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Tax Treatment When Exercising Your Stock Options

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Help! I have exercised my options, now what?!

Congratulations! You have exercised (a batch of) GitLab stock options. You are probably thinking: "Now what?!" This landing page can be used to check the tax consequences following the exercise of GitLab stock options. We will try to to our best to cutting through complexity for you. However, the information on this page should be used for discussion purposes only. For any personal advice please reach out to a tax professional.

Employee of GitLab Entity

Country GitLab Employee
United States If ISO reporting is handled through filing of Form 3921 as part of year end filing Read this section of the Handbook
United Kingdom Difference between fair market value and exercise price is taxed at date of exercise if there is a liquid market for the stock at time of exercise Income tax will be due on the spread at exercise. Employee NICs and, if you entered into a joint election, employer NICs also will be due on the spread.
Netherlands Difference between fair market value and exercise price is taxed at date of exercise. On monthly basis payroll to send exercise details including grant price, FMV and number of shares exercised to Dutch payroll provider. Income tax will be due on the spread at exercise and run through payroll. Social insurance contributions also will be due on the spread, to the extent that the applicable contribution ceiling has not been exceeded.
Australia Difference between fair market value and exercise price is taxed at date of exercise. On monthly basis payroll to send exercise details including grant price, FMV and number of shares exercised to Australian payroll provider. Optionholders who were granted options on or after July 1, 2015 and elect to participate in the Offer will be subject to tax on the option when the option is exercised. The taxable amount will be the difference between the sale price of the shares and the exercise price, expressed in Australian dollars. Reporting through payroll.
Germany Difference between fair market value and exercise price is taxed at date of exercise. On monthly basis payroll to send exercise details including grant price, FMV and number of shares exercised to German payroll provider. Income tax will be due on the spread at exercise. Social insurance contributions also will be due on the spread, to the extent that the annual contribution ceiling has not been reached. A solidarity surcharge will apply on the amount of the income tax liability. Church taxes also may be due on the amount of the income tax liability, depending on where the optionholder resides and whether he or she is a registered member of a church. Reporting through payroll.

Service Provider of GitLab

For the sake of clarity: the word “spread” used in the table below means the difference between fair market value and exercise price.

Country Service Provider GitLab BV or PEO
Austria Income tax will be due on the spread at exercise. Social insurance contributions are due on the spread, to the extent the service provider has not reached the applicable contribution ceilings. No withholding or reporting obligation upon the exercise.
Belgium Assuming that the stock option grant is accepted within 60 days of the offer: no taxation at exercise unless the service provider executed an undertaking not to exercise the options prior to the end of the third calendar year following the calendar year of the offer date and he or she has breached the undertaking. When this is the case, the contractor will be subject to an additional tax liability on the date of exercise. GitLab will not report the exercise or the taxable amount unless the service provider accepted the options within 60 days of the original offer and executed an undertaking not to exercise the options prior to the end of the third calendar year following the calendar year of the original offer date and he or she has breached the undertaking.
Brazil No tax is due upon the exercise of the option. No withholding or reporting obligation upon exercise.
Canada Both federal and provincial taxes are due on the spread. Not withholding of federal and provincial income taxes or Canada Pension Plan (or Quebec Pension Plan) contributions upon exercise. Reporting of the taxable amount at exercise to the service provider on a Form T4A that will be filed with the Canada Revenue Agency.
Chile Income tax is due on the difference between the sale proceeds and the service provider's cost basis in the shares (i.e. the fair market value of the shares on date the option vested). No withholding or reporting obligation upon the exercise and sale of shares.
France Income tax and social security contributions will be due on the spread at exercise. Some of the social security contributions may be deductible for French income tax purposes. An additional surtax will apply to the extent the service provider's income exceeds specified thresholds. No withholding or reporting obligation upon the exercise and sale of shares.
Guatemala Although not entirely certain, income tax and value added tax likely will be due on the spread at exercise. No social insurance contributions will be due on the spread. No withholding or reporting obligation upon the exercise.
India Income tax will be due on the spread at exercise. The employing entity may be required to operate withholding tax upon the exercise of the option.
Ireland To the extent the optionholder realizes capital gains exceeding the annual exemption amount for the tax year, tax will be due on the difference between the sale proceeds and the service provider's cost basis in the shares (likely, the price paid to acquire the shares plus any amount previously subject to tax). No withholding obligation upon the exercise and sale of shares. Reporting of the exercise and sale to the Irish Revenue on Form RSS1 by March 31 of the year following exercise and sale.
Israel Income tax, and if applicable, wealth tax, will be due on the spread at exercise. No withholding or reporting obligation upon the exercise and sale of shares.
Italy Income tax is due on the spread at exercise. Social insurance contributions depend on the service provider's specific profession. There may be required to operate withholding tax upon the exercise of the option.
Japan Income tax is due on the spread at exercise. Social insurance contributions will not be due. No withholding or reporting obligation upon the exercise.
Mexico Income tax is due on the spread at exercise. Social insurance contributions will not be due. No withholding or reporting obligation upon the exercise.
Poland Service provider likely to be subject to tax upon the sale of shares. The taxable amount likely is the sales proceeds less the exercise price. Social insurance contributions are not due. No withholding or reporting obligation upon the exercise.
Portugal Income tax is due on the spread at exercise. Social insurance contributions should not be due. The service recipient does not have a withholding or reporting obligation upon the exercise.
South Africa Income tax is due on the spread at exercise. Unemployment contributions also due (to the extent the applicable ceiling has not been exceeded). No withholding or reporting obligation upon the exercise and sale of shares.
Spain Income tax is due on the spread at exercise. Social insurance contributions likely not due. No withholding of income taxes on the spread at exercise or reporting of the taxable amount to the tax authorities.
Taiwan Income tax due on the spread at exercise. Social insurance contributions not due. No withholding of income taxes or reporting of any income at exercise of the option.
Ukraine Income tax likely due on the entire sale proceeds. Social insurance contributions not due. It may be possible to deduct the exercise price from the sale proceeds. No withholding of any taxes or report any income at exercise of the option.
United States Read this section of the Handbook Withholding is typically not required, however when the service provider fails to provide a valued tax identification number in form 1099, GitLab has to ensure backup withholding (roughly 25%).