2018 Global Employee Equity at a glance: Poland | White & Case LLP International Law Firm, Global Law Practice
2018 Global Employee Equity at a glance: Poland

2018 Global Employee Equity at a glance: Poland

Welcome to the Poland page of our Global Employee Equity at a glance series. To view other countries in this series, please visit our 2018 Global Employee Equity at a glance page.

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TABLE OF CONTENTS

Stock Option Plans
Employment
Regulatory
Tax

Restricted Stock and RSUs
Employment
Regulatory
Tax

Employee Stock Purchase Plans
Employment
Regulatory
Tax

 

Stock Option Plans: Employment

Labor Concerns

There is a risk of employees claiming that they are entitled to benefits under the Plan where the Plan is amended or discontinued or where their employment is terminated.

There are laws that prohibit discrimination against, and/or less favorable treatment of, employees on certain grounds, including age, gender, disability and part-time status. Companies should be mindful of this when determining the eligibility of employees to participate in the Plan, the benefits being granted and the exercise of any discretion.

Communications

A disclaimer should be included in the award agreement that acknowledges each employee's receipt of the Plan documents and the discretionary nature of the Plan and confirms that termination of employment will result in the loss of unvested rights.

Although there is no legal requirement to do so, it is recommended that the Plan documents be translated.

Government filings must be made in Polish.

Electronic execution of award agreements may be acceptable under certain conditions, which are not onerous.

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Stock Option Plans: Regulatory

Securities Compliance

Neither the grant nor the exercise of Options is likely to trigger any prospectus requirements.

Foreign Exchange

Employees may be subject to certain reporting requirements, which are not onerous.

Data Protection

Processing of employee data for purposes directly connected to the employment relationship can generally be justified on the basis that the processing is necessary to fulfill the contract of employment. Purposes outside that category need to be assessed on a case-by-case basis and opt-in consent may be required in some cases. In all cases, companies should provide employees with a privacy notice describing what personal data is being collected and how the data is being used (including details of data sharing with third parties).

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Stock Option Plans: Tax

Employee Tax Treatment

An employee is generally subject to income tax on the gain on exercise of the Option (i.e., the excess of the market value of the Stock acquired over the aggregate exercise price).

Capital gains tax is also payable on the gain upon the net proceeds of sale of the Stock, although there is some risk of double taxation.

Social Security Contributions

Social security contributions should not arise provided that the Subsidiary is not involved in the offer of Options and the income is not considered to arise from the employment relationship.

Tax-Favored Program

Under the 2018 Tax Regime, neither the receipt of the Option nor the vesting/exercise of the Option or acquisition of Option should not be regarded as creating income in Poland if the program is qualified as an incentive program under Polish tax regulations (in particular incentive program ends up in obtaining stock). If this is the case, only disposal of the stocks should be subject to capital tax.

Withholding and Reporting

The Subsidiary may have an obligation to withhold the income tax and social security contributions if the Subsidiary reimburses the Issuer for the costs of the Plan and if participation in the Plan is considered to arise from the employment relationship.

Reporting requirements may apply to the extent withholding applies.

Employer Tax Treatment

A deduction is available if the Subsidiary reimburses the Issuer for the costs of the Plan. A written reimbursement agreement is required (setting out the criteria used to establish the amount to be paid by the Subsidiary).

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Restricted Stock and RSUs: Employment

Labor Concerns

There is a risk of employees claiming that they are entitled to benefits under the Plan where the Plan is amended or discontinued or where their employment is terminated.

There are laws that prohibit discrimination against, and/or less favorable treatment of, employees on certain grounds, including age, gender, disability and part-time status. Companies should be mindful of this when determining the eligibility of employees to participate in the Plan, the benefits being granted and the exercise of any discretion.

Communications

A disclaimer should be included in the award agreement that acknowledges each employee's receipt of the Plan documents and the discretionary nature of the Plan and confirms that termination of employment will result in the loss of unvested rights.

Although there is no legal requirement to do so, it is recommended that the Plan documents be translated.

Government filings must be made in Polish.

Electronic execution of award agreements may be acceptable under certain conditions, which are not onerous.

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Restricted Stock and RSUs: Regulatory

Securities Compliance

Neither the grant nor the vesting of Restricted Stock or RSUs is likely to trigger any prospectus requirement.

Foreign Exchange

Employees may be subject to certain reporting requirements, which are not onerous.

Data Protection

Processing of employee data for purposes directly connected to the employment relationship can generally be justified on the basis that the processing is necessary to fulfill the contract of employment. Purposes outside that category need to be assessed on a case-by-case basis and opt-in consent may be required in some cases. In all cases, companies should provide employees with a privacy notice describing what personal data is being collected and how the data is being used (including details of data sharing with third parties).

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Restricted Stock and RSUs: Tax

Employee Tax Treatment

Processing of employee data for purposes directly connected to the employment relationship can generally be justified on the basis that the processing is necessary to fulfill the contract of employment. Purposes outside that category need to be assessed on a case-by-case basis and opt-in consent may be required in some cases. In all cases, companies should provide employees with a privacy notice describing what personal data is being collected and how the data is being used (including details of data sharing with third parties).

Capital gains tax is also payable on the gain upon the net proceeds of sale of the Stock, although there is some risk of double taxation.

Social Security Contributions

Social security contributions do not arise provided that that the Subsidiary is not involved in the offer of Restricted Stock or RSUs and the income is not considered to arise from the employment relationship.

Tax-Favored Program

Under the 2018 Tax Regime, neither the receipt of the Restricted Stock/RSU. nor the vesting/exercise of the Restricted Stock/RSU or acquisition of Restricted Stock/RSU should not be regarded as creating income in Poland if the program is qualified as an incentive program under Polish tax regulations (in particular incentive program ends up in obtaining stock). If this is the case, only sale of the Stocks should be subject to capital tax.

Withholding and Reporting

The Subsidiary may have an obligation to withhold the income tax and social security contributions if the Subsidiary reimburses the Issuer for the costs of the Plan and if participation in the Plan is considered to arise from the employment relationship.

Reporting requirements may apply to the extent withholding applies.

Employer Tax Treatment

A deduction is available if the Subsidiary reimburses the Issuer for costs of the Plan. A written reimbursement agreement is required (setting out the criteria used to establish the amount to be paid by the Subsidiary).

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Employee Stock Purchase Plans: Employment

Labor Concerns

There is a risk of employees claiming that they are entitled to benefits under the Plan where the Plan is amended or discontinued or where their employment is terminated.

There are laws that prohibit discrimination against, and/or less favorable treatment of, employees on certain grounds, including age, gender, disability and part-time status. Companies should be mindful of this when determining the eligibility of employees to participate in the Plan and the exercise of any discretion.

Deductions from an employee's remuneration are permitted, but only with the employee's prior written consent.

Communications

A disclaimer should be included in the award agreement that acknowledges each employee's receipt of the Plan documents and the discretionary nature of the Plan and confirms that termination of employment will result in the loss of unvested rights.

Although there is no legal requirement to do so, it is recommended that the Plan documents be translated.

Government filings must be made in Polish.

Electronic execution of award agreements may be acceptable under certain conditions, which are not onerous.

[Go back to top of page]

 

Employee Stock Purchase Plans: Regulatory

Securities Compliance

It is possible that a prospectus will be required for participation in the Plan to be offered to employees in Poland. However, certain exemptions, exclusions and interpretations may be applicable and, in practice, a prospectus is rarely required. For example, offers made to no more than 150 persons in any one Member State are exempt and certain Issuers, including those incorporated or listed in a Member State, are required to publish an information memorandum only, which includes summary information about the Plan and the Stock, instead of a prospectus. Where a prospectus is required, the Issuer may be able to take advantage of a short-form regime under which certain requirements for the prospectus' contents are waived. Any prospectus must be approved by the relevant regulatory authority in the Issuer's Home Member State and filed under the passporting system with the relevant regulatory authority of each Member State in which participation in the Plan is being offered.

Foreign Exchange

Employees may be subject to certain reporting requirements, which are not onerous.

Data Protection

Processing of employee data for purposes directly connected to the employment relationship can generally be justified on the basis that the processing is necessary to fulfill the contract of employment. Purposes outside that category need to be assessed on a case-by-case basis, and opt-in consent may be required in some cases. In all cases, companies should provide employees with a privacy notice describing what personal data is being collected and how the data is being used (including details of data sharing with third parties).

[Go back to top of page]

 

Employee Stock Purchase Plans: Tax

Employee Tax Treatment

An employee is generally subject to income tax on the value of the discount when the Stock is purchased.

Capital gains tax is also payable on the gain upon the net proceeds of sale of the Stock, although there is some risk of double taxation.

Social Security Contributions

Social security contributions do not arise provided that the Subsidiary is not involved in the offer of Stock and the income is not considered to arise from the employment relationship.

Tax-Favored Program

Under the 2018 Tax Regime, neither the receipt of the Stock nor the vesting/exercise of the Stock or acquisition of Stocks should not be regarded as creating income in Poland if the program is qualified as an incentive program under Polish tax regulations (in particular incentive program ends up in obtaining Stock). If this is the case, only sale of the Stocks should be subject to capital tax.

Withholding and Reporting

Under the 2018 Tax Regime, neither the receipt of the Stock nor the vesting/exercise of the Stock or acquisition of Stocks should not be regarded as creating income in Poland if the program is qualified as an incentive program under Polish tax regulations (in particular incentive program ends up in obtaining Stock). If this is the case, only sale of the Stocks should be subject to capital tax.

Reporting requirements may apply to the extent withholding applies.

Employer Tax Treatment

A deduction is available if the Subsidiary reimburses the Issuer for costs of the Plan. A written reimbursement agreement is required (setting out the criteria used to establish the amount to be paid by the Subsidiary).

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2018 Global Employee Equity at a glance

Employment, Compensation & Benefits practice group

 

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