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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 New Zealand

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 New Zealand. 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 New Zealand?

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

You can grant NSOs to contractors in New Zealand, but under some securities laws, you cannot normally grant stock options to an advisor or a contractor who doesn’t work principally for you in New Zealand.

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

How are NSOs taxed in New Zealand?

In New Zealand, 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 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 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 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.
At sale There is no taxation at sale. There is no taxation at sale. There is no taxation at sale.

Are there tax advantages for your team members?

Direct employees EOR employees Contractors
There is a potential tax exemption for direct employees, but the criteria are very narrow. 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. 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 New Zealand-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.

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