Are you fully prepared for the tax complexities surrounding your ESOP/RSUs as a global professional?
As a global professional, you’re likely familiar with the perks and challenges of working for a multinational corporation. One of the enticing benefits often offered by these companies is the opportunity to participate in Employee Stock Ownership Plans (ESOPs) or receive Restricted Stock Units (RSUs) as part of your remuneration package. While these incentives can be a valuable addition to your compensation, it’s essential to understand the tax implications, especially if you’re a non-U.S. resident holding assets in a U.S.-listed company.
As of now, you might be diligently paying income tax on your ESOPs/RSUs and feeling like you have everything under control. However, there’s more to consider than just current taxes; there’s the looming specter of estate tax, particularly concerning for non-U.S. holders.
For instance, did you know that if you hold U.S. assets totaling more than $60,000 USD, you could be subject to U.S. estate tax upon your death? This tax is levied on the value of U.S. situs assets owned by non-U.S. citizens and can range from 18% to 40%.
Consider this scenario: according to data from the U.S. Treasury, in 2017, U.S. equities held by foreign investors amounted to a staggering $7,189 billion. Even if only a fraction of these equities were owned by private individuals, the potential federal estate tax liabilities could be significant for non-U.S. investors.
| U.S. Estate (Inheritance) & Gift Tax Rates | |
| The default estate exemption for non-resident aliens is $60,000. U.S. situs assets valued in excess of this amount will be subject to tax at the rates detailed below. | |
| Tax rate | Taxable amount |
| 18% | $0 to $10,000 |
| 20% | $10,001 to $20,000 |
| 22% | $20,001 to $40,000 |
| 24% | $40,001 to $60,000 |
| 26% | $60,001 to $80,000 |
| 28% | $80,001 to $100,000 |
| 30% | $100,001 to $150,000 |
| 32% | $150,001 to $250,000 |
| 34% | $250,001 to $500,000 |
| 37% | $500,001 to $750,000 |
| 39% | $750,001 to $1,000,000 |
| 40% | $1,000,001 and up |
| IMPORTANT INFORMATION 1. This information taken from the IRS website can be found here: www.irs.gov/businesses/taxation-of-nonresident-aliens-1 2. This table is for demonstrative purposes only and should not be used as official tax advice – please consult a U.S. tax expert for U.S. tax advice |
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Many individuals mistakenly believe that estate tax only applies to tangible assets like real estate or holiday homes. However, your ESOPs and RSUs, being assets of a U.S.-listed company, fall under the purview of U.S. estate tax laws.
So, what can you do to navigate this tax maze and optimize your ESOPs and RSUs? That’s where firms like Stealth Wealth Associates come in.
Stealth Wealth Associates specializes in advising global professionals on managing their ESOPs and RSUs effectively. From tax planning strategies to diversification of your global stock portfolio, our dedicated team of experts can help you make informed decisions tailored to your unique circumstances.
Whether you’re concerned about minimizing your tax liabilities or maximizing the growth potential of your investments, consulting with professionals who understand the nuances of ESOPs and RSUs can make all the difference.In conclusion, as a global professional holding ESOPs or RSUs in a U.S.-listed company, it’s crucial to be aware of the various taxes that may apply to your assets. By seeking expert advice and exploring strategic solutions, you can ensure that your hard-earned rewards contribute to your long-term financial success.
