EASi Handles Chargeback Agreements for Global Companies

PLEASANTON, Calif., May 10 /PRNewswire/ -- Equity Administration Solutions, Inc. (EASi), the leading independent stock plan software company today announced that it has the capability of addressing recharge agreements to help companies with foreign subsidiaries capture tax and other benefits.

Establishing a chargeback agreement between a parent company and its foreign subsidiaries can reduce the parent company's global effective tax obligation and enable the repatriation of cash to the parent company.  According to Don Gillotti, EASi's Vice President of Sales, "The EASi platform makes it possible to establish tax entities with accompanying tax rates and designate net operating loss positions to effectively support chargeback agreements.  The system will be able to handle chargeback agreements under IFRS in the future."  

Chargeback agreements enable a subsidiary to receive a local tax deduction for some portion of the compensation cost of equity based awards. "Agreements can be structured to charge the subsidiary with the grant date fair value of the award and/or the gain on settlement which is taxable to the grantee," explained Gordon Hillegas, EASi Vice President and resident accounting expert. He added that another potential benefit to the parent company is the repatriation of cash from the subsidiary that can be tax free to the parent company and not subject to a dividend withholding tax if the chargeback arrangement meets the requirements of Treasury Regulation Section 1.1032-3. "The potential upside of chargeback agreements depends upon the local tax rules by country and other administrative requirements and regulations.  EASi recommends that companies consult with their tax advisors and make a thorough analysis of these factors on a country by country basis," added Hillegas.  

EASi's robust web-based stock plan solution continues to lead the industry with functionality to support the complex administrative and reporting requirements for multinational companies. According to Gillotti, "The "date sensitive" plan participant mobility tracking functionality is the foundation for supporting chargeback agreements. On a current and historical basis, the EASi platform tracks more than 20 participant status characteristics including employment dates by company, by country, state or province, residence and work address and the subsidiary and parent company's statutory tax rate for DTA tracking.  With this information available in the database, expense accrual and deferred tax reports, as well as the details of exercises and vesting of restricted stock awards to include individual income tax liability, can be filtered by user defined plan, subsidiary, country, experience group, and other categories within user selected date ranges. The time of a participant's employment in various subsidiaries, and related tax jurisdictions can be determined and prorated for expense allocation purposes to enable accurate chargebacks.  

Equity Administration Solutions, Inc. www.easiadmin.com set the standard in stock plan software with its comprehensive industrial strength platform that handles all the accounting, tax and administration needs of companies that grant equity awards. Headquartered in Pleasanton, CA, EASi continues to lead the industry with second-to-none solutions in areas including FAS123R, IFRS 2, Performance Awards and WorkStream process automation. The company serves more than 500 customers with nearly one million participants in more than 60 countries spanning four continents.  

SOURCE Equity Administration Solutions, Inc.