U.S. Equity Compensation Grants to Foreign Employees: Structuring and Reporting Options

Tax Impact of U.S.-Sourced Non-Qualified Options and Grants of U.S. Parent's Shares to Foreign Subsidiary Employees

Recording of a 110-minute CPE webinar with Q&A

Conducted on Wednesday, June 14, 2017
Recorded event now available

This webinar will provide corporate advisers with a practical and comprehensive guide to the tax and other implications of granting compensatory stock options to nonresident employees.


As U.S. companies continue to expand globally, they are increasingly offering equity-based compensation to employees located outside the United States. Grants of options or other equity-based compensation can create multiple cross-border issues for both the U.S. firm and the foreign employee.

For employees of foreign subsidiaries, equity compensation from the U.S. parent creates still more complexities. Parent grants to foreign employees are often “pushed down” to the subsidiary, which enters into a “recharge” agreement with the parent. Depending on the structuring of the recharge agreement, the grant can create both tax and transfer pricing implications for the U.S. parent.

Listen as our experienced panel provides a thorough and practical guide to the tax treatment of equity compensation grants to foreign employees by U.S. companies.


  1. Treatment of non-qualified stock option grants from U.S. company to non-U.S. employee
    1. Sourcing of income
    2. Timing of U.S. and foreign company tax
    3. Foreign tax credit
    4. Impact of tax treaties
  2. Grant of equity shares of U.S. parent company to employees of foreign subsidiary
  3. Recharging agreements
  4. Transfer pricing implications


The panel will discuss these and other important issues:

  • U.S. income sourcing methods for non-qualified options granted to non-U.S. employees
  • Withholding requirements on U.S. companies on U.S.-sourced equity grants to non-U.S. employees
  • What is a “recharging agreement” and how does it work in the context of U.S. parent company grants of equity compensation to employees of foreign subsidiaries?
  • Tax impact of recharging on parent company
  • Restricted stock units and other forms of equity compensation
  • Tax qualified plans on a global basis
  • Legal and regulatory issues in relation to global grants - including securities laws; exchange controls and data protection
  • Global remuneration regulations affecting equity plans
  • Documentation for global plans and how to avoid too many versions

Learning Objectives

After completing this course, you will be able to:

  • Identify the tax treatment of a U.S. company granting non-qualified stock options to foreign employees
  • Recognize the potential for dual taxation on grants of non-qualified stock options to foreign persons
  • Determine the tax and transfer pricing ramifications of recharging agreements in the grant of equity shares of the U.S. parent to employees of a foreign subsidiary


Ian Fraser, Partner
Simmons & Simmons, London, England

Mr. Fraser has significant experience advising businesses on all aspects of employee incentives. This work includes advising on the design and drafting of share incentive plans, manager equity arrangements and cash bonus plans and on the tax, legal and regulatory implications of operating them in the UK and internationally. He advises on HM Revenue & Customs tax advantaged share plans and “unapproved” arrangements and on structuring equity arrangements for new hire and severance packages. He also regularly advises on managing employee equity rights in the course of corporate transactions, including maximising value through the efficient use of tax reliefs.

Bob Grayson, Partner
Tapestry Compliance, London, England

Mr. Grayson manages the Firm's global legal and tax compliance for all types of share plans, incentives and employment issues. He works with many of the world’s leading companies advising them on developing the best strategy for global compliance. He previously worked with Linklaters for over 10 years, doing finance work in Asia and with the Employee Incentives team in London. Prior to co-founding Tapestry, he was a senior in-house counsel with Shell. His experience includes all aspects of share incentives including global compliance issues, plan design, dealing with internal stakeholders, rule drafting, communications, internal approvals and share hedging.

William D. Wright, Partner
Fisher & Phillips, Philadelphia

Mr. Wright is Co-Chair of the firm's International Employment Practice Group. He counsels employers on various employment, compensation and benefit issues related to the employment of foreign nationals in the U.S., as well as the employment of U.S. permanent residents and citizens abroad. He has worked on compliance issues related to hiring, retention and separation of employees in several jurisdictions.

Craig P. Tanner, Counsel
Reed Smith, Palo Alto, Calif.

Mr. Tanner represents multinational companies with equity compensation, executive compensation, employment, and data privacy programs. In his compensation practice, he works with clients in designing, offering, and implementing international equity-based compensation programs, advising clients on the tax, securities, employment, currency exchange, data privacy, and communications issues that the companies encounter when offering the programs to employees, directors, and consultants throughout the world. He advises clients on cross-border equity compensation issues arising in mergers and acquisitions.

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Corporate Tax Advisory Board

David Adler

Director of Multistate Tax Services

Deloitte Tax

Silvia Aguirre

Chief Certificate Officer


David Bowen


Grant Thornton

Elizabeth Bowman

Tax Research Analyst

ADP Tax Credit Services

Rick Bregitzer

Manager of Domestic Taxes


Joseph Calianno

Partner, National Tax Office International Tax


Patrick Derdenger

Tax Partner

Steptoe & Johnson

Martin Eisenstein

Managing Partner

Brann & Isaacson

John Garippa

Senior Partner

Garippa Lotz & Giannuario

Joseph Geiger, Esq., CPA

Tax Consultant


Kenneth Graeber

VP & Management Consultant

Marvin F. Poer & Co.

Don Griswold

Executive Tax Counsel

Berkshire Hathaway Tax Group

Stephanie Anne Lipinski-Galland


Williams Mullen

George Manousos



Diane Matulich

Senior Manager, Local Taxes

Advanced Micro Devices

Betty McIntosh

Senior Managing Director

Cushman & Wakefield

Foy Mitchell

Vice President

Marvin F. Poer & Co.

Richard Pomp

Professor of Tax Law

University of Connecticut

Walter Pickhardt


Faegre Baker Daniels

Richard J. Prem

Vice President, Indirect Taxes & Tax Reporting


Michael Press


Scout Economics

Tammy Propst



Mark Semerad

Manager of Property Tax

Level 3 Communications

Richard Weiss

Tax Research Manager

ADP Tax Credit Services

Tom Windram

Managing Director & National Leader, Federal Tax Credits & Incentives

RSM McGladrey

Thomas Zaino

Managing Member

Zaino Hall & Farrin

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