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Old 09.06.2019, 13:37
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Swiss tax on long term incentive after I leave CH?

OK, this may get a bit complicated but I'll try to articulate it well:
1) I'm an American currently living and working in Switzerland
2) I'm permanently returning to the US next month
3) As part of my compensation, I receive a long term incentive (LTI) which I can only receive three years after it "vests"

When those LTIs vest in the coming years, will I need to pay Swiss tax on them? On the one hand, they were awarded when I was living in Switzerland. On the other hand, I will not realize them as income until after I have left Switzerland and am back in the US. Thoughts?
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Old 09.06.2019, 13:47
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Re: Swiss tax on long term incentive after I leave CH?

meant to put the frownie face after #2, not #1, my bad. This is why I need help on taxes, I'm too stupid to even figure out emoticons on an internet bulletin board
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Old 09.06.2019, 19:37
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Re: Swiss tax on long term incentive after I leave CH?

My guess, and I am not an international tax lawyer, is one of the following scenarios will apply.

1. You'll be paid the LTI less withholding tax, that you will be able to declare against your due US tax for that year.
2. You'll be paid the LTI gross, and pay US tax on it when you file in the US.
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Old 09.06.2019, 20:07
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Re: Swiss tax on long term incentive after I leave CH?

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OK, this may get a bit complicated but I'll try to articulate it well:
1) I'm an American currently living and working in Switzerland
2) I'm permanently returning to the US next month
3) As part of my compensation, I receive a long term incentive (LTI) which I can only receive three years after it "vests"

When those LTIs vest in the coming years, will I need to pay Swiss tax on them? On the one hand, they were awarded when I was living in Switzerland. On the other hand, I will not realize them as income until after I have left Switzerland and am back in the US. Thoughts?
Grant is not taxable, only vesting. You have to pay withholding tax in Switzerland (and also sicial contributions). Not sure about the US taxes.

Also, make sure your employer can reach you and has your address and bank details, so that they actually can pay out after 3 years.
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Old 10.06.2019, 12:58
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Re: Swiss tax on long term incentive after I leave CH?

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Grant is not taxable, only vesting. You have to pay withholding tax in Switzerland (and also sicial contributions). Not sure about the US taxes.

Also, make sure your employer can reach you and has your address and bank details, so that they actually can pay out after 3 years.
Thanks, I have some additional questions about the vesting. To be specific, I was granted a long-term incentive earlier this year. I will not receive this payout until 2022 when I am presumably in the US (I am returning to the US next month). So can I expect that I will need to pay any tax?
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Old 10.06.2019, 13:50
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Re: Swiss tax on long term incentive after I leave CH?

depends on how the LTI is structured. some are taxable on grant, others on vesting.
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Old 11.06.2019, 14:54
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Re: Swiss tax on long term incentive after I leave CH?

LTI with it's multi year vesting and differentiated rules in various countries is complex.
For example, in CH if you receive the award in restricted shares (i.e., actual shares which bear voting rights and dividends from grant but cannot be sold before vesting) are taxable upon grant even though at a reduced rate (depending on canton); 'promised shares' = RSUs = restricted stock units (which do not bear dividend or voting rights until vesting) are taxable upon vesting only.
When moving to another country, this may cause issues with taxation and usually proportionate value should be taxed in each country.
I.e., if you receive shares in CH and move after one year out of 3 year vesting, 1/3 should be taxable in CH and 2/3 in the new country. If there is a difference in taxing at grant vs. at vest, it is complex to document
Therefore, if planning to move internationally and have choice of the above two options, I'd go with RSUs where it is taxed upon vesting in both countries.
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