8 ms·

Also, mechanically, as someone who was paid primarily in RSUs last year, you pay taxes based on their value at the date of grant. This is painful if they go dow

Also, mechanically, as someone who was paid primarily in RSUs last year, you pay taxes based on their value at the date of grant. This is painful if they go down quite a bit between when you receive them vs tax time.

curiousllama 4y ago
> With RSUs, you are taxed when you receive the shares. Your taxable income is the market value of the shares at vesting. You pay taxes at date of vest not grant. Small terminology difference, but important - if you sell your RSUs immediately, you never lose $ after taxes. https://www.schwab.com/public/eac/resources/articles/rsu_facts.html https://www.schwab.com/public/eac/resources/articles/rsu_fac...
- csunbird 4y ago
  In Europe, you pay taxes, as soon as you get them.
  - DocSportello 4y ago
    In my part of Europe, you pay on sale, not vest or grant.
  - ksala_ 4y ago
    Totally depends on the state. In Ireland you don't pay anything when the stocks are granted to you (you're promised X stocks in Y months), you pay income tax (PAYE) on them when they vest (you receive the stocks) and then you pay capital gain tax (CGT) on the gains (sell price - vest price) when you sell them. Example: you're granted 1 share today to vest in 1 year. In 1 year the share is worth 100, it vests and you pay PAYE in this (it can either come from your salary, or by selling the stock). If the stock rise to 150 and you sell it after, you pay CGT on 50.
    - disgruntledphd2 4y ago
      > Example: you're granted 1 share today to vest in 1 year. In 1 year the share is worth 100, it vests and you pay PAYE in this (it can either come from your salary, or by selling the stock). If the stock rise to 150 and you sell it after, you pay CGT on 50. Huh? Can you actually keep the stock and give revenue the money out of your post-tax? I wasn't aware that was possible.
      - ksala_ 4y ago
        Yes. To be fair, I never tried it. But my broker (Morgan Stanley) allows you to select how you want to receive them, the default method is "sell to Cover" (sell just enough to pay taxes) but you can also select "Sell All Shares" and "Pay Cash to Cover Taxes".
        disgruntledphd2 4y ago
        Huh, interesting. I used Schwab and don't remember ever seeing it. That would definitely have been worthwhile at some point in 2014.
    - gerbler 4y ago
      This isn't correct. You pay CGT on the difference between grant and sale The one loophole is to sell with 4 weeks, that is CGT exempt.
  - lupire 4y ago
    Where in Europe?
copecopecope 4y ago
That hasn't been my experience. RSUs are taxed at vesting in the US.
jackcarter 4y ago
This isn't true for RSUs in the USA. You're taxed on the value at the time when you receive them.
thelastgallon 4y ago
This doesn't sound right. You pay taxes when they vest, not when they are granted.
- outside1234 4y ago
  It depends on the country and tax law. What you said is true for the US.
tschellenbach 4y ago
Actually it can be either way: https://www.cooleygo.com/what-is-a-section-83b-election/#:~:text=So%20what%20is%20a%20Section,the%20date%20the%20equity%20vests https://www.cooleygo.com/what-is-a-section-83b-election/#:~:....
- innagadadavida 4y ago
  83b is offered to very select few and most of us regular folks just don’t have that option. Either way it would be a terrible thing to pay tax at time of grant and the stock takes a hit.
b4je7d7wb 4y ago
This varies widely country by country. I think your case applies to Germany(at least for options). Most of the Nordic and Baltics pay tax on value at vesting afaik. I heard some German employees got screwed by option grant taxes when the stock tanked between grant and vest. Some even took loans to pay the taxes.
adam_arthur 4y ago
It's taxed at vest time. Most people should always just sell the stock immediately to cover tax burden. I mean, do whatever you want, but why set yourself up for tax liability risk at all. There are tons of other good investments out there that will mitigate concentration risk. If there's actually a strong fundamental basis for upside (not 10x sales fantasy valuation), it could be prudent to hold in some cases
- nsenifty 4y ago
  Isn't the tax already withheld at the time of vest? I mean sure at some point your tax rate is going to be much higher than the withholding rate so you end up paying extra over it. Concentration is the real risk. I know many people at Apple and Microsoft whose only investment is their company stock. It has worked out well for them but they're just one big scandal away from disaster.
  - adam_arthur 4y ago
    No tax is withheld at vest time. At least in the majority of cases/usually. Holding vested RSUs is only wise if your conviction is that the company you work for is the best investment available at the time. You can easily sell them and invest in other stocks instead, which reduces your risks substantially
    - nsenifty 4y ago
      > No tax is withheld at vest time. At least in the majority of cases/usually. My last two employers deducted shares at vest as tax. This is in US, btw. I am surprised it isn't the common practice. The only problem was that the withholding rate was too low for my effective tax rate which means I always have to pay estimated taxes.
      - kevinventullo 4y ago
        Google and Facebook both deduct shares at vest. The default is something like 25%, which isn’t too far off from most folks’ effective tax rates. Yet, base comp tends to be withheld at marginal rates; so if you don’t change anything, you can still end up owing a decent amount.

curiousllama 4y ago

> With RSUs, you are taxed when you receive the shares. Your taxable income is the market value of the shares at vesting. You pay taxes at date of vest not grant. Small terminology difference, but important - if you sell your RSUs immediately, you never lose $ after taxes. https://www.schwab.com/public/eac/resources/articles/rsu_facts.html https://www.schwab.com/public/eac/resources/articles/rsu_fac...

csunbird 4y ago
In Europe, you pay taxes, as soon as you get them.
- DocSportello 4y ago
  In my part of Europe, you pay on sale, not vest or grant.
- ksala_ 4y ago
  Totally depends on the state. In Ireland you don't pay anything when the stocks are granted to you (you're promised X stocks in Y months), you pay income tax (PAYE) on them when they vest (you receive the stocks) and then you pay capital gain tax (CGT) on the gains (sell price - vest price) when you sell them. Example: you're granted 1 share today to vest in 1 year. In 1 year the share is worth 100, it vests and you pay PAYE in this (it can either come from your salary, or by selling the stock). If the stock rise to 150 and you sell it after, you pay CGT on 50.
  - disgruntledphd2 4y ago
    > Example: you're granted 1 share today to vest in 1 year. In 1 year the share is worth 100, it vests and you pay PAYE in this (it can either come from your salary, or by selling the stock). If the stock rise to 150 and you sell it after, you pay CGT on 50. Huh? Can you actually keep the stock and give revenue the money out of your post-tax? I wasn't aware that was possible.
    - ksala_ 4y ago
      Yes. To be fair, I never tried it. But my broker (Morgan Stanley) allows you to select how you want to receive them, the default method is "sell to Cover" (sell just enough to pay taxes) but you can also select "Sell All Shares" and "Pay Cash to Cover Taxes".
      - disgruntledphd2 4y ago
        Huh, interesting. I used Schwab and don't remember ever seeing it. That would definitely have been worthwhile at some point in 2014.
  - gerbler 4y ago
    This isn't correct. You pay CGT on the difference between grant and sale The one loophole is to sell with 4 weeks, that is CGT exempt.
- lupire 4y ago
  Where in Europe?

copecopecope 4y ago

That hasn't been my experience. RSUs are taxed at vesting in the US.

jackcarter 4y ago

This isn't true for RSUs in the USA. You're taxed on the value at the time when you receive them.

thelastgallon 4y ago

This doesn't sound right. You pay taxes when they vest, not when they are granted.

outside1234 4y ago
It depends on the country and tax law. What you said is true for the US.

tschellenbach 4y ago

Actually it can be either way: https://www.cooleygo.com/what-is-a-section-83b-election/#:~:text=So%20what%20is%20a%20Section,the%20date%20the%20equity%20vests https://www.cooleygo.com/what-is-a-section-83b-election/#:~:....

innagadadavida 4y ago
83b is offered to very select few and most of us regular folks just don’t have that option. Either way it would be a terrible thing to pay tax at time of grant and the stock takes a hit.

b4je7d7wb 4y ago

This varies widely country by country. I think your case applies to Germany(at least for options). Most of the Nordic and Baltics pay tax on value at vesting afaik. I heard some German employees got screwed by option grant taxes when the stock tanked between grant and vest. Some even took loans to pay the taxes.

adam_arthur 4y ago

It's taxed at vest time. Most people should always just sell the stock immediately to cover tax burden. I mean, do whatever you want, but why set yourself up for tax liability risk at all. There are tons of other good investments out there that will mitigate concentration risk. If there's actually a strong fundamental basis for upside (not 10x sales fantasy valuation), it could be prudent to hold in some cases

nsenifty 4y ago
Isn't the tax already withheld at the time of vest? I mean sure at some point your tax rate is going to be much higher than the withholding rate so you end up paying extra over it. Concentration is the real risk. I know many people at Apple and Microsoft whose only investment is their company stock. It has worked out well for them but they're just one big scandal away from disaster.
- adam_arthur 4y ago
  No tax is withheld at vest time. At least in the majority of cases/usually. Holding vested RSUs is only wise if your conviction is that the company you work for is the best investment available at the time. You can easily sell them and invest in other stocks instead, which reduces your risks substantially
  - nsenifty 4y ago
    > No tax is withheld at vest time. At least in the majority of cases/usually. My last two employers deducted shares at vest as tax. This is in US, btw. I am surprised it isn't the common practice. The only problem was that the withholding rate was too low for my effective tax rate which means I always have to pay estimated taxes.
    - kevinventullo 4y ago
      Google and Facebook both deduct shares at vest. The default is something like 25%, which isn’t too far off from most folks’ effective tax rates. Yet, base comp tends to be withheld at marginal rates; so if you don’t change anything, you can still end up owing a decent amount.