What are the tax and social security consequences for companies operating an incentive plan?

Employee Incentives

United States Small Flag United States

(i) on grant;

No consequences at grant.

(ii) on vesting;

No income tax consequences to employers upon vesting. RSUs and (unless timely Section 83(b) elections have been made) restricted stock and profits interest awards are subject to taxation at vesting for Social Security and Medicare purposes. Employers owe the employer portion of such taxes which are equal to the amount of Social Security and Medicare taxes paid by employees (described above), except that employers do not owe the additional 0.9% Medicare tax payable by higher-income employees.

(iii) on exercise;

Employers owe the employer portion of Social Security and Medicare taxes (save for the additional 0.9% Medicare tax) when the participant exercises a NQSO or a SAR.

Neither ESPPs nor ISOs are subject to taxation for Social Security or Medicare purposes.

(iv) on the acquisition, holding and/or disposal of any underlying shares of securities;

No taxes are assessed against the employer upon acquisition, holding or disposal of the shares by the participant.

(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.

The issuance of bona fide loans to employees that meet the requirements described in Q/A-7 does not give rise to income tax consequences for the employer.

Mexico Small Flag Mexico

(i) on grant;

If the Mexican employer sponsors the plan or is charged with the cost of the same by a related party, at the time of the grant, it should deduct the corresponding income tax from the employee/participant’s salary. There is practical issue with this rule established by the Mexican Income Tax Law, which is making a deduction from the employee’s salary at a time where he/she has not received any income from the incentive plan. Companies in Mexico have designed a communication process to convey this situation to the participants and explain the benefits arising from the plan in the future to bear the payroll deduction. There is no effect from a social security contribution, because the Mexican employer will not be making any payment through its payroll, at the time of the grant.

(ii) on vesting;

There are no tax or social security effects for the company operating the plan by the mere fact of reaching a date in which the grant becomes vested.

(iii) on exercise;

If the exercise of the grant implies the payment of whole or part of the benefits arising from the incentive plan, there will not be a tax effect because this happened at the time of the grant. Based on the amount paid to the employee/participant and assuming through the Mexican employer’s payroll, the employer will pay a portion of the social security contribution corresponding to such amount and the salaries paid in the corresponding period.

(iv) on the acquisition, holding and/or disposal of any underlying shares of securities;

There are no tax or social security effects for the company operating the plan on the acquisition, holding and/or disposal of the underlying shares or securities.

(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.

The Mexican employer must obtain the repayment of the loan in terms of the agreement entered into with the employee/participant, including accrued interests. The employee/participant should authorize the company operating the incentive plan, to make deductions from his/her salaries in order to repay the loan and interests. If the company operating the plan is not the Mexican employer, it may agree with the latter to assist in the collection of the loans through payroll deductions, although this participation of the Mexican employer may be interpreted as a joint liability for the operation of the plan.

Romania Small Flag Romania

Similarly as for the previous case, the consequences for the companies (employers or deemed employers, within the scope of tax legislation) depend on whether the incentive plan qualifies as taxable or not, as follows:

A. for non-taxable incentive schemes - the employer does not have any obligations towards the authorities, since the participants are solely responsible to declare their gains and pay the corresponding income tax and social security contributions.

B. for schemes that do not meet the specific conditions - they are fully taxable and the employer (or deemed employer) has the obligation to compute, declare, withhold and pay to the state budget the income tax and social security contributions. This obligation arises at exercise moment.

Denmark Small Flag Denmark

An employer is in general entitled to a deduction for the expenses in connection with a granting under an Incentive Plan at the same time as the employee is taxable of the value of the Incentive Plan, see question 7. However, this does not apply, if the Incentive Plan is subject to the 7P Scheme and, thus, the employer is not entitled to a deduction.

Ecuador Small Flag Ecuador

(i) on grant;

TAX: When a cost is generated for the company and an income for the employee, a tax effect is generated (deduction for the company and income tax for the worker).

SOCIAL SECURITY: When a cost is generated for the company and an income for the employee, the social security contribution is mandatory.

(ii) on vesting;

TAX: When a cost is generated for the company and an income for the employee, a tax effect is generated (deduction for the company and income tax for the worker).

SOCIAL SECURITY: When a cost is generated for the company and an income for the employee, the social security contribution is mandatory.

(iii) on exercise;

TAX: When a cost is generated for the company and an income for the employee, a tax effect is generated (deduction for the company and income tax for the worker).

SOCIAL SECURITY: When a cost is generated for the company and an income for the employee, the social security contribution is mandatory.

(iv) on the acquisition, holding and/or disposal of any underlying shares of securities;

TAX: When a cost is generated for the company and an income for the employee, the social security contribution is mandatory.

SOCIAL SECURITY: When a cost is generated for the company and an income for the employee, the social security contribution is mandatory.

(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.

TAX: When companies charge interest on employee loans, such interest must be reported as income.

SOCIAL SECURITY: No impact.

China Small Flag China

(i) on grant;

No tax or social security consequence.

(ii) on vesting;

No tax or social security consequence.

(iii) on exercise;

Announcement of the State Administration of Taxation on Handling Enterprise Income Tax Involved in the Implementation of Equity Incentive Plan by Chinese Resident Enterprises (Announcement of the State Administration of Taxation No. 18 of 2012)

The listed company shall, in accordance with the Administrative Measures for the Equity Incentives of Listed Companies, establish an employee equity incentive plan. And in accordance with the relevant provisions of China's enterprise accounting standards, when the incentive plan is granted to the equity incentives, the fair price and quantity of the stock shall be calculated and determined as the listing company's cost or expense in relevant year, in exchange for the price of the incentive to provide services. For the above-mentioned enterprises that establish employee equity incentive plans, the enterprise income tax shall be implemented as follows:

(1) If the equity can be exercised immediately after the implementation of the equity incentive plan, the listed company may calculate the wage and salary expenses of the listed company in the current year based on the difference between the fair price of the stock and the actual exercise price of the incentive, and carry out pre-tax deduction according to the tax law.

(2) After the implementation of the equity incentive plan, it is necessary to exercise for waiting a certain number of years of service or to meet the stipulated performance conditions (hereinafter referred to as the waiting period). During the waiting period of the listed company, the relevant cost expenses calculated and confirmed by the accounting shall not be deducted when the enterprise income tax is calculated and paid in the corresponding year. When the equity of the equity incentive plan can be exercised, may calculate the wage and salary expenses of the listed company in the current year based on the difference between the fair price of the stock and the actual exercise price of the incentive, and carry out pre-tax deduction according to the tax law.

(3) The fair price at the time of actual exercise of the stock shall be determined by the closing price of the stock on the actual exercise date.

(4) For the resident companies listed outside China and non-listed companies, if the employee equity incentive plan is established in accordance with the Administrative Measures for the Equity Incentives of Listed Companies, and is handled in accordance with the relevant provisions of China's accounting standards in the accounting treatment of enterprises, the relevant enterprise income tax shall be implemented in accordance with the above provisions.

(iv) on the acquisition, holding and/or disposal of any underlying shares of securities;
No tax or social security consequence.

(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.

No tax or social security consequence.

The Netherlands Small Flag The Netherlands

(i) on grant:

No tax and/or social security consequences arise at the date of grant.

(ii) on vesting:

Upon the date of vesting tax and social security consequences will arise in respect of free / discounted shares, resulting in a withholding obligation for the employer.

There is in principle no matching deduction available for corporate income tax (’CIT’) purposes.

(iii) on exercise:

Upon the date of exercise tax and social security consequences will arise in respect of share options and SARs, resulting in a withholding obligation for the employer.

There is no matching deduction available for CIT purposes when exercising share options under an option plan. If a SAR in accordance with plan rules is exercised for cash, the exercise gain paid to the employee is deductible for CIT purposes, unless the employee’s taxable employment income in the preceding year exceeded EUR 572,000 (2019).

(iv) on the acquisition, holding and/or disposal of any underlying shares of securities:

In principle no tax and/or social security consequences arise on the acquisition, holding and/or disposal of any of the underlying shares.

For sake of completeness we note that if a participant’s employment ceases (irrespective the reason), all taxable employment income derived from that employment as from 1 January of the calendar year immediately preceding the termination year, is considered for determining whether a special employer tax on excessive termination payments applies. Benefits may (partially) be considered a termination payment to this end, if the participant is leaving in the same or the next calendar year of the vesting date of the free / discounted share plan, or the exercise date of the option right and/or SAR. The applicability of this special tax is dependent on a number of conditions. In practice the most important condition is that the special employer tax only applies if the participant’s remuneration in the second calendar year preceding the year in which his employment is terminated, exceeded EUR 551,000 (2019).

(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan:

If the employer (or a group company) has extended a loan to the participant at beneficial conditions, e.g. at an interest rate that is below market rates under similar conditions, the employer will have a withholding obligation on the taxable benefit.

Brazil Small Flag Brazil

Depending on the kind of incentive there will be or not labour/tax costs impact and the legal nature of the incentive is dependent on Courts jurisprudence.

For example, in Brazil, there is a tax dispute regarding what should be the nature of share-based plans, mainly stock option plans: either compensation for work or commercial agreement.

The repercussion of such dispute affects both the company and participants considering that, depending on the legal nature of the share-based plan, the taxation can be either more favourable or more burdensome.
According to the labour jurisprudence, the main characteristics to identify a stock option plan as of commercial nature are:

a. Willingness: the participant accepts the granting of the stock options as an investment opportunity, separated from its employment relationship.

b. Burden: the participant must exercise the stock options through the payment of a fair price.

c. Risk for the Participant: the investment made by the participant must be subject to common market oscillations.

  1. If the plan is characterised as compensation, the following tax treatment should apply:

    (i) on grant: no taxation.

    (ii) on vesting: no taxation.

    (iii) on exercise:

    a. The company will be required to withhold at source the WHT, as described in question 7 above.

    b. The average INSS rate payable by the company on compensation to employees is 20 per cent. In addition to this rate, percentages are added to cover the costs of occupational accident insurance and contributions to social security services that are specific to each activity carried out by the company. The average rate resulting from these additions is 28.8 per cent, a figure that may vary according to each company’s line of business.

    c. If the participant is an employee, such compensation is taken into account in the calculation of the other employment statutory rights, as it may apply, such as (1) 13th salary; (2) weekly rest ; (3) overtime and night shift pay ; (4) premium for working under unhealthy or hazardous conditions at the workplace ; (5) unemployment fund; (6) severance pay, and (7) paid vacation plus 1/3 of vacation bonus.

    d. on the acquisition, holding and/or disposal of any underlying shares of securities:

    The compensation for work paid with share-based plans shall be added to the corporate income tax (CIT) calculation basis in the period in which the corresponding cost/expense was recorded.

    Such compensation amount may be deducted from the CIT calculation basis upon effective payment (settlement in cash or other financial asset) or after ownership transfer of the shares or plans.

    e. No tax consequences will arise from the holding/disposal of any underlying shares.

    f. in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan:

    Considering that the lender is domiciled in Brazil, the tax on financial operations (IOF) will be due on the loan amount at a 0.0082% rate per day, limited to 1.5%, plus and additional of 0.38%, regardless of the operation term.

  2. If the plan does not qualify as compensation, the tax treatment applicable to commercial plans would be as follows:

    a. on grant: no taxation.

    b. on vesting: no taxation.

    c. on exercise: no taxation.

    d. on the acquisition, holding and/or disposal of any underlying shares of securities: No tax consequences should arise.

    e. in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan: the same as applicable for compensation plans.

Japan Small Flag Japan

In relation to the payment of a bonus, the payment is deductible. On the other hand, if the bonus is paid to an officer, in principle, the payment is not deductible in order to prevent the officer from manipulating the amount of the company’s income. The companies are required to withhold tax and social security contributions from the payment of bonuses.

In addition, if a company adopts the profit sharing plan mentioned above, the company also is required to withhold tax and social security contributions from the payment made under the profit sharing plan.
In relation to the stock option, the taxation is as follows:

(i) on grant;

Not deductible.

(ii) on vesting;

Not deductible.

(iii) on exercise;

Deductible, if any.

(iv) on the acquisition, holding and/or disposal of any underlying shares of securities;

The acquisition and holding of any underlying shares of securities are not deductible. On the other hand, when shares are sold, the acquisition cost is deductible.

(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.

There is no special taxation system for borrowing related to stock options.

Norway Small Flag Norway

The employer is required to withhold both tax and social security contributions payable whether the awards are cash or equity settled. Withholding must be in accordance with the participant's tax withholding card (which is issued by the tax authorities based on the previous year's earnings). Tax and social security must be withheld and paid by the employer every second month, i.e. on the 15th of every second month (beginning in March).

The employer is required to pay employer’s social security contributions on the amount subject to income tax. The employer may be exempt from paying the contributions if the employee is not subject to the Norwegian National Insurance Scheme or is exempt from employer reporting liabilities in Norway.

(i) on grant;

Shares: For free share awards and purchase of discounted shares the taxable benefit is included in the basis for payroll tax of 14.1 %.

Derivative: If the employee does not pay fair market value at investment, the discount is subject to payroll tax of 14.1 %. The cost is deductible for the company.

(ii) on vesting;

Usually no consequences for companies unless the vesting date is when sufficient restrictions are lifted to consider the employee as a share owner.

(iii) on exercise;

Share Option plans, share subscription rights and Restricted stock units: The taxable benefit is included in the basis for payroll tax of 14.1%.

Derivative: If any discount was subject to payroll tax at investment, there is no consequences for the company operating the plan at exit. If the gain at exit is considered employment income, payroll tax at 14.1 % will most likely be due on the gain.

(iv) on the acquisition, holding and/or disposal of any underlying shares of securities;

Changes in the underlying object for a share option due to merger, demerger or in the corporate structure usually do not result in payroll tax.

(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.

Benefit of a low or no interest loan to an employee may be subject to payroll tax if considered taxable. See above regarding individual tax consequences.

United Kingdom Small Flag United Kingdom

(i) on grant;

No tax is payable by the company on the grant of options under either a tax-favoured or non tax-favoured share option plan.

(ii) on vesting;

If an income tax charge arises for the participant on vesting (see 7 above) then this will be payable by the employer under the Pay-As-You-Earn ("PAYE") collection system if the shares are "readily convertible assets". Broadly this is where the shares are either capable of being sold or are deemed to be readily convertible assets because the company cannot secure a corporation tax deduction in respect of them. If the shares are readily convertible assets then a charge to national insurance contributions will also arise both for the employee and the employer. Whereas an employer can seek an indemnity in respect of the income tax and employee's national insurance contributions that it is required to pay under PAYE, it is not generally possible to recover the employer's national insurance contributions that become due (but see (iii) below). Note that if the shares are not "readily convertible assets" then any income tax is payable by the individual under self-assessment (and not via PAYE) and there is no national insurance contributions charge (either employee or employer).

(iii) on exercise;

If an income tax charge arises for the participant on the exercise of an option and the shares are readily convertible assets, the employer will have to account for this tax (and any associated employee's and employer's national insurance contributions) under the PAYE collection system. In these circumstances, it is also possible for the employer and participant to agree that the participant will bear all or a proportion of the employer's liability to national insurance contributions that becomes due.

Provided certain conditions are met, a company may be able to claim a corporation tax deduction from its profits in relation to the option plan.

(iv) on the acquisition, holding and/or disposal of any underlying shares or securities;

If the shares are readily convertible assets then the employer will be liable to account for any tax and national insurance contributions arising on the acquisition of the shares under the PAYE collection system.
Provided certain conditions are met, a company may be able to claim a corporation tax deduction from its profits on the issue of shares under a share ownership plan.

(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.

If an individual has an income tax charge because they pay less than the official rate of interest on their loan then this will give rise to a corresponding liability to national insurance contributions on the employer. In this case, however, there is no national insurance liability for the employee. If the loan is waived then the income tax charge that arises is not payable through PAYE but by the individual under self-assessment. However, an employee's and employer's charge to national insurance contributions will arise and will be payable by the employer under PAYE.

Germany Small Flag Germany

(i) on grant:

For the company the issuing shares is recorded as personnel expense under equity within the balance sheet. The granting must be included in the balance sheet, even if the employee does not exercise the options;

(ii) on vesting:

The vesting-period is not an event for taxation or social security contributions for the company;

(iii) on exercise:

The exercise of share options or a non-equity-based incentive plan is taxable for the employee. Social security contributions for both the company and the employee must be paid on the reference date of exercising. The company is responsible for deducting the respective taxes and for forwarding them to the tax authorities. The balance sheet recognizes the issuing of share options or the exercise of a virtual share option plan as personnel expense under liabilities;

(iv) on the acquisition, holding and/or disposal of any underlying shares of securities:

For the employer no further obligations occur other than to deduct the taxes and social security contributions for the employee and to forward them to the respective authorities;

(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the company of the participant (if different) or a third party) as part of the incentive plan:

Company loans have a positive effect on cash flow.

Spain Small Flag Spain

Please see answer 7.

France Small Flag France

On a preliminary basis, note that:

- Cash bonuses or bonuses resulting from phantom shares plans are subject to national social security contributions and income tax (through withholding tax) under the same conditions as salary. Consequently, the developments that follow only concern stock options and free shares;

- Bonuses in shares (stock options and free shares) are subject to preferential social and tax regime provided that the requirements of the French Commercial Code are complied with (see question 5) and specific disclosure requirements are fulfilled (see question 9).

The social and tax regime depends on the date of authorization to grant the shares. The rules set out below are those applicable to stock options granted since 28 September 2012 and free shares granted since 31 December 2016.

a. Tax and social security consequences on grant:

- If the requirements of the French Commercial Code are complied with, there are no tax and social security consequences for the company on grant for bonuses in shares.

However, for stock-option, a specific contribution amounting to 30 % of the value of the options granted is due. This contribution is calculated based on:

  • either the fair value of the options ;
  • or 25% of the value of the shares to which the options relate on the date of the decision to grant the shares.

This contribution is due the month following the grant date. This contribution is therefore due even if the conditions for benefiting from the shares are not met. However, if the conditions are not ultimately met, the company may request reimbursement of the contribution.

- Otherwise, bonuses in shares (stock options and free shares) are subject to social security contributions under the same conditions as salary on the basis of the value of the shares (stock market price) on the date of grant.

b. Tax and social security consequences on vesting:

- If the requirements of the French Commercial Code are complied with, a specific tax and social regime applies.

For free shares and stock options, the added value on vesting is exempt from social security contributions.
For free shares a specific contribution is due by the company. It amounts to 30 % of the value of the shares on the date of the acquisition (20 % for shares authorized since January 1st 2018). This contribution is due the month following the acquisition date.

- Otherwise, bonuses in shares (stock options and free shares) are subject to social security contributions under the same conditions as salary on the basis of the value of the shares (stock market price) on the date of grant.

c. With regards to loans offered to participants: note that social security contributions are due from the date of payment, even if it is an advance payment. According to the French tax administration, the company cannot deduct the advance payment from the result of the current financial year.

Colombia Small Flag Colombia

By general rule, the employer giving rewards or any incentive plan to its employees have also certain tax limits over how much and when, said rewards can be written off against the income tax.

The tax treatment may varied depending on the incentive plan, as would be explain above:

(i) Cash award: Section 107-1 of the tax code allows a maximum of 1% of taxpayer´s net income to be deducted when the expense refers to “attention to employees” such as gifts, courtesies, parties, meetings and celebrations. It is important to mention that this limitation also applies for attention to customers and suppliers and may be deducted only in the year the award is payed.

(ii) Stock option: No liability or expense will be recognised for this concept until the moment the employee compliance with the covenants and exercises the purchase option. Section 108-4 of the Colombian Tax Code allows employers to deduct the value of the shares determinate according to the provision of the section 90 of the tax code, once the options are exercised. Hence, the value of the shares could be: (i) if the shares are listed in the stock market, the value would be the one certificated during the day the option is exercised; or (ii) if the shares are not listed, the value must be at least the intrinsic value added an extra 30%. (130% the intrinsic value).

When the company qualify as Colombian entity, it is required to report and withhold in respect to the participants, since the incentive plans qualified as employee income and it may be deemed to be taxable.

Regarding social security payments, no consequences should exist from creating incentive plans if employers and employees enter in to an agreement establishing the incentive plan must be excluded from the employee´s salary base. If there is no agreement between the parties, local social security authorities could request contributions to the social security system using the amount paid as benefit as part of the base to calculate such contributions.

Portugal Small Flag Portugal

Any cost related to cash bonuses or share plans incurred by the employer are deducted for corporate tax purposes on the same year where the income is recognized as employment income by the employee.

Costs with bonuses and share plans attributed to board-members are subject to a “penalty tax”, in the form of an additional corporate income tax liability, levied at the rate of 35%. This tax does not apply where the variable compensation (i) does not exceed 25% of the employee’s total compensation or € 27,500; or (ii) at least 50% of the compensation is deferred for 3 years and is subject to the employee’s positive performance during this period.

The employer’s social security contributions are equivalent to 23.75% of the gross compensation. As explained above, currently variable compensation is generally not subject to social security contributions.

Italy Small Flag Italy

As regards social security contributions, the social security exemption is exclusively linked to the allotment of shares, since in this case the employee shares in the business risk. On the other hand, that according to INPS circulars No. 123/2009 and No. 162/2010 and its message of 12/10/2010, in order to benefit from social security payment exemption it is necessary that the share plan is not generalized, that it is subject to the occurrence of specific conditions, and involves the actual allocation of shares. Otherwise the amount paid to managers is to be considered normal remuneration and, therefore, subject to contribution.

If performance bonuses are paid, nothing changes for the company from a tax and contribution point of view. However, a recent amendment to paragraph 189 of article 1 of Law 208/2015 provides that “For companies that involve employees equally in the organization of work ...,a twenty percentage point reduction is provided relative to the contribution rate payable by the employer for the scheme relating to invalidity, old age and late employees’ dependents on a portion of the payments referred to in paragraph 182 not exceeding 800 euros. No contribution is due from the employee on the same quota. With reference to the portion of payments referred to in this paragraph, the pension contribution rate shall be reduced accordingly”. This means that the employer is allowed to reduce its contribution burden by 20 percentage points in respect of a part of the bonus subject to tax relief not exceeding EUR 800, and the worker is allowed not to pay his/her own contributions on that amount.

On the contrary, in the case of so-called corporate welfare, the money sums, goods and services provided to the worker, not contributing to the formation of the income from employment, will also be exempt from the employer’s social security contribution.

Turkey Small Flag Turkey

(i) on grant;

(ii) on vesting;

(iii) on exercise;
Please see below.

(iv) on the acquisition, holding and/or disposal of any underlying shares of securities;

If local subsidiary of a company abroad does reimburse the global company in exchange of the shares provided by the global company stock option spread on exercise is likely to be treated as employment income, giving rise to an income tax liability for the employee which must be withheld by the employer. The spread on exercise will become subject to employee social security (to the extent that the employee has not exceeded the maximum cap) and this must also be withheld by the employer.

If local subsidiary of a company abroad does not reimburse the global company the employee himself/herself should declare the taxable gain through their annual income tax return. In the event that a tax return declaration is made, the purchase price shall be deducted from the share sale price and remaining earning amount shall be included in the tax return declaration and the tax accrued to be calculated on the following Income Tax Tariff shall be paid. There will be no tax or social security obligations for the employer.

(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.

These loans to participants may be offered in two ways first as advances given to employees as a benefit in the payroll to be paid later in instalments without interest or typical loans to be paid back with interest.

In the first case scenario, company is obliged to withhold the income tax amount and pay it to the authority and share the stamp tax duty with the employee.

When it comes to the second scenario, the company shall invoice the amount calculating the interest. However it is actually forbidden for companies to loan money to other persons if this is not included in their area of business as financial institution under Decree No. 32.

Updated: May 30, 2019