NSO

You can grant non-qualified stock options (NSO) to employees employed by a local subsidiary. There are certain tax advantages the grantees may be eligible to, it’s worth checking out the conditions!

Spain has a standard tax treatment for employees:

• Grant: There’s no taxation at grant.
  
  
• Exercise: The stock options are taxed at the time of exercise, as salary income. The company will be responsible for reporting and withholding taxes.
  
  
• As from exercise, the company doesn't need to do anything, but the grantee needs to declare shares held abroad every year.
  
  
• Sale: The sale price minus the price paid for the shares (and the amount already taxed at exercise), will be taxed as “savings” income.  

Certain things will change in 2023 as a new “startup law” will be enacted, making it even more favorable to grant NSO for companies qualifying as “startup” under the new law.

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NSO

You can grant non-qualified stock options (NSO) to employees employed via an “Employer of Record” (EoR) in Spain.

• Grant: There’s no taxation at grant.
  
  
• Exercise: The stock options are taxed at the time of exercise, as salary income.
  
  
• As from exercise, the company doesn't need to do anything, but the grantee needs to declare shares held abroad every year.
  
  
• Sale: The sale price minus the price paid for the shares (and the amount already taxed at exercise), will be taxed as “savings” income.  

Certain things will change in 2023 as a new “startup law” will be enacted, but most changes will not be relevant for EoR employees.

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NSO

You can grant non-qualified stock options (NSO) to local contractors in Spain.

• When the stock options are granted to a contractor, it could theoretically increase the risk of requalification of the relationship into an employment relationship (meaning more taxes and payments, such as severance pay). However, the fact that stock options are granted to a contractor is not as such a decisive element for that requalification.
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• The company won’t legally have to do anything vis-à-vis the local authorities as it will be the grantee’s responsibility to report the taxable gains and pay the taxes.
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• There’s a certain tax benefit available if certain conditions are met. One of these conditions is that the grantee commits not to exercise the stock options within the first 2 years.

Certain things could change in 2023 as a new “startup law” will be enacted.

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