Employee Stock Plans: Year-End 2015 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. Please note that this Commentary does not address routine, year-end tax reporting obligations. A chart summarizing these items appears at the end of this Commentary. 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

Employers are subject to annual reporting requirements with respect to all equity grants to Australian employees. By July 14, 2016, Australian employers must issue an Employee Share Scheme Statement to each employee who was granted an equity award that vested (exercised for stock options granted after July 1, 2015) in the prior tax year (i.e., before June 30, 2016), and by August 14, 2016, the employer must file an Employee Share Scheme Annual Report with the Australian Taxation Office ("ATO").

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 6, 2016 (which is the third business day of the first quarter of the calendar year) for activity that occurred during the fourth quarter of 2015.

In addition, for those companies that have obtained SAFE approval for their equity plans (and the plans have not since been terminated), companies must renew their foreign exchange quota for the 2016 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, 2015.

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 to (i) the social security office ("URSSAF"), (ii) the beneficiary, and (iii) the French tax authorities. Among other things, equity awards are generally considered tax-qualified in France if they are granted pursuant to a special French sub-plan and meet specific requirements.

At the time of grant of the French tax-qualified stock options and/or RSUs, the French affiliate must report to the URSSAF (i) the name and address of each beneficiary, and (ii) the number and value of the options and/or shares granted.

By March 1 of the year following the year in which an employee exercises his or her French tax-qualified stock option and/or vests in his or her tax-qualified RSUs, the French affiliate must provide the employee with an individual statement. With respect to stock options, the individual statement 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 each 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. With respect to RSUs, the individual statement generally requires the same information as listed above for tax-qualified stock options except that the data should be referenced from the vesting date for the RSUs.

The French affiliate must also send a copy of this individual statement to the tax office where it files its corporate tax return before March 1 of the year following the year in which an employee exercises the stock option and/or vests in his or her tax-qualified RSUs.

In addition, French affiliates should also report details regarding the exercise of French-qualified stock options and the vesting of French-qualified RSUs in the annual employer year-end declaration (the "DADS") by February 1st of the year following the year in which an employee exercises his or her options and/or vests his or her RSUs. French employers must include in the DADS the same information as listed above for the individual statement.

Annual Report to Shareholders

If the French affiliate of the issuer company has annual shareholder meetings, the French affiliate should distribute a special report to its shareholders at its annual shareholders' meeting that lists the French-qualified stock option and RSU grants that have been made to the ten employees of the French affiliate who have received the most stock options and/or shares upon exercise/vesting of the awards as well as the corporate executives of the issuer company, its affiliates and the affiliated companies of the consolidated group. If the French affiliate does not hold its own shareholder meetings, the French affiliate should still compile this report, but retain it in its files rather than distributing it to shareholders.

INDIA

Tax Reporting for Stock Options/Restricted Stock/Restricted Stock Units/Purchase Rights

Companies are required to withhold on the taxable gains from equity awards (at exercise for stock options, vesting for restricted stock and RSUs, and purchase for employee stock purchase plans ("ESPPs")). Companies are also required to issue a Tax Deducted at Source ("TDS") certificate to their employees by May 31, 2016 after the end of the tax year (March 31, 2016). Employees should use this certificate to file their annual tax return, which is due on or about July 31, 2016.

In addition, the Indian affiliate is required to file TDS returns with the Indian tax authorities on a quarterly basis. Those returns, which are due by the 15th day following the last day of the relevant quarter, report details on all amounts withheld during the quarter, including those amounts withheld with respect to taxable gains. In respect of the sale of shares, employees will continue to be responsible for paying and reporting any applicable capital gains tax.

Exchange Control Report

Companies should also be aware of the requirement for the Indian affiliate to file a statement with the Reserve Bank of India ("RBI") through the AD Category – I Bank, which provides details regarding the shares issued to or repurchased from residents of India during the prior fiscal year. This report should be filed on Form ESOP Reporting (Annex – B (issuance) and Annex – C (repurchases)) of the RBI Master Circular on Direct Investment by Resident in Joint Venture (JV) / Wholly Owned Subsidiary Abroad (dated July 2015)("Master Circular"). The Master Circular does not prescribe the date by which the report must be filed. Therefore, it is advisable to submit the report as soon as possible (preferably by June 30, 2016, because the Master Circular will be replaced on July 1, 2016).

IRELAND

Tax Reporting for Stock Options/Restricted Stock Units/Purchase Rights

By March 31, 2016, all employers are required to file a Form RSS1 with the Irish Revenue with respect to the following events occurring in the 2015 tax year: (i) options and other rights granted; (ii) shares issued following the exercise of options; (iii) shares issued (other than option exercises); and (iv) consideration given for options and other rights assigned or released.

Separate reporting requirements apply for save-as-you-earn plans, approved profit-sharing plans, and employee share ownership trusts.

ISRAEL

Tax Reporting for Stock Options/Restricted Stock Units/Purchase Rights

For stock option, RSU, and ESPP grants under trustee and non-trustee plans in Israel, reports must be made both quarterly and annually to the Israeli tax authorities. At the end of each calendar quarter, the local affiliate or trustee, as applicable, must file Form 146 detailing the grants made during that quarter with the Israeli tax authorities. In addition, annually, the local affiliate or trustee must file Form 156 with the Israeli tax authorities by March 31 of the following year detailing the grant activity and the status of any outstanding grants during the prior calendar year.

Please note that while the Israeli tax authorities have indefinitely extended the deadline for these submissions (until an electronic submission system is operable), some companies and trustees have chosen to make these reports in hard copy until the electronic system is operable.

JAPAN

Tax Reporting for Stock Options/Restricted Stock Units/Purchase Rights

Japanese companies that are owned 50 percent or more by non-Japanese companies and Japanese branch offices of non-Japanese companies are required to file a statement with the district director of the tax office if an employee of a Japanese branch or subsidiary of a foreign parent exercised, or received benefits under, any of the following rights:

• The right to acquire, without payment or with payment of a discounted price, stock of the foreign parent or any of its parent or subsidiaries (collectively, "Parent Stock").
• The right to receive payment of cash in the amount equivalent to the price of the Parent Stock or distributions related to the Parent Stock.
• The right to acquire the Parent Stock or receive payment of cash where the price of the Parent Stock, the business results of the foreign parent, or other index exceeds a predetermined threshold within a certain period.

Exercises of stock options, vesting of RSUs, dividend equivalents, and ESPP purchases are subject to these reporting requirements. These filings must be made with respect to any exercises or payments by March 31 of the calendar year following the year in which the exercise or payment occurred.

MALAYSIA

Tax Reporting for Equity Award Vesting

Companies that grant equity awards to employees in Malaysia must report, on an annual basis, any stock option exercises, RSU vesting, and/or purchases under an ESPP that took place during the previous calendar year. The report must be submitted to the Malaysian Inland Revenue Board in Appendix C of the Form BT/MSSP/2012 (which is also known as Appendix A and is the form used to report the grant of equity awards) by the last day of February each year. The statement of remuneration (i.e., EA Form) must also be provided to the employees by the last day of February each year. Please note that if the equity awards are granted to employees of more than one Malaysian entity, a separate filing should be made by each Malaysian entity as they are all separate and distinct employers.

PHILIPPINES

Securities Reporting for Exemption

Companies that grant equity awards to their employees in the Philippines typically obtain an exemption from the Securities and Exchange Commission in the Philippines ("SEC Philippines") to avoid having to register their securities with the SEC Philippines. Once an exemption has been received from the SEC Philippines, the company is then required to file an annual report with the SEC Philippines by January 10 of each year that reflects the number of shares that have been issued by the company pursuant to stock option exercises, the vesting of restricted stock units, and purchases under an employee stock purchase plan during the prior calendar year.

SINGAPORE

Certain Tax-Favored Program Applications

Companies that grant stock options and share awards in Singapore may have awards that are potentially eligible for the Qualified Employee Equity-Based Remuneration Scheme ("QEEBR Scheme") and the Equity Remuneration Incentive Scheme (All Corporations)("ERIS"). Employers that desire to operate stock plans that qualify for the QEEBR Scheme and the ERIS Scheme must keep sufficient documentation to show that their stock plans satisfy the applicable requirements when requested by the Comptroller of Income Tax.

Qualified Employee Equity-Based Remuneration Scheme

Under the QEEBR Scheme, qualifying employees may apply to defer payment of the income tax due at exercise of stock options and vesting of share awards, including RSUs, for a period of up to five years, subject to an interest payment.

Under the terms of the QEEBR Scheme, a stock plan that meets the applicable requirements is automatically qualified, and no formal approval is required. The QEEBR scheme generally requires that stock options with an exercise price equal to or greater than the market value at the time of grant do not vest any earlier than one year after the date of grant, and for stock options where a discount at grant applies, the option may not vest any earlier than two years after the date of grant. For share awards, where the price paid for the share is equal to or greater than its market value at grant, the award cannot vest earlier than six months from the date of grant. However, if the price paid is less than market value at the time of grant, the award cannot vest any earlier than the first anniversary of the date of grant.

Employees must submit an application form to defer their tax gains to the Comptroller of Income Tax, and the employer must certify on the application form that the stock plan under which the stock option and/or share award is granted qualifies for the QEEBR Scheme by meeting the applicable vesting period requirements. The form must be submitted to the Comptroller of Income Tax by April 15, 2016.

Equity Remuneration Incentive Scheme (All Corporations)

Under the ERIS, qualifying employees are eligible for income tax exemptions for gains arising from qualifying stock option and share award plans, including RSUs, of up to SGD 1 million over a period of 10 years. While ERIS was phased out in 2013, it still applies to gains accrued through December 31, 2023. Under this scheme, the employee will enjoy a full tax exemption on the first SGD 2,000 worth of gains from the stock option and share awards plan and a tax exemption of 25 percent on the remaining amount of gains from such plan for each year of assessment during the 10-year period. Under the terms of the ERIS, among other requirements, the same vesting requirements applicable to the QEEBR Scheme also apply to stock options and share awards, respectively. In addition, the stock options and share awards must be offered to a designated percentage or more of a company's eligible employees in Singapore (subject to certain exclusions for part-time, newly hired, and short-term employees).

The local affiliate is required to provide employees with the details of all gains arising from stock plans, segregating the gains, where applicable, into those qualifying for the various share incentive schemes and those that do not qualify for any tax exemption under any schemes, no later than March 1, 2016 on an annual return. The annual return to employees is made on Form IR8A. If the company submits salary data electronically to the Comptroller of Income Tax, it may provide employees with such details of the remuneration in any alternative format.

Whenever the local affiliate grants options or shares under an ERIS Scheme, it is also required to provide a written confirmation to a qualifying employee, within the four-week period following December 31 of the year of grant that the qualifying terms and conditions of the ERIS have been met in respect of those share awards and/or stock options granted under the relevant qualifying stock plan.

THAILAND

Securities Reporting for Stock Options/Purchase Rights

Companies that grant stock options to the employees of their Thai affiliates must report any exercises of those options to the Thai SEC within 15 days after the end of the calendar year in which the options were exercised, in accordance with the details described in the Guidance set forth by the Thai SEC, as well as submit a summary of the plan pursuant to which the options were granted. Therefore, with respect to stock options exercised in 2015, the issuer company must file the report by January 15, 2016. A similar requirement exists for stock purchased under an ESPP—a report has to be filed within 15 days after the end of each purchase period under the plan. For example, if an ESPP's annual purchase period ends on January 31 of each year, the reporting deadline would be February 15 of that same year.

UNITED KINGDOM

Tax Reporting for Incentive Stock Options/Purchase Rights

For each tax year, which runs from April 6 to April 5 in the UK, UK employers are required to file a number of tax returns with Her Majesty's Revenue & Customs ("HMRC") that relate to equity grants made to their employees and the exercise or vesting of such rights. These returns must be filed online.

With the introduction of real-time information ("RTI") reporting, employers are now generally required to send to HMRC through the PAYE (the payroll tax deduction system) online details of every payment made to an employee "on or before" the date the payment is made. RTI reporting is required for taxable amounts that are withheld through payroll on stock option exercises and vesting of other stock awards, although reports of these withholdings must be made as soon as possible within 14 days of the end of the relevant tax month or the date that income tax and national insurance contributions ("NIC") are deducted (whichever is earlier). HMRC has confirmed that RTI reporting must be applied to internationally mobile employees that have UK tax and NIC liabilities, even if paid by an overseas employer.

By July 6, 2016, UK employers must also file online, through the PAYE online service, annual stock-related benefits reports with respect to stock options and other stock purchase rights that have been granted and/or exercised and/or vested in the tax year ending April 5, 2016. Separate annual returns must be filed online for each separately registered stock plan, whether tax-advantaged or non tax-advantaged. (All tax-advantaged stock plans must be separately registered online, but all non tax-advantaged stock plans may either be registered separately or under a single "other" unique scheme registration number.)

UNITED STATES

Tax Reporting for Incentive Stock Options/Purchase Rights

U.S. companies that grant incentive stock options ("ISOs") to their U.S. employees or sponsor an ESPP in which their U.S. employees participate must deliver an information statement (at least once per year) to those employees who have exercised their ISOs during that year or who have purchased shares of stock under an ESPP. For stock purchases that occurred in 2015, information statements must be delivered to employees by January 31, 2016 and then filed with the IRS by either February 28, 2016 or March 31, 2016, depending on the filing format. If paper returns are filed with the IRS, the filing deadline is February 28, 2016, whereas electronically filed returns, which are required for 250 or more returns, are due by March 31, 2016. The information statement must provide the number of shares purchased, the exercise or purchase price, and the value of the shares transferred from the company to the participant, among other items. The information statement for exercised ISOs should be made on IRS Form 3921 and on Form 3922 for shares purchased under an ESPP.

VIETNAM

Exchange Control Reporting for Approved Issuers

Companies outside of Vietnam require exchange control approval from the State Bank of Vietnam with respect to the offer of awards under an equity plan to employees in Vietnam. If a company has received such approval, it is required to submit an annual report to the State Bank of Vietnam that summarizes the number of grants made during the prior year as well as the number of shares issued pursuant to awards in the prior year. Reports for the 2015 calendar year are due by January 31, 2016.

Country	Type of Report	Type of Awards Covered	Deadline
Australia	Tax Report	All equity awards	July 14, 2016 (Employee Statement) August 14, 2016 (Report to ATO)
China	Quota Renewal Quarterly Report	All equity awards	December 31, 2015 January 6, 2016
France	Tax Report	French-qualified stock options and restricted stock units	February 1, 2016 (DADS) March 1, 2016
India	Withholding Certificate Exchange Control Filing	All equity awards All equity awards	May 31, 2016 June 30, 2016
Ireland	Tax Report	All equity awards	March 31, 2016
Israel	Quarterly Report Annual Report	All equity awards All equity awards	End of Quarter March 31, 2016
Japan	Tax Report	All equity awards	March 31, 2016
Malaysia	Tax Reports	All vested equity awards	February 29, 2016
Philippines	Securities Report	All equity awards	January 10, 2016
Singapore	Confirmation Report Tax Report Tax Deferral Application	All equity awards that qualify under the ERIS All equity awards All equity awards that qualify under the QEEBR Scheme	January 31, 2016 March 1, 2016 April 15, 2016
Thailand	Securities Report	Stock options Purchase rights under an employee stock purchase plan	January 15, 2016 Varies
United Kingdom	Tax Report	Stock options and stock transfers	Real-Time Reporting July 6, 2016 (Share Scheme and Benefit Returns (Form 42))
United States	Tax Report	Incentive stock options and purchase rights under an employee stock purchase plan	January 31, 2016 (Deliver to employees) February 28, 2016 or March 31, 2016, as applicable (File with IRS)
Vietnam	Exchange Control Report	All equity awards	January 31, 2016

Lawyer Contacts

For further information, please contact your principal Firm representative or one of the lawyers listed below. General email messages may be sent using our "Contact Us" form, which can be found at www.jonesday.com/contactus/.

Robert G. Marshall II
San Francisco
+1.415.875.5720
rgmarshall@jonesday.com

Shoshana E. Litt
New York
+1.216.586.1015
selitt@jonesday.com

Special thanks to Adam Salter, Michael Whitbread, Liming Yuan, Shu Liu, Emmanuel de La Rochethulon, Thomas Le Frêche, Toru Yamada, Toshiuki Takahashi, and John Papadakis for their assistance.

This Commentary should be considered guidance only and should not be relied upon as legal advice. Specific design features of employee stock plans can substantially alter the applicable legal requirements. Readers are urged to obtain specific legal advice regarding how the local requirements apply to their plan terms before filing any year-end report. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our "Contact Us" form, which can be found on our website at www.jonesday.com. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.