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Old 05.04.2011, 18:58
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Stock taxed upon vesting...

I have been taxed on stock that has just vested from a US based startup that I worked at, since I later transferred internally with the large multinational that purchased the startup I am have still not finished the vesting period but was very surprised to see that my salary this month was reduced greatly to cover these taxes. Is this normal?

My concern is that when I sell the stock the US will come looking for their share of the taxes as they will then see it as income.

The stock is based in a US fidelity account, I am an EU citizen and hold a B permit in CH and advise or references would be really great,


Cheers,

Last edited by lesCA; 05.04.2011 at 19:16.
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Old 06.04.2011, 00:24
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Re: Stock taxed upon vesting...

I just had a similar experience for the second year running (UK citizen with B permit) - the value of the stock at vest is taxed as income (along with social deductions). Due to paying Quellensteuer, a fair amount of tax was deducted from my entire earnings and not just the 'additonal gain'. Based on the tables that payroll use, it looks like I've started earning a shed load more per year and this has bumped up the tax bracket.

It will be claimed back in next years tax return (or as some have experienced, your company may re-imburse you in December if you care to push them for it).

I presume you have RSUs since vesting of stock options is not a taxable event in CH as far as I can tell.

FYI, the deductions/taxes that payroll made for me were apportioned between here and the UK arm of the company. Since the stock was assigned to me in the UK but didn't vest until I got here, there is a time-apportionment calculation that your company might have done too. e.g. 30% is taxable in the UK (through an immediate sell on my behalf) and 70% taxable here (collected through payroll, not by selling the shares).

When it comes to selling them, I've had advice that private capital gains are not subject to tax in CH.

Maybe someone can answer more authorativitely as to what US event happens when you sell the stock. I would think it makes no difference as you are now resident here for tax purposes...

Stu
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Old 06.04.2011, 10:48
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Re: Stock taxed upon vesting...

To add - my stock is held and managed by US-based ETrade and there is no US liability when selling.

To ensure you don't pay, make sure you obtain and return to Fidelity a W8-BEN form declaring that you, as a foreign citzen, are exempt from US witholding taxes.
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