Can an overseas employee participate in an incentive plan?

Employee Incentives

United States Small Flag United States

There are no prohibitions on extending US incentive plans to overseas employees, but there are limitations and restrictions that must be observed.

The terms of the US plan must provide that it can be extended to overseas employees. Typically, those employees will be employed by a separate entity. With some plan designs it may be necessary for the US board of directors to authorize the extension of the plan to those foreign subsidiaries. Many US plans authorize the creation of “sub-plans” to facilitate overseas awards and allow the main plan rules to be varied to comply with local laws.

Obviously, US companies must comply with the securities and prospectus laws, tax laws, data protection laws, currency exchange requirements and labor/employment laws of foreign countries.

Mexico Small Flag Mexico

Given that there is no limitation in Mexico for incentive plans, an overseas employee may participate, however this is not a common practice.

Romania Small Flag Romania

Strictly from a Romanian employment law standpoint, there are no special prohibitions or limitations between local and overseas employees for participating in an incentive plan. However, from a practical perspective, considering the relevant tax implications is key when taking this decision.

In practice there are situations when incentive plans are implemented by multinational groups of companies for worldwide employees. Such scenarios are - in principle - also covered by the Romanian tax legislation, but the specifics of each scheme needs to be analysed so as to determine the local tax implications.

Ecuador Small Flag Ecuador

Yes, overseas employees can participate in an incentive plan.

Denmark Small Flag Denmark

Yes. See question 17.

China Small Flag China

Yes. In case there will be any doubt, we assume here overseas employee refers to foreign natural person (the situation for natural person from Hong Kong, Macau and Taiwan is more complicated since they are regarded as foreigners in some cases and not foreigner when there are specific policies, so such situation will not be discussed here.

In the unlisted company, the overseas employee could participate in the incentive plan, however, the exercise of the incentive plan may lead the nature change of such company, i.e. from one limited liability company into one joint-venture, and the related industry access for foreign investment shall be applied. If the company carrying out the equity incentive plan falls into the “restricted” category for foreign investment, then the incentive plans for foreign natural person should satisfy government approval requirement; if the company carrying out the equity incentive plan falls into the “prohibited” category for foreign investment, then incentive plans cannot be vested to foreign natural person.

While for the listed-company, on August 15th, 2018, the CSRC reviewed and adopted amendments to Administrative Measures for the Equity Incentives of Listed Companies and Administrative Measures on the Registration and Settlement of Securities. Under the amended measures, foreign employees involved in equity incentives are no longer limited to employees working domestically. Foreign employees working abroad are also included in the range of objects that can be subject to equity incentives. Foreign employees work abroad allowed to participate in equity incentives can also open A-share account and Foreign employees' A-share securities accounts are no longer limited to holding and selling, and are no longer prohibited from "engaging in other securities trading activities" (such as increasing their holdings). In conjunction with this, China Securities Depository and Clearing Corporation Limited issued Circular on Matters Concerning the Opening of A-share Securities Accounts by Qualified Foreigners, which clarifies the scope of foreigners who can open A-share securities account and the application materials required to open an account. From September 15th, 2018, foreign nationals working domestically may apply for account opening in accordance with the requirement in this notice.

The Netherlands Small Flag The Netherlands

Yes, taking into account the securities laws applicable in the country where such overseas employees are residing.

Brazil Small Flag Brazil

Yes, an overseas employee can participate in incentive plans. The Brazilian expatriation law requires employers to (1) grant to employees the rights provided under the local law (or the rights provided under the Brazilian employment law, including occupational health and safety rights, when they are more beneficial than the local law); and (2) the rights provided under the Brazilian expatriation law. In this regard, the employee may participate in any incentive plan offered by the company regardless of being working abroad, provided the employee is eligible to participate in the plan, and any payment made overseas to the employee is subject to the Brazilian employment, tax and social security laws as applicable.

Japan Small Flag Japan

Yes. Overseas employee can participate in incentive plans referred to herein. Practically speaking, however, Japanese companies tend to construct incentive plans for domestic use. Therefore, there are a limited number of companies that provide an incentive plain at the global level.

Norway Small Flag Norway

Yes, there are no restrictions for foreign employees.

United Kingdom Small Flag United Kingdom

An overseas employee can participate in an incentive plan but it will be important for the company operating the plan to obtain local law advice on the tax and legal implications of the plan in each applicable jurisdiction. An overseas employee can participate in a tax-favoured plan but will not generally be able to benefit from the associated tax relief as they are unlikely to be subject to UK tax.

Germany Small Flag Germany

Overseas employees can participate in an incentive plan. Significant for the participation is the question whether the employee is a German tax resident in Germany. Depending on this, the respective employee must face the German tax regulations on taxation of income at the time of exercising the incentive payment. The obligation to social security contribution also depends on the existence of treaties or EU-provisions to regulate the obligation.

France Small Flag France

Yes, an overseas employee can participate in an incentive plan. Also note that by application of the “equal treatment, equal pay” principle, the employer may be forced, depending on the circumstances, to grant the incentive plan to an overseas employee.

Spain Small Flag Spain

There are no limitations on the participation of foreign employees in incentive plans under Spanish mercantile/employment legislation.

Colombia Small Flag Colombia

An overseas employee may participate in an incentive plan, but if considered an employee of a Colombian company, all agreements as per such plan must be executed with his local employer.

Portugal Small Flag Portugal

Employees working abroad can participate in incentive plans in the same conditions applicable to those employed by the Portuguese company.

Italy Small Flag Italy

Overseas employees can participate in an incentive plan. As regards the relevant tax levy on the employee, the applicable law depends on the Country he or she is a tax resident of.

Turkey Small Flag Turkey

Yes an overseas employee can participate in an incentive plan.

Updated: February 26, 2019