Employee Stock Plans 2012: Year-End International Reporting Requirements

This Commentary highlights some of the principal calendar and year-end reporting requirements for employee stock plans that U.S. companies most commonly encounter when offering these programs to their employees in selected jurisdictions worldwide. A chart summarizing these items appears at the end of this Commentary. Please note that this Commentary does not address routine, year-end tax reporting obligations. If you have any questions about these requirements or need any assistance, please do not hesitate to contact one of the Jones Day lawyers listed below.

Australia

Tax Reporting. Employers are subject to annual reporting requirements with respect to all equity grants to Australian employees. By July 14, 2013, Australian employers must issue an Employee Share Scheme Statement to each employee who was granted an equity award that vested in the prior tax year (i.e., before June 30, 2013), and by August 14, 2013, the employer must file an Employee Share Scheme Annual Report with the Australian Taxation Office ("ATO"). However, if taxation is deferred until a subsequent tax year, reporting to employees and the ATO will most likely not be required for 2012–2013. In any event, it is recommended that employees be provided with a statement about future reporting requirements.

Canada

Elimination of Tax Deferral Elections. Effective March 4, 2010, the Canadian federal government eliminated the deferral election for stock options and, by extension, the requirement to file a Form T1212. Canadian employees who filed deferral elections prior to such date and whose tax liability is greater than the benefit received upon sale of the stock received upon exercise, however, may receive special tax relief on stock sold before 2015. This treatment generally reduces the taxes payable on the proceeds of disposition from the optioned securities. In order to take advantage of this special tax relief, employees must make an election by the filing due date of their personal tax return for the year in which they sell their stock.

China

Exchange Control Reports for Stock Options/Restricted Stock Units/Purchase Rights. For companies that have obtained SAFE registration for their equity plans in China, quarterly reports must be filed with the local SAFE officials detailing the company's equity plan activity (e.g., grants, exercises, share sales, and the balance of the designated foreign exchange account)during the previous quarter. The next report is due by January 4, 2013 (which is the third business day of the first quarter of the calendar year) for activity that occurred during the fourth quarter of 2012.

In addition, for those companies with SAFE approval that provides for a designated quota of foreign currency that may be transferred out of China (e.g., under an employee stock purchase plan), companies must renew their foreign exchange quota for the 2013 calendar year. This renewal request should be made annually by the Chinese affiliate that is authorized by its parent company outside of China to act as its local agent with respect to SAFE-related matters and should be filed by December 31, 2012.

France

Tax Reporting for French-Qualified Awards. French affiliates of companies that grant stock options and/or restricted stock units ("RSUs") to their employees in France that are tax-qualified under the French Commercial Code must fulfill certain tax reporting requirements by March 1, 2013.1

With respect to French-qualified stock options, the French affiliate must provide each employee, by March 1 of the year following the year in which an employee exercises his or her tax-qualified stock option, with a statement that provides (i) the French affiliate's corporate purpose, the location of its principal establishment, and/or the location of its registered office; (ii) the name and address of the employee, (iii) the exercise price of the exercised stock options; (iv) the number of shares acquired upon exercise of the stock options; (v) the date of grant and date of exercise of the exercised stock options; (vi) the acquisition gain realized upon exercise; and (vii) the excess amount of the discount at the time of grant of the exercised stock options, if the discount granted to the employee exceeds 5 percent of the average trading price for the 20 trading days preceding the date of grant. The French affiliate must also send a copy of this individual statement to the tax office where it files its...