You can definitely grant non-qualified stock options (NSO) to local residents in Ukraine.
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• In principle, there will be no taxation at the time of grant, nor at the time of exercise (even though the law is not 100% clear regarding the absence of taxation at exercise, and the tax authorities could theoretically claim that a benefit already arise at the time of exercise).
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• At the time of sale, 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, at a flat rate of 18%, plus a military levy of 1,5%. No social security charges will apply.
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• As you may expect, the war against Russia has certain legal implications: One of these implications is that a “martial law” is currently in place, which has as practical effect to prohibit the grantees from wiring the funds necessary to exercise their stock options from their Ukrainian bank accounts.
  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)).

Since there should in principle be no taxes to pay before the grantee is able to obtain a benefit from the stock options received by selling the shares, stock options are a tax efficient way to incentivize your team members in Ukraine!

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NSO

You can definitely grant non-qualified stock options (NSO) to local residents working via an EoR employer in Ukraine.

NSO

You can definitely grant non-qualified stock options (NSO) to local residents working as contractors in Ukraine.