⚠️  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! 💡

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

Setting up an “employee share scheme” normally triggers a few formalities. Some companies also take the position not to comply with the procedure for “employee share schemes”.

In a nutshell, what does taxation look like?

• At grant 👉 No taxation.
  
  
• At exercise 👉 There should be no taxation.

• At sale 👉 The positive difference between the sale price and the exercise price paid by the grantee will be considered as a salary, and subject to income tax.

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

Setting up an “employee share scheme” normally triggers a few formalities. Some companies also take the position not to comply with the procedure for “employee share schemes”.

In a nutshell, what does taxation look like?

• At grant 👉 No taxation.
  
  
• At exercise 👉 There should be no taxation.

• At sale 👉 The positive difference between the sale price and the exercise price paid by the grantee will be considered as a salary, and subject to income tax.

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

Setting up an “employee share scheme” normally triggers a few formalities. Some companies also take the position not to comply with the procedure for “employee share schemes”.

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 👉 The spread should be included by the grantee in the contractor’s “gross income”, as it constitutes “an amount received in respect of services rendered” and will be subject to income tax.

• At sale 👉 The sale gain will either be subject to capital gains tax or income tax depending on whether the grantee holds the shares on a capital account or on a revenue account.