How Esops From Firms Listed Abroad Increase Compliance Burden On Employees

Similar to Esops offered by an Indian company, the taxation of stock options by an MNC happens at two stages. First, when employees receive the stocks and then when they sell them.

Just like start-ups are offering stock options to their employees, some multinationals listed abroad are also rewarding their employees with employee stock option plans (Esops) during the covid-19 pandemic.

According to tax experts, the compensation structures of these multinational corporations (MNCs) are getting linked to the global performance of the companies. While the mode of acquisition of Esops may differ slightly, their taxation is similar to stock options offered by an Indian company. However, Esops from a company listed abroad can slightly increase the tax compliance burden when filing returns.

Taxation

Similar to Esops offered by an Indian company, the taxation of stock options by an MNC happens at two stages. First, when employees receive the stocks and then when they sell them.

The day a company offers stocks to employees, it is called a grant date. An employee receives a letter stating the number of stocks offered, the price, when can those be availed, and other details. At this stage, there is no taxation.

Source: livemint

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