Tax on spread at exercise, likely as salary (remuneration) income. Tax authorities may challenge employees who claim option income as occasional income, which is taxable at a lower effective rate.
Tax on sale
Likely available if (1) reimbursement is made pursuant to a written agreement, (2) the award income is classified as remuneration income, and (3) amount reimbursed is determined in accordance with general accounting conventions.
However, deduction may not be available for awards granted to officers or directors of the local entity.
Income Tax:
Generally, no withholding, unless the subsidiary is significantly involved in operation of plan and delivery of payment to employees.
Annual reporting required (assuming local entity is at least 50% owned by issuer and that no withholding is required).
Social Insurance Contributions:
Generally, no.
Yes, depending on value and size of offering. However, regardless of value and size of offering, companies making grants solely to employees of a wholly-owned subsidiary that is (1) a first tier or second tier subsidiary of the issuer, and (2) organized as a KK are not required to make any securities filings. If the exemption does not apply, grants to 50 or more offerees in excess of JPY 100 million require an extensive filing in addition to ongoing filings; grants to 50 or more offerees between JPY 10 million and JPY 100 million also require a (less extensive) filing.
Aggregation rules apply (12-month aggregation rule applies to the value threshold; 6-month aggregation rule applies to the 50 offeree threshold).
Cashless exercise restriction does not avoid securities requirements for options.