Article 21 - Stock-based Compensation

At the election of the DCE, a CE, located in the State, may substitute the amount allowed as a deduction in the computation of its taxable income in the State for the amount included in its financial accounts for any cost or expense of such CE which was paid with stock-based compensation.

If the Stock-Based Compensation expense arises from an option that expires without exercise, the CE must include the previously deducted amount as additional income in the GloBE income or loss for the Tax Period in which the option expired.

This election applies for five Tax Periods and must be applied consistently to all Stock-Based Compensation arrangements across all CEs in the State during the election Tax Period and all subsequent Tax Periods.

If the election is made in a Tax Period after some of the stock-based compensation of a transaction has been recorded in the financial accounts, the Constituent Entity must include in the computation of its GloBE Income or Loss for that Tax Period an amount equal to the excess of the cumulative amount allowed as an expense in the computation of its GloBE Income or Loss in previous Tax Periods over the cumulative amount that would have been allowed as an expense if the election had been in place in those Tax Period.

If the election is revoked, the Constituent Entity must include in the computation of its GloBE Income or Loss for the revocation Tax Period the amount deducted pursuant to the election that exceeds financial accounting expense accrued in respect of the stock-based compensation that has not been paid.