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The Revenue Tax Act and its Enforcement Decree had been lately revised to introduce a requirement for native subsidiaries or branches of overseas corporations in South Korea to file data regarding stock-based compensation issued to their executives and staff by the overseas corporations. This requirement turned efficient on 1 January 2024 to stock-based compensation acquired or exercised on or after 1 January 2024.
Notification Obligation
From 1 January 2024, the place executives or staff of a neighborhood subsidiary or department of a overseas firm obtain or train stock-based compensation (eg shares, inventory choices or bonuses given in cash equal to the share worth) granted by the overseas mother or father firm, the native subsidiary or department (because the case could also be) should submit the next data to the South Korean tax authority:
- particulars of the grant, train and fee schedules of the stock-based compensation;
- income arising from such train and fee; and
- private data of the related govt or worker.
The above data should be submitted by 10 March of the yr following the tax yr during which the train or fee of the stock-based compensation happens.
For executives or staff of a neighborhood subsidiary, a overseas mother or father firm refers to a overseas firm that owns, instantly or not directly, a minimum of 50% of the shares of the native subsidiary. For executives or staff of a department of a overseas firm, a overseas mother or father firm refers back to the headquarter or department of a overseas firm, or a overseas firm that instantly or not directly owns a minimum of 50% of the inventory of one other overseas firm.
Key Takeaway
Employers who’ve issued or are meaning to difficulty stock-based compensation should guarantee they adjust to the submitting obligation whether it is granted by a overseas mother or father firm.
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