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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 Ukraine

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 Ukraine. 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 Ukraine?

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 also potentially increase your misclassification risk in Ukraine (although this is not the primary factor). See how Remote protects you against misclassification.

How are NSOs taxed in Ukraine?

In Ukraine, 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 There should be no taxation at exercise, although the rules on this are not fully defined. There should be no taxation at exercise, although the rules on this are not fully defined. There should be no taxation at exercise, although the rules on this are not fully defined.
At sale Any gain made is taxed as capital gains. Any gain made is taxed as capital gains. Any gain made is taxed as capital gains.

Due to the current situation in Ukraine, your team members may be unable to wire the funds necessary to exercise their stock options from their Ukrainian bank accounts.

If this restriction is still in place at the time of exercise, it’s recommended to allow your team members to exercise their stock options by way of a “cashless exercise” or “net exercise” arrangement. Under such an arrangement, your team member “sacrifices” some of the shares they would normally be entitled to purchase to cover the overall exercise price. This means that they don’t pay an exercise price, but they get less shares.

Are there tax advantages for your team members?

Direct employees EOR employees Contractors
No tax-favored scheme is available. However, 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. No tax-favored scheme is available. However, 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. No tax-favored scheme is available. However, 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 Ukraine-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.