Global Tax and Regulatory Update: July 2019


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COUNTRY UPDATES

EU Prospectus Regulation Coming into Force in July 2019

Regulation (EU) 2017/1129 (the “Prospectus Regulation”) will come into force effective July 21, 2019, automatically repealing the existing Prospectus Directive 2003/71/EC (the “Prospectus Directive”). The Prospectus Regulation will be directly applicable in all EU Member States, including the UK, without the need for implementing legislation at the national level.

Employee Share Plan Prospectus Exemption

Pursuant to the expanded exemption for employee share plans in the Prospectus Regulation, companies will now be able to offer their share plans in the EU on an exempt basis, regardless of whether the head office or registered office is in an EU Member State, or whether the company’s securities are listed on an EU regulated market, and regardless of the number of employees offered participation under the plan. Reliance on this expanded exemption is subject to the condition that the company provides employees with a document disclosing, among other things, the number and nature of the securities being offered and the reasons for the offer.

Grandfathering of Existing Prospectuses

Limited grandfathering will be available for prospectuses approved before July 21, 2019. Specifically, an approved prospectus under the current regime will continue in effect until the later of: i) the end of its validity period or ii) July 21, 2020.

Brexit 

The Prospectus Regulation will become automatically applicable in the UK on July 21, 2019, in advance of the expected Brexit date presently scheduled for October 31, 2019. It is expected that in the event of a no-deal Brexit, the UK government will adopt the Prospectus Regulation into national law, such that the prospectus exemption will continue to apply to UK companies and EU companies in the same manner after October 31, 2019.

 

Shareworks Global Compliance Comment:

We recommend companies review the upcoming changes in the law in relation to their equity incentive programs in the EU. Please contact us if you need further assistance.

 Armenia: Amendments to Tax Code Proposed

A draft law proposing amendments to the Tax Code has been submitted by the Armenian Ministry of Finance to replace the current progressive individual income tax rates with a flat rate of 23%, effective as of September 1, 2019. Over the next four years, the rate will be gradually decreased to 20% by January 1, 2023.

Social security contributions

In addition, for employees born on or after July 1, 1974, the compulsory state pension contribution will increase to 3.5% (from the current 2.5%) of the employee’s monthly gross income, effective as of January 1, 2020, and then a further increase to 4.5%, effective January 1, 2021.

Our Global Compliance Law Firm, Ameria, in Armenia will be happy to provide more information. For more information feel free to reach out to David Sargsyan at davsar@ameria.am and Miqael Mkrtumyan m.mkrtymyan@ameria.am

 

Shareworks Global Compliance Comment:

We recommend companies and share plan administrators continue to monitor these developments. Please contact us if you need further assistance with this regard.

Austria Flag Austria: Tax Reform Announced by the Ministry of Finance

The Ministry of Finance has announced certain tax reforms to reduce individual tax rates over a period of several years.

  • Starting in 2021, the individual income tax rate for the lowest band (from EUR 11,001 to EUR 18,000) will decrease from 25% to 20%;
  • Starting in 2022, the individual income tax rate for the second band (from EUR 18,001 to EUR 31,000) will decrease from 35% to 30% and the rate for the third income band (from EUR 31,001 to EUR 60,000) will decrease from 42% to 40%.

Further details will be reported in due course.

Our Global Compliance Law Firm, CMS, in Austria will be happy to provide with more information. For any further information feel free to reach out to Johannes Trenkwalder at johannes.trenkwalder@cms-rrh.com

 

Shareworks Global Compliance Comment:

We recommend companies stay alert for more information. Please contact us if you need further assistance in this regard.

Bangladesh Flag Bangladesh: Budget 2019/2020

On June 13, 2019, the Finance Minister presented the budget for the fiscal year 2019/2020. Among the various proposals are the following:

  • There will be a dividend exemption of BDT 50,000 for individual taxpayers for dividends received from a publicly listed company;
  • A surcharge of the higher of 0.1% of the net wealth and 30% of the individual’s taxable income will be applied to individuals with net wealth of more than BDT 500 million;
  • The threshold for the taxation of net wealth of individual taxpayers will be increased from BDT 22.5 million to BDT 30 million; and
  • There will be minimum surcharges of BDT 3,000 and BDT 5,000 applicable to individuals with net wealth beyond BDT 30 million and BDT 100 million, respectively.

Our Global Compliance Law Firm, Orr, Dignam & Co., in Bangladesh will be happy to provide with more information. For more information feel free to reach out to Muhammad Hafizullah at dignior@bangla.net

 

Shareworks Global Compliance Comment:

We recommend companies review and adjust accordingly. Please contact us if you need further assistance with this regard.

Barbados Flag Barbados: Budget 2019 – Income Tax Amendments

The Minister of Finance recently delivered the Budget for 2019/2020. Among other amendments, effective July 1, 2019, the personal annual income tax bands will be:

Amount (BBD) Rate (%)
0 – 35,000 0
35,001 – 50,000 12.5
50,001 – 33.5
  • The tax bands to which rates of 16%, 33.5%, and 40% applied will be abolished.
  • Effective January 1, 2020 another rate reduction is proposed, such that the 33.5% rate will decrease to 28.5%.

Our Global Compliance Law Firm, Dentons, in Barbados will be happy to provide more information. For any further information feel free to reach out to Yoshodra Rampersaud at yoshodra.rampersaud@dentons.com

 

Shareworks Global Compliance Comment:

We recommend companies review and adjust accordingly. Please contact us if you need further assistance with this regard.

Netherlands Flag Netherlands: Fiscal Agenda 2019/2020 – Published

The Fiscal Agenda 2019 has been published by the Ministry of Finance. Among other things, the government will be reviewing the taxation of stock option granted to employees of start-ups and scale-ups, which are currently taxed at exercise.

Stock options plans are a popular compensation tool for start-ups and scale-ups; however, taxpayers often struggle to pay the taxes because of selling restrictions or a lack of funds. The review will examine making such option plans more financially attractive from a tax perspective in connection with the overall Tax Plan for 2020.

Our Global Compliance Law Firm, Weiringa Advocaten, in The Netherlands would be happy to provide with more information. For any further information feel free to reach out to Maartje Oliemans at oliemans@wieringa.nl

 

Shareworks Global Compliance Comment:

We recommend companies and share plan administrators stay alert for more information. Please contact us if you need further assistance in this regard.

Uzbekistan Flag Uzbekistan: Calculation of Tax Amounts, Wages, and Fines – Decree Adopted

On May 21, 2019, a decree “On improving the procedure for determining the size of wages, pensions, and other payments” was adopted.

It was decided that the calculation of tax amounts, pensions, fines, and allowances will no longer  be based on the value of the monthly minimum wage (MMW). Starting from September 1, 2019, the following indicators shall be used instead:

  • the minimum monthly salary (MMS) (UZS 577,170 in 2019) to calculate salaries, allowances, and employee incentives;
  • the standard calculation index (SCI) (UZS 202,730 in 2019) to calculate tax amounts and fines, the amount of the authorized capital, and various financial transactions; and
  • the pension calculation index (PCI) (UZS 202,730 in 2019) to calculate pensions and social security contributions.

Please note these changes do not have direct impact on employee share plans.

 

Shareworks Global Compliance Comment:

We recommend companies review this information. Please contact us if you need further assistance in this regard.

UPCOMING FILING AND REPORTING

Portugal Flag Portugal: Equity Reporting

June 30, 2019
Affects: Local Company

Employers in Portugal must submit Form Modelo 19 with details of the creation and application of all share plans set up for the benefit of its employees by 30 June following the tax year.

 

Our collaborating law firm in Portugal (Abreu & Marques Associados) is happy to assist, should you need any support with this.

 

China Flag China: SAFE Quarterly Reports

July 3, 2019
Affects: Local Company

Companies that have obtained SAFE approval for their equity plans in China are required to file quarterly reports with their local SAFE office within three business days at the end of the relevant quarter.

 

Our collaborating law firm in China (Martin Hu & Partners (MHP)) is happy to assist, should you need any support with this.

 

Saudi Arabia Flag Saudi Arabia: Quarterly Equity Reporting

July 10, 2019
Affects: Parent Company

Companies offering share plans to employees in Saudi Arabia under the new securities laws exemption must notify the Capital Market Authority (“CMA”) within 10 days after the end of the quarter following grant disclosing the total number and value of such offers. This notification can be made by an authorised person or by the company. The company should also review any plan amendments or changes to determine whether any additional filings with the CMA are required.

 

Australia Flag Australia: Employee Share Scheme Statement

July 14, 2019
Affects: Local Company

The annual reporting deadline for Australian employers is approaching. Companies that have a presence or employees in Australia and operate an equity plan must issue an Employee Share Scheme Statement to each employee who was granted an equity award that vested in the prior tax year by July 14. In addition, an Employee Share Scheme Annual Report must be filed with the Australian Taxation Office by August 14.

 

To learn more about how Shareworks can support your annual ESS activity please click here, or reach out to your Shareworks Relationship Manager. For clients not using Shareworks, our collaborating law firm in Australia (Minter Ellison) is happy to assist, should you need any support with this.

 

India Flag India: Indian Employer Tax Filings

July 15, 2019
Affects: Local Company

Indian employers are required to file Form 24Q with the Indian tax authorities on a quarterly basis. These quarterly returns report information on employment income paid to employees (including from share-settled awards) as well as taxes withheld.

The quarterly returns must be submitted by:

  • Quarter ending March 31: May 31
  • Quarter ending June 30: July 31
  • Quarter ending September 30: October 31
  • Quarter ending December 31: January 31

 

Our collaborating law firm in India (Little & Co.) is happy to assist, should you need any support with this.

 

UPCOMING EVENTS

CEPI and GEO East Coast Symposium

July 24, 2019

Join GEO and the CEP Institute in the Big Apple this summer! The CEPI and GEO East Coast Symposium will be coming to the AMA Centre in New York, NY, on July 24th! This special event will offer hand-picked sessions in a wide variety of topics, highlighting some of the industry’s best speakers and the chance to meet useful and influential contacts.

Registration is required and will open soon.

 

More info: https://www.globalequity.org/geo/node/6909

27th Annual NASPP Conference and Exhibition

September 16-19, 2019

Plan to be part of the leading event in equity compensation as it gathers nearly 2,000 of your fellow stock plan pros for four days of unbeatable opportunities for education, peer-to-peer community building, and discovery of effective solutions for the professional challenges you face.

Engage with more than 200 industry experts as they lead almost 100 sessions designed to provide you with essential guidance on major regulatory and economic developments, and the latest best practices in compensation, strategy, design, administration, communication, and more.

The Solium Team will be there!

We will be presenting:

Darren Smith will also be attending this event. Get in contact!

 

More info: https://www.naspp.com/Conference/Annual-Conference/27th-Annual-NASPP-Conference

Australia Regional Event

September 24, 2019

GEO is delighted to present the 2019 Australia Regional Events — dedicated to Australian equity compensation in Sydney.

This unique event brings forward-thinking equity and executive compensation discussions to an intimate gathering of innovators, issuers, suppliers and thought leaders.

 

More info: https://www.globalequity.org/geo/AUS2019-Sydney

Australia Regional Event

September 26, 2019

GEO is delighted to present the 2019 Australia Regional Events — dedicated to Australian equity compensation in Melbourne

This unique event brings forward-thinking equity and executive compensation discussions to an intimate gathering of innovators, issuers, suppliers and thought leaders.

 

More info: https://www.globalequity.org/geo/AUS2019-Melbourne

This email is part of our updating service. If you have any queries on any of the updates or you no longer wish to receive these emails at all you can change the settings here, or contact Anna at anna.sanz@solium.com.

Please note, this is a general guide only and we accept no liability for any loss caused by acting upon or refraining from acting upon the advice contained in this email. While we take every care to ensure the accuracy of the information, there may still have been minor changes in these countries (to the tax rates etc.) or changes that we are unaware of at Solium Global Compliance. There may also have been changes before the date of the Solium Global Compliance update or changes which affect your plans due to the specific nature of your share plans. We would recommend that you consult local lawyers before acting on any of the information above.

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