Global equity compensation newsletter / Issue 3 / March 2016

Global equity compensation newsletter / Issue 3 / March 2016
Country summaries p1/ Country discussions p3 /Come see us! P5/ Let’s talk p6
Recent legislative updates
This month's issue addresses recent changes in various jurisdictions, namely:
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Australia – Changes to 2016 employee share scheme reporting
Brazil – New eSocial reporting obligation to impact mobility process
India – 2016 proposals set to increase mobility program costs
Ireland – Form RSS1 due by March 31
Japan – Employer reporting requirement due March 31
Country summaries
Australia
Changes to 2016 Employee Share Scheme
reporting
The Australian Taxation Office (ATO)
announced a number of changes to the
Employee Share Scheme (ESS) reporting
requirements. Changes include a new ESS
reporting lodgment process and reporting for
international mobile employees. The lodgment
dates remain the same; employers are required
to file an ESS annual report with the ATO by
August 14, 2016 and employers are required to
provide employees with ESS statements by
July 14, 2016.
Please refer to the Country discussions section
for more information about the changes.
www.pwc.com
Brazil
New eSocial reporting obligation to impact mobility process
In an attempt to streamline its data collection processes, the Brazilian Tax Authorities
launched the eSocial reporting obligation. eSocial is meant to be a standardized and
centralized system that contains labor, social security and tax information regarding
employees and independent contractors. It is expected to affect processes used for
seconded employees.
eSocial reporting will be required starting September 2016.
Next steps for companies to start preparing for eSocial reporting compliance include
conducting a thorough analysis of current internal process and making the necessary
adjustments in order to fulfill the local legislation and application tool’s requirements.
The information presented above will not be discussed in the Country discussions below.
Please follow the link here to PwC’s Global Mobility Insights article to read more.
India
2016 Budget proposal set to increase mobility costs
On February 29, 2016, the Government presented the Union Budget for fiscal year 20162017. The key features of the proposal affecting personal taxation and potentially
impacting globally mobile employees will be discussed below. Examples of the possible
changes include an increase in the surcharge and changes in the taxation of social security
payments at the time of contribution and withdrawal.
Please refer to the Country discussions section for more information about the changes.
Ireland
Upcoming online filing requirements for Form RSS1 due by March 31
As a reminder, companies with employees participating in stock option plans in Ireland
are subject to upcoming annual reporting requirements. Specifically, RSS1 forms for the
2015 tax year has been released by the Irish tax authorities and must be filed via
Revenue’s Online System (ROS) by March 31, 2016. (For other types of awards which tax
withholding and reporting is required when the taxable event occurs such as restricted
stock units, annual reporting on form RSS1 is not required.)
The information presented above will not be discussed in the Country discussions below.
Japan
Upcoming employer reporting requirement for equity award income due March 31
As a reminder, Japanese employers must report the income recognized from foreign
share plan awards (i.e., stock options, restricted stock units, etc.) in 2015 to the tax
authorities by March 31, 2016. This requirement applies to Japanese subsidiaries owned
50% or more by a foreign entity that provides equity awards to employees or directors
resident in Japan.
The information presented above will not be discussed in the Country discussions below.
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Country discussions
Australia
Changes to 2016 employee share scheme reporting
The new ESS annual report lodgment process will significantly impact foreign
multinationals who previously satisfied ESS reporting requirements by submitting paper
or Bulk Load Excel Spreadsheets. Starting in 2016, employers will be able to lodge ESS
annual reports depending upon the number of participants:
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Employers up to 20 participants can use an ESS online form (which will be
available soon)
Employers with more than 20 participants must use software that meets the
ATO’s ESS electronic reporting specifications (which have not been released
yet).
It is important to note that the new ATO’s ESS electronic reporting system does not
relieve the employer of their obligation to provide employees with ESS statements by
July 14, 2016. The deadline to file ESS annual reports is August 14, 2016.
Reporting for internationally mobile employees has also become more stringent.
Historically, employers had the choice of reporting either:
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The actual assessable amount of the discount (after taking into account the
foreign service), or
The gross discount.
Employers are now required to disclose whether the amount reported in the annual
report is the ‘gross’ or ‘assessable’ ESS amount.
As a reminder, the ATO is continuing to data match the ESS reporting information from
employers against the ESS income on the employee’s income tax returns. It is important
to communicate to employees how the reportable amount was determined and to indicate
if the ‘gross’ or assessable amount was reported.
Please follow the link here to PwC’s Global Mobility Insights article to read more.
India
2016 Budget proposal set to increase mobility costs
On February 29, 2016, the Government presented the Union Budget for fiscal year 20162017. The proposal includes an increase in the surcharge and changes in the taxation of
social security payments, which could potentially affect mobile employees. The key
proposals of interest include:
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Income tax rates: Currently, the surcharge is 12% for individuals earning
total income in excess of INR 10 million. It is expected to increase by 3%,
which will result in an effective maximum marginal tax rate of 35.54% (up
from 34.61%).
Taxation of dividends: the budget proposes to tax dividends received by
resident individuals at 10% where the amount of dividend received is above
INR 1 million. Presently dividends are exempt from tax.
Taxation of contributions to Indian Social Security: Currently, an employers’
contributions to the Indian Social Security up to 12% of salary does not
subject the employee to tax. It has now been proposed that any contribution
in excess of 0.15 million per annum would be taxable in the hands of
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employees. Further, withdrawal from Indian Social Security after completing
continuous service of five years is currently fully exempt from tax. Now a
proposal has been made wherein any withdrawal from the Indian Social
Security shall be exempt from tax up to 40% of accumulation (out of
contributions made on or after April 1, 2016).
The increase of surcharges and changes in the taxation of Indian social security payments
at the time of contribution and withdrawal will likely increase cost of assignment due to
increased Indian tax liability and related tax gross up for the tax equalization of such
payments.
Additionally, the Finance Minister announced that the long term capital gain regime for
unlisted companies may decrease from three to two years. Currently, long term capital
gains from unlisted shares are taxed at 20% while short term capital gains are taxed at
marginal tax rates.
As a next step, companies who have mobile employees, should inform them about these
changes and perhaps also factor in their budget the increased cost of these assignments.
Please follow the link here to PwC’s Global Mobility Insights article to read more.
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Come see us!
Please see a schedule of our upcoming speaking events:
Global Equity Organization Conference
United Technologies Corporation: Managing an Equity Plan
Across Several Businesses and Countries
Presenter(s):
When:
Craig O’Donnell, Principal, Boston, MA
Parmjit Sandhu, Director, Stamford, CT
April 20, 2016 from 2:30pm – 3:30pm
Bringing Order Out of Chaos – The Twitter Story
Presenter(s):
When:
Jennifer George, Director, San Francisco/ San Jose, CA
April 21, 2016 from 10:45am – 11:45am
What’s New in Accounting for Stock Compensation?
Presenter(s):
When:
Ken Stoler, Partner, Los Angeles, CA
April 21, 2016 from 2:15pm – 3:15pm
You Can Bring a Horse to Water But You Can’t Make Her Drink:
Understanding Motivation
Presenter(s):
When:
William Dunn, Partner, Philadelphia, PA
April 22, 2016 from 11:15am – 12:15pm
For additional event information, visit the GEO site: www.globalequity.org
NASPP Webinar
ASC 718 in Motion: The FASB's Amendments
Did the ‘simplification initiative’ ultimately simplify?
Presenter(s):
When:
AmyLynn Flood, Partner, Philadelphia, PA
May 10, 2016 from 4pm – 5pm
For additional event information, click here.
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Let’s talk
For more information about any of these developments, please feel free to contact any of
our team members listed below.
Bill Dunn (Partner), Philadelphia, PA
+1 (267) 330-6105
[email protected]
AmyLynn Flood (Partner), Philadelphia, PA
+1 (267) 330-6274
[email protected]
Kerri McKenna, Philadelphia, PA
+1 (267) 330-1723
[email protected]
Michael Shapson, Philadelphia, PA
+1 (267) 330-2114
[email protected]
Amanda Beittel, Philadelphia, PA
+1 (267) 330-2556
[email protected]
Blake Eisenberg, Chicago, IL
+1 (312) 298-3760
[email protected]
Parmjit Sandhu, Stamford, CT
+1 (203) 539-3774
[email protected]
Gemma Smith, New York, NY
+1 (646) 471-6623
[email protected]
Jennifer George, San Jose, CA/
San Francisco, CA
+1 (408) 817-4370
[email protected]
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