Tax at vesting. Taxable amount is fair market value of the shares at vesting.

Tax on sale

Generally allowed, if subsidiary reimburses parent under a written agreement and the value of the shares at vesting is treated as compensation to the employee and is subject to withholding and social security contributions.

Reimbursed amounts may be treated as service fees and subject to additional taxes.

Reimbursement may be difficult to implement due to exchange control considerations.

Income Tax:

Likely no, unless the local subsidiary reimburses parent or RS/RSU income considered to be part of local compensation.

Social Insurance Contributions:

Uncertain due to evolving case law, but may be due if local subsidiary reimburses parent or award income otherwise considered to be part of local compensation. If due, employer must pay employer social insurance contributions and withhold employee portion of social insurance contributions (employee portion is subject to monthly contribution ceiling while employer portion is uncapped).

If no reimbursement and income not considered part of local compensation, social insurance contribution obligations uncertain due to conflicting case law.

None.

Reimbursement of costs by Brazilian subsidiary may be difficult to implement because commercial bank chosen to handle the remittance may question the transaction and/or request that Central Bank approval be obtained.

Cash-netting to remit reimbursement of RS/RSU costs is permitted but also requires approval by commercial bank.

Employees may be subject to reporting of shares or other assets held abroad if certain threshold exceeded.

Significant likelihood of vested rights/entitlement claims for RS/RSU.

RS/RSU with performance vesting conditions (based on employee's performance) creates an even greater risk.

Employees should sign specific labor disclaimer and compliance language.

Under data protection legislation adopted in 2020, a valid basis (e.g., necessity for performance of a contract) is needed for the collection, use, storage, and processing of personal data as well as the transfer of personal data out of Brazil. Accordingly, companies should review their approach to data privacy compliance in the context of equity plan administration and consider on which basis they may be able to rely to collect, process and transfer data.