- Can a local company issue stock options/restricted units in your jurisdiction?
- If yes, is it a common practice to issue stock options/restricted units by local company in your jurisdiction?
- Is it allowed for the residents of your jurisdiction to receive stock options/restricted units from foreign companies?
- Is it common to use recharge mechanisms with local companies when the stock options/restricted units are issued by foreign company?
- Does your jurisdiction have special regulations applicable to stock options/restricted units granted to its residents from foreign companies?
- When stock options/restricted units are granted by foreign company, is it commonly required to have prospectus or other offering to be published in your jurisdiction?
- Whether the grant and/or vesting of stock options/restricted units are considered a notifiable event in your jurisdiction from the company’s (issuer) perspective?
- Are there any regulatory or other restrictions that could significantly limit an ability of the residents of your jurisdiction to participate in foreign stock option plans?
- Is it necessary to undergo any kind of registration of foreign stock option plan in order for the residents of your jurisdiction to participate?
- Does your jurisdiction have special taxation rules applicable to stock options/restricted units?
- Whether grant/vesting of stock option is considered a taxable event for participant in your jurisdiction?
- Whether spread between exercise price of option and market price of shares is considered taxable income for participant in your jurisdiction?
- Whether investment gain on sale of shares received upon exercise of option are subject to tax in your jurisdiction?
- Whether grant of restricted units is considered a taxable event in your jurisdiction?
- Whether vesting of restricted units is considered a taxable event in your jurisdiction?
- Whether there is a risk of double taxation upon sale of shares received under restricted units by participant in your jurisdiction?
- Whether there is separate securities tax applied to shares received under stock option/restricted unit in your jurisdiction?
- Whether social security taxes may apply to benefits received by participant under stock option plan?
- Is there a risk of double taxation for the residents of your jurisdiction in case of receiving foreign stock options/restricted units?
- Is there a possibility for stock option plan to benefit from any special taxation regime in your jurisdiction, in case if certain conditions are met?
- Whether the burden of tax reporting of taxable income received from stock options/restricted units issued by foreign company lies with the participant or the company (including local subsidiary in cases of recharge mechanisms)?
- Is it common in your jurisdiction to offer cash payout to the participants instead of shares as a result of stock options exercise/restricted units vesting?
- Is it necessary in your jurisdiction to have stock option plan documents translated into local language?
- Is it required for a participant of the plan to have a separate bank account in order to pay for vested shares?
- Whether there are any restrictions in your jurisdiction on granting stock options/restricted units to independent contractors?
- Does the company have consultation obligation towards employee representative bodies (e.g. works council) prior to launching a stock option plan in your jurisdiction?
- Besides having a plan, is it required/recommended in your jurisdiction to conclude a separate option/unit award agreement with the employee?
1. Can a local company issue stock options/restricted units in your jurisdiction?
Yes.
2. If yes, is it a common practice to issue stock options/restricted units by local company in your jurisdiction?
No.
Hungarian individuals receiving stocks/options/restricted units of a foreign parent company is more common than a Hungarian company issuing stock/options/RSUs.
3. Is it allowed for the residents of your jurisdiction to receive stock options/restricted units from foreign companies?
Yes.
4. Is it common to use recharge mechanisms with local companies when the stock options/restricted units are issued by foreign company?
Yes.
5. Does your jurisdiction have special regulations applicable to stock options/restricted units granted to its residents from foreign companies?
No.
6. When stock options/restricted units are granted by foreign company, is it commonly required to have prospectus or other offering to be published in your jurisdiction?
No.
7. Whether the grant and/or vesting of stock options/restricted units are considered a notifiable event in your jurisdiction from the company’s (issuer) perspective?
No.
8. Are there any regulatory or other restrictions that could significantly limit an ability of the residents of your jurisdiction to participate in foreign stock option plans?
No.
9. Is it necessary to undergo any kind of registration of foreign stock option plan in order for the residents of your jurisdiction to participate?
No.
10. Does your jurisdiction have special taxation rules applicable to stock options/restricted units?
No.
Only for schemes that meet certain criteria and in exchange benefit from more favourable treatment.
11. Whether grant/vesting of stock option is considered a taxable event for participant in your jurisdiction?
No.
No income tax is due on grant/vesting, but income tax is due when exercising the option.
12. Whether spread between exercise price of option and market price of shares is considered taxable income for participant in your jurisdiction?
Yes.
13. Whether investment gain on sale of shares received upon exercise of option are subject to tax in your jurisdiction?
Yes.
14. Whether grant of restricted units is considered a taxable event in your jurisdiction?
No.
15. Whether vesting of restricted units is considered a taxable event in your jurisdiction?
Yes.
Income tax is due when shares are received.
16. Whether there is a risk of double taxation upon sale of shares received under restricted units by participant in your jurisdiction?
No.
17. Whether there is separate securities tax applied to shares received under stock option/restricted unit in your jurisdiction?
No.
Any gain realised is taxed under the general personal income tax rules (a flat 15% personal income tax rate).
18. Whether social security taxes may apply to benefits received by participant under stock option plan?
Yes.
Social contribution tax (a flat 13% rate) may apply in addition to personal income tax in certain cases, but with an annual ceiling.
19. Is there a risk of double taxation for the residents of your jurisdiction in case of receiving foreign stock options/restricted units?
No.
Only regarding the US (receiving shares issued by a US company), with which Hungary no longer has a double tax treaty, as of 1 January 2024.
20. Is there a possibility for stock option plan to benefit from any special taxation regime in your jurisdiction, in case if certain conditions are met?
Yes.
21. Whether the burden of tax reporting of taxable income received from stock options/restricted units issued by foreign company lies with the participant or the company (including local subsidiary in cases of recharge mechanisms)?
It lies with the participant, but the local subsidiary may voluntarily intervene and assist.
22. Is it common in your jurisdiction to offer cash payout to the participants instead of shares as a result of stock options exercise/restricted units vesting?
It is not common, but in certain structures it is possible.
23. Is it necessary in your jurisdiction to have stock option plan documents translated into local language?
No.
The related documents must be in a language that the employee speaks and understands.
24. Is it required for a participant of the plan to have a separate bank account in order to pay for vested shares?
No.
25. Whether there are any restrictions in your jurisdiction on granting stock options/restricted units to independent contractors?
No.
26. Does the company have consultation obligation towards employee representative bodies (e.g. works council) prior to launching a stock option plan in your jurisdiction?
No.
There is no consultation obligation if only a couple of employees (executives) participate in the plan; this is the practice in Hungary. If the plan affects a large number of employees, a consultation obligation applies.
27. Besides having a plan, is it required/recommended in your jurisdiction to conclude a separate option/unit award agreement with the employee?
No.
It is not required to have a separate agreement. It is recommended to have a separate agreement only if the plan does not regulate all relevant questions (e.g. rules applicable in the case of employment termination).
