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Find out how Remote can guide you through the complexities of managing cross-border hiring, payroll, taxes, and compliance.

Stock options for employees in Kenya

Equity incentives are an invaluable way to attract, motivate, and retain top talent for your business. But when you cross hiring borders, they can become deeply complex.

Remote enables you to easily offer non-qualified stock options (NSOs) to your team members in Kenya. There are no compliance headaches or administrative hassles — just simplicity and clarity for you and your people at every step.

What are NSOs?

NSOs are a type of equity incentive. They give your team members the right to buy a set number of shares in your company at a fixed price, known as the exercise price.

This typically happens after a vesting period, which is often based on the length of time your team member stays at your company. As a result, they are a great way to foster long-term commitment, and align people with your company’s strategic goals.

Who can receive NSOs in Kenya?

Direct employees EOR employees Contractors
Can receive NSOs? Yes Yes Yes
Difficulty score Easy Easy Easy

It’s important to note that granting stock options to contractors can potentially increase your misclassification risk in Kenya (although this is not the primary factor). See how Remote protects you against misclassification.

How are NSOs taxed in Kenya?

In Kenya, NSOs are taxed in the following ways:

Direct employees EOR employees Contractors
At grant There is no taxation at grant. There is no taxation at grant. There is no taxation at grant.
At exercise The spread is usually taxed as salary income. The spread is the difference between the fair market value of the shares at the time of exercise, and the exercise price (or “strike” price) paid by your team member. The spread is usually taxed as salary income. The spread is the difference between the fair market value of the shares at the time of exercise, and the exercise price (or “strike” price) paid by your team member. The spread is usually taxed as gross income, to be paid as part of the contractor’s installment taxes. The spread is the difference between the fair market value of the shares at the time of exercise, and the exercise price (or “strike” price) paid by your team member. The gain will need to be reported as income in the annual tax return.
At sale There is no taxation at the time of sale of shares in a foreign company. There is no taxation at the time of sale of shares in a foreign company. There is no taxation at the time of sale of shares in a foreign company.

Are there tax advantages for your team members?

Direct employees EOR employees Contractors
As mentioned, capital gains on the sale of shares of a foreign company are currently not taxed. In addition, you can allow your team members to exercise their non-vested stock options early (a process known as “early exercise”). This can potentially reduce their tax liability, although early exercises can be difficult to manage and may require additional paperwork. As mentioned, capital gains on the sale of shares of a foreign company are currently not taxed. In addition, you can allow your team members to exercise their non-vested stock options early (a process known as “early exercise”). This can potentially reduce their tax liability, although early exercises can be difficult to manage and may require additional paperwork. As mentioned, capital gains on the sale of shares of a foreign company are currently not taxed. In addition, you can allow your team members to exercise their non-vested stock options early (a process known as “early exercise”). This can potentially reduce their tax liability, although early exercises can be difficult to manage and may require additional paperwork.

Is your business eligible?

If you want to use Remote Equity Advanced to offer stock options to your Kenya-based team members, your top corporation (i.e., your parent company) must be incorporated in Delaware. Your company must also be private — not publicly listed.