file_000000008224522fbe1793a45ac2834b_conversation_id=67ef798f-e538-800c-95d8-311cbd8d19ce&message_id=611dd353-9dbe-49fd-ac6d-af91804355bf (1)

Expat Tip 17: Stock Options & RSUs – Tax Rules for Expats

Equity compensation — such as stock options and RSUs (Restricted Stock Units) — are a powerful way to build wealth. But for expats, they often become complex tax traps when crossing borders.

 

🚩 Key Tax Events to Watch

  • Grant date: Usually no tax event unless options are exercised immediately.

  • Vesting / Cliff: Some countries tax RSU vesting as ordinary income.

  • Exercise: May trigger taxable income or capital gains.

  • Sale: Gains after exercise typically become capital gains.

  • Double taxation risk: Home vs host country may both tax the same event.

  •  

🌍 Country-by-Country Differences

  • U.S. expatriates: Often taxed by U.S. IRS and host country on all equity events.

  • Canada: RSUs taxed at vesting as income; capital gains thereafter.

  • Australia: Options and RSUs taxed via ESS / employee share scheme rules, often at vesting or exercise.

  • Other jurisdictions: Some don’t tax until sale; others tax multiple events (vesting, exercise, sale).

  •  

✅ Guidance for Expats

  1. Check home vs host country rules for each equity type.

  2. Document grant agreements, vesting schedules, and fair market valuations.

  3. Use tax treaties to claim credits or eliminate double taxation.

  4. Forecast tax impact before exercising large equity grants while abroad.

  5. Use professional tax software or advisors to model multi-jurisdiction equity taxation.

 

🦊 Felix’s Quick Tips

  • If moving soon, delay exercising large options until after residency clarity.

  • For RSUs, ask for whether withholding will account for local income tax.

  • Always archive grant docs, metric assumptions, valuation dates — these can be critical if audited.

  • Consider selling some equity gradually to manage taxable events in chunks.

  •  

———————————————————————————————————————————————————————————————————————————

🦊 Information on specific countries

    • Australia (ATO): Employee share schemes (ESS) are taxable when options or RSUs vest, even if granted overseas. If you’ve moved countries, Australia may tax the portion of benefit that relates to your Australian residency. ATO – Employee Share Schemes

    • Canada (CRA): RSUs are taxable as employment income when they vest. Stock options may get a deduction if conditions are met, but moving abroad complicates allocation. CRA – Stock Options

    • U.S. (IRS): U.S. persons must report stock options/RSUs regardless of where they work. Often, income is sourced based on where you performed the services leading to the award. IRS – Stock Options

 

 

 

 

 

en_USEnglish
en_USEnglish