ARTICLE · 09 JANUARY 2006

US Jobs Creation Act

Pinsent Masons

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This article highlights the key issues in the draft regulations which are likely to affect non-US companies making option grants or share awards to US taxpayers.

United KingdomTax

David Pett

Originally published December 2005

The US Jobs Creation Act of 2004 enacted section 409A of the US Internal Revenue Code of 1986, imposing penal income tax charges on ‘non-qualified deferred compensation’ (see below) which is not structured and paid in accordance with the provisions of that section. The US Treasury has recently published draft regulations which clarify the application of section 409A to share incentive arrangements operated by non-US companies.

This article highlights the key issues in the draft regulations which are likely to affect non-US companies making option grants or share awards to US taxpayers. Please note that the information given in this article is for guidance only; we are not qualified to give advice on US law, so if you are uncertain of the effect on you of section 409A, we can help you to seek advice from US lawyers or tax advisers.

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