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Granting equity in 

the 

Ukraine

 

Get to know everything about your taxation and reporting obligations in 

the 

Ukraine

Introduction

⚠️  The tax information below is an extremely brief summary for standard situations of the referred relationship, and each situation may of course be different from the norm and have its own specificities. ⚠️

A more comprehensive set of information for this country and work relationship is available on Easop.

If you’re looking for more detailed information in this country (or if you are just curious about our global compliance offering and pricing), get in touch with us and we’ll tell you more about it! 💡

Regular employee

✅ Yes, you can grant non-qualified stock-options (NSO) to employees in Ukraine.

In a nutshell, what does taxation look like?

  • At grant 👉 No taxation.

  • At exercise 👉 There should be no taxation at exercise.

  • At sale 👉 The the gain made (i.e. the difference between (a) the price received from the sale of the shares and (b) the costs incurred for purchasing the shares (usually corresponding to the exercise price paid by the grantee)) will be taxed as a capital gain.

If "martial law" is applicable?

"Material law" , which prohibits the grantees from wiring the funds necessary to exercise their stock options from their Ukrainian bank accounts, may be applicable (due to the situation with Russia).

If this restriction is still in place at the time a grantee exercises, it’s recommended to allow the grantees to have the possibility to exercise their stock options by way of “cashless exercise” or “net exercise” arrangement (or to offer other types of incentives that don’t require payment of an exercise price, such as Stock Appreciation Rights (SARs)). Allowing cashless or net exercise is something that can be done when the grantee exercises so you don’t have to worry about it now.

In a “net exercise” or “cashless exercise” arrangement, the grantee will “sacrifice” some of the shares the grantee would normally be entitled to purchase, in order to cover the overall exercise price. In other words, the grantee doesn’t pay an exercise price, but gets less shares.

Employee via EoR

✅ Yes, you can grant non-qualified stock-options (NSO) to EoR employees in Ukraine.

In a nutshell, what does taxation look like?

  • At grant 👉 No taxation.

  • At exercise 👉 There should be no taxation at exercise.

  • At sale 👉 The the gain made (i.e. the difference between (a) the price received from the sale of the shares and (b) the costs incurred for purchasing the shares (usually corresponding to the exercise price paid by the grantee)) will be taxed as a capital gain.

If "martial law" is applicable?

"Material law" , which prohibits the grantees from wiring the funds necessary to exercise their stock options from their Ukrainian bank accounts, may be applicable (due to the situation with Russia).

If this restriction is still in place at the time a grantee exercises, it’s recommended to allow the grantees to have the possibility to exercise their stock options by way of “cashless exercise” or “net exercise” arrangement (or to offer other types of incentives that don’t require payment of an exercise price, such as Stock Appreciation Rights (SARs)). Allowing cashless or net exercise is something that can be done when the grantee exercises so you don’t have to worry about it now.

In a “net exercise” or “cashless exercise” arrangement, the grantee will “sacrifice” some of the shares the grantee would normally be entitled to purchase, in order to cover the overall exercise price. In other words, the grantee doesn’t pay an exercise price, but gets less shares.

Contractor

✅ Yes, you can grant non-qualified stock-options (NSO) to contractors in Ukraine.

Note that granting stock options to contractors could increase the misclassification risk (i.e. the contractor relationship being requalified as an employer-employee relationship, with all tax consequences that can go with it). This will never be the only factor though, what counts primarily for determining the degree of misclassification risk are factors relating to the modalities of the services performed (control over the contractor’s work, exclusivity, term of the services, etc.).

In a nutshell, what does taxation look like?

  • At grant 👉 No taxation.

  • At exercise 👉 There should be no taxation at exercise.

  • At sale 👉 The the gain made (i.e. the difference between (a) the price received from the sale of the shares and (b) the costs incurred for purchasing the shares (usually corresponding to the exercise price paid by the grantee)) will be taxed as a capital gain.

If "martial law" is applicable?

"Material law" , which prohibits the grantees from wiring the funds necessary to exercise their stock options from their Ukrainian bank accounts, may be applicable (due to the situation with Russia).

If this restriction is still in place at the time a grantee exercises, it’s recommended to allow the grantees to have the possibility to exercise their stock options by way of “cashless exercise” or “net exercise” arrangement (or to offer other types of incentives that don’t require payment of an exercise price, such as Stock Appreciation Rights (SARs)). Allowing cashless or net exercise is something that can be done when the grantee exercises so you don’t have to worry about it now.

In a “net exercise” or “cashless exercise” arrangement, the grantee will “sacrifice” some of the shares the grantee would normally be entitled to purchase, in order to cover the overall exercise price. In other words, the grantee doesn’t pay an exercise price, but gets less shares.

Want to know more about equity in 

the 

Ukraine

?

Discover everything you need to know about taxation and reporting obligations for you and your team in 

the 

Ukraine

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