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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 South Africa

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 South Africa. 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 South Africa?

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

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

How are NSOs taxed in South Africa?

In South Africa, 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. There should be no taxation at exercise. The spread (i.e., the difference between the fair market value of the shares and the exercise price) should be included by the contractor in their gross income, as it constitutes “an amount received in respect of services rendered,” and is subject to income tax.
At sale Any gain is considered as salary, and is subject to income tax. Any gain is considered as salary, and is subject to income tax. Any gain is subject either to capital gains tax or income tax, depending on whether the contractor holds the shares on a capital account or on a revenue account.

Are there tax advantages for your team members?

Direct employees EOR employees Contractors
There is currently no tax-favored scheme. There is currently no tax-favored scheme. There is currently no tax-favored scheme.

Is your business eligible?

If you want to use Remote Equity Advanced to offer stock options to your South Africa-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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