Hi Steve,
The tax regime depends on the tax residence of the grantee, but you're right that the most common scenario (if no tax-favor scheme applies) is the spread (i.e. the difference between the fair market value (FMV) of the shares at the time of exercise and the exercise price paid by the grantee) being taxed as salary income at exercise. So if the FMV = exercise price no tax would be due by the grantee at exercise.
Again, it may vary depending on the grantee's tax residence.
Happy to look into you're specific situation if you share more details, i.e.
- Where the grantor is located.
- The work relationship between the grantor and the grantee (employee, EoR employee or contractor).
- The tax residence of the grantee.
Cheers!
Val
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Valentin Haarscher
Co-founder & CEO
Easop
New York
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Original Message:
Sent: 11-02-2023 08:30
From: Steve Marovich
Subject: FMV=Exercise Price
Can you advise what for recording requirements exist when FMV = exercise price? This would lead to a no tax scenario and thus nothing would be run through payroll. Not sure how to go about this.
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Steve Marovich
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