact Implementation of the appropriate communication process between the
parent company, the local LTI contacts, the provider(s), the bank and the beneficiaries
Appropriate information of the beneficiaries Know that 100% compliance does not exist even if it is easier for local
than for mobiles
Tax provider
Tax authorities
Payroll team
Finance team
Mobility teamBroker
Discussion - Educated team and appropriate process of communication
Questions?
Top 10 Practical Tips for Dealing withGlobal Payroll and Reporting Issues
Thank You.
Any Questions?
Marc Younes | [email protected]
Colin Bernier | colin.bernier@ey‐avocats.com
