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[NTS] Compliance Request Korean Subsidiary Stock Compensation Reporting
According to the Korean tax law, any gains from ‘Stock-based compensation, etc’ [for example, stock options, employee stock purchase plan (ESPP), restricted stock units (RSU), performance share units (PSU), stock appreciation rights (SAR) and phantom stocks (PS) among others.] granted by a foreign parent company to (or exercised by) an executive/employee of its Korean subsidiary (or branch) in return for his or her services are regarded as ‘wage and salary income’ (or ‘other income’ if the executive/employee has exercised or received it after retiring from the company). An executive/employee who has such income is required to report it to the tax authority and to pay the corresponding income tax.
Additionally, when an executive/employee of a Korean subsidiary (or branch) has either exercised stock options or received stock-based compensation granted by a foreign corporation that is a controlling shareholder, the Korean tax law [Income Tax Act, Article 164-5 “Submission of Statement of Overseas Stock Options and Other Transactions” (Effective from January 1, 2024).] mandates the Korean subsidiary (or branch) to submit a “Statement of Stock Options and Other Transactions” to the head of the relevant tax office.
NTS kindly request your cooperation in ensuring that your Korean subsidiary (or branch) submits the required statement of stock-based compensation you, as the foreign controlling shareholder, granted to its executives/employees (including former executives/employees) to the relevant tax office by March 10th of the year following the taxable period in which the compensation was granted.
[NTS] Compliance Request Korean Subsidiary Stock Compensation Reporting
According to the Korean tax law, any gains from ‘Stock-based compensation, etc’ [for example, stock options, employee stock purchase plan (ESPP), restricted stock units (RSU), performance share units (PSU), stock appreciation rights (SAR) and phantom stocks (PS) among others.] granted by a foreign parent company to (or exercised by) an executive/employee of its Korean subsidiary (or branch) in return for his or her services are regarded as ‘wage and salary income’ (or ‘other income’ if the executive/employee has exercised or received it after retiring from the company). An executive/employee who has such income is required to report it to the tax authority and to pay the corresponding income tax.
Additionally, when an executive/employee of a Korean subsidiary (or branch) has either exercised stock options or received stock-based compensation granted by a foreign corporation that is a controlling shareholder, the Korean tax law [Income Tax Act, Article 164-5 “Submission of Statement of Overseas Stock Options and Other Transactions” (Effective from January 1, 2024).] mandates the Korean subsidiary (or branch) to submit a “Statement of Stock Options and Other Transactions” to the head of the relevant tax office.
NTS kindly request your cooperation in ensuring that your Korean subsidiary (or branch) submits the required statement of stock-based compensation you, as the foreign controlling shareholder, granted to its executives/employees (including former executives/employees) to the relevant tax office by March 10th of the year following the taxable period in which the compensation was granted.
[NTS] Compliance Request Korean Subsidiary Stock Compensation Reporting
[한국어] 국외 주식매수선택권등 거래명세서 작성 도움자료