EMPLOYEE STOCK PURCHASE PLANS

EMPLOYEE STOCK PURCHASE PLANS: EMPLOYMENT

Labor Concerns

Employers should distribute a hard-copy disclaimer which acknowledges the employees' receipt of the Plan documents as well as the voluntary nature of the Plan. Court rulings have held that stock plan benefits are considered salary for the purposes of calculating termination rights. Court rulings have also held that an employee terminated without cause may be entitled to continuation of the stock plan benefits by applying the termination provisions for retirement or disability in the event of a termination without cause.

Communications

Translation of Plan documents for employees is not required, but is recommended. Should any discrepancy arise and documents need to be presented to a Spanish court, official translations would be required. Government filings must be made in Spanish. Electronic execution of award agreements may be acceptable under certain conditions.

EMPLOYEE STOCK PURCHASE PLANS: REGULATORY

Securities Compliance

Neither the grant nor the purchase of the Stock is likely to trigger any prospectus requirement.

Foreign Exchange

Spanish resident individuals must make an annual filing (for administrative and statistical purposes only) declaring their interests in foreign securities.

Data Protection

Employee consent for the processing and transfer of personal data is a recommended method of compliance with existing data privacy requirements. Generally, an employer must register data processing activities and databases with Spain's data protection authorities.

EMPLOYEE STOCK PURCHASE PLANS: TAX

Employee Tax Treatment

An employee is generally subject to tax on the value of the discount when the Stock is purchased. Tax is also imposed on the gain upon sale. However, the transfer of Stock to employees up to an annual limit of €12,000 is not taxable, provided (i) the offer is made to all employees of the company or the group; and (ii) the offer is made under the same conditions to all employees.

Social Insurance Contributions

Social security contributions are due on compensation up to a threshold. Since employees may have exceeded the social security contribution ceiling, income from the purchase of Stock under an employee stock purchase plan may not result in additional social security contributions. If this is not the case, the profits arising from the purchase of the Stock under the Plan would be subject to social security contributions. Social security contributions cannot be passed onto the employees.

Tax Favored Program

None.

Withholding and Reporting

Payment on account is required, subject to certain salary thresholds, generally by the local employer. Such payment on account is generally made in the form of income tax withholdings.

Employer Tax Treatment

A deduction is available if the Subsidiary reimburses the Issuer for the cost of the Plan benefits. A written reimbursement agreement is required (stating the criteria used to establish the amount to be paid by the Subsidiary).

Tax Rates

Income tax is charged at rates of up to 47%.

Social taxes are levied on the employee at a rate of 6.35% on the amount recognized as income under the Plan.

For regular income, there is a ceiling on income subject to social taxes of EUR 3,642 per month.

Where social taxes arise for the employer, these are levied at the rate of 29.9%.

Any gain made on the sale of shares is taxed at a rate of (i) 19% over the first EUR 6,000 of gain obtained, (ii) 21% on the portion of the gains between EUR 6,001 and EUR 50,000, and (iii) 23% on the portion of the gain which exceeds EUR 50,000.

RESTRICTED STOCK and RSUs

RESTRICTED STOCK and RSUs: EMPLOYMENT

Labor Concerns

Employers should distribute a hard-copy disclaimer which acknowledges the employees' receipt of the Plan documents as well as the voluntary nature of the Plan. Court rulings have held that stock plan benefits are considered salary for the purposes of calculating termination rights. Court rulings have also held that an employee terminated without cause may be entitled to continuation of the stock plan benefits by applying the termination provisions for retirement or disability in the event of a termination without cause.

Communications

Translation of Plan documents for employees is not required, but is recommended. Should any discrepancy arise and documents need to be presented to a Spanish court, official translations would be required. Government filings must be made in Spanish. Electronic execution of award agreements may be acceptable under certain conditions.

RESTRICTED STOCK and RSUs: REGULATORY

Securities Compliance

Neither the grant nor the vesting of restricted stock or RSUs is likely to trigger any prospectus requirement, provided that the restricted stock or RSUs are not transferable to third parties prior to vesting.

Foreign Exchange

Spanish resident individuals must make an annual filing (for administrative and statistical purposes only) declaring their interests in foreign securities.

Data Protection

Employee consent for the processing and transfer of personal data is a recommended method of compliance with existing data privacy requirements. Generally, an employer must register data processing activities and databases with Spain's data protection authorities.

RESTRICTED STOCK and RSUs: TAX

Employee Tax Treatment

An employee is generally subject to tax on the value of the Stock when restricted stock and RSUs vest. Tax is also imposed on the gain upon sale. However, the transfer of Stock to employees up to an annual limit of €12,000 is not taxable, provided that (i) the offer is made to all employees of the company or the group; and (ii) the offer is made under the same conditions to all employees. 30% of the income from RSUs will be tax exempt if (i) the benefits arising from the RSUs are not obtained on a regular or recurrent basis (i.e., the RSUs are not granted annually) and are accrued in a period of more than two years, and (ii) such benefits do not exceed either the amount resulting from multiplying the annual average salary by the number of years in which the benefits have accrued or EUR 300,000. This limit may be doubled in certain circumstances. Additional limits to the reduction may also apply. Any excess over this limit will not benefit from the reduction.

Social Insurance Contributions

Social security contributions are due on compensation up to a threshold. Since employees may have exceeded the social security contribution ceiling, income from the restricted stock or RSUs (when the RSUs vest) may not result in additional social security contributions. If this is not the case, the profits arising from the Plan would be subject to social security contributions. Social security contributions cannot be passed onto the employees.

Tax Favored Program

None.

Withholding and Reporting

Payment on account is required, subject to certain salary thresholds, generally by the local employer. Such payment on account is generally made in the form of income tax withholdings.

Employer Tax Treatment

A deduction is available if the Subsidiary reimburses the Issuer for the cost of restricted stock or RSU plan benefits. A written reimbursement agreement is required (stating the criteria used to establish the amount to be paid by the Subsidiary).

Tax Rates

Income tax is charged at rates of up to 47%.

Social taxes are levied on the employee at a rate of 6.35% on the amount recognized as income under the Plan.

For regular income, there is a ceiling on income subject to social taxes of EUR 3,642 per month.

Where social taxes arise for the employer, these are levied at the rate of 29.9%.

Any gain made on the sale of shares is taxed at a rate of (i) 19% over the first EUR 6,000 of gain obtained, (ii) 21% on the portion of the gains between EUR 6,001 and EUR 50,000, and (iii) 23% on the portion of the gain which exceeds EUR 50,000.

STOCK OPTIONS PLANS

STOCK OPTIONS PLANS: EMPLOYMENT

Labor Concerns

Employers should distribute a hard-copy disclaimer which acknowledges the employees' receipt of the Plan documents as well as the voluntary nature of the Plan. Court rulings have held that stock plan benefits are considered salary for the purposes of calculating termination rights. Court rulings have also held that an employee terminated without cause may be entitled to continuation of the stock plan benefits by applying the termination provisions for retirement or disability in the event of a termination without cause.

Communications

Translation of Plan documents for employees is not required, but is recommended. Should any discrepancy arise and documents need to be presented to a Spanish court, official translations would be required. Government filings must be made in Spanish. Electronic execution of award agreements may be acceptable under certain conditions.

STOCK OPTIONS PLANS: REGULATORY

Securities Compliance

Neither the grant nor the exercise of the stock options is likely to trigger any prospectus requirement, provided that the stock options are not transferable.

Foreign Exchange

Spanish resident individuals must make an annual filing (for administrative and statistical purposes only) declaring their interests in foreign securities.

Data Protection

Employee consent for the processing and transfer of personal data is a recommended method of compliance with existing data privacy requirements. Generally, an employer must register data processing activities and databases with Spain's data protection authorities.

STOCK OPTIONS PLANS: TAX

Employee Tax Treatment

An employee is generally subject to tax on the profit arising out of the exercise of the stock options (market value less exercise price) at the time of exercise. Tax is also imposed on the gain upon sale. However, the transfer of Stock to employees up to an annual limit of €12,000 is not taxable, provided that (i) the offer is made to all the employees of the company or the group; and (ii) the offer is made under the same conditions to all the employees. 30% of the income from stock options will be tax exempt if (i) the benefits arising from the stock options are not obtained on a regular or recurrent basis (i.e., the stock options are not granted annually) and are accrued in a period of more than two years, and (ii) such benefits do not exceed either the amount resulting from multiplying the annual average salary by the number of years in which the benefits have accrued or EUR 300,000. This limit may be doubled in certain circumstances. Additional limits to the reduction may apply. Any excess over this limit will not benefit from the reduction.

Social Insurance Contributions

Social security contributions are due on compensation up to a threshold. Since employees may have exceeded the social security contribution ceiling, income from the exercise of stock options (upon exercise) may not result in additional social security contributions. If this is not the case, the profits arising from the Plan would be subject to social security contributions. Social security contributions cannot be passed onto employees.

Tax Favored Program

None.

Withholding and Reporting

Payment on account is required, subject to certain salary thresholds, generally by the local employer. Such payment on account is generally made in the form of income tax withholdings.

Employer Tax Treatment

A deduction is available if the Subsidiary reimburses the Issuer for the cost of the Plan benefits. A written reimbursement agreement is required (stating the criteria used to establish the amount to be paid by the Subsidiary).

Tax Rates

Income tax is charged at rates of up to 47%.

Social taxes are levied on the employee at a rate of 6.35% on the amount recognized as income under the Plan.

For regular income, there is a ceiling on income subject to social taxes of EUR 3,642 per month.

Where social taxes arise for the employer, these are levied at the rate of 29.9%.

Any gain made on the sale of shares is taxed at a rate of (i) 19% over the first EUR 6,000 of gain obtained, (ii) 21% on the portion of the gains between EUR 6,001 and EUR 50,000, and (iii) 23% on the portion of the gain which exceeds EUR 50,000.