In the case where you are working in a Japanese company and stock option of foreign parent company is granted under the stock option plan, what will the Japanese tax treatment be?
You will need to check if the stock options are tax qualified or non-tax qualified for Japanese tax purposes, first.
Since tax qualified stock options should be based on the resolution of board members of the Japanese company under the Japanese corporation law, stock options granted under the stock option plan of foreign parent company are normally treated as non-tax qualified for Japanese tax purposes.
Then, you will need to file the income tax return when you exercise declaring the salary income equal to the excess of the fair market value of the shares received over the option price of stock option.
Since the above mentioned salary income is not withheld, it is important to file the Japanese income tax return declaring the salary income based on stock options.