RSUs and the Expat Tax Maze
Starting a career across borders is thrilling, whether you're hopping from London to Toronto or from Silicon Valley to Manchester. New cultures, new adventures… and, yes, new tax nightmares.
One of the biggest traps lurking in your expat financial life?
Those shiny little things called Restricted Stock Units (RSUs).
Today, RSUs aren't just for Wall Street bankers. They're a major part of compensation in tech, finance, consulting, and startups worldwide. They're a powerful way to build wealth and tie your success to your employer's. But if you're moving between Canada, the US, and the UK, understanding how RSUs are taxed is absolutely critical.
Think of this guide as your personal GPS through the RSU tax jungle. We'll cover how RSUs are taxed at each step, how cross-border moves complicate things, and how smart planning can keep more money in your pocket (and less in government hands). Let's dive in.
What Exactly Are RSUs? (Spoiler: They're Not Free Money)
At their heart, RSUs are a deal between you and your employer: stick around long enough (or hit certain performance goals), and you'll earn company shares or sometimes a cash equivalent.
There are three dates you absolutely must know:
• Grant Date: Your employer makes the promise. It's like being handed a golden ticket, except you can't cash it in yet. No tax event yet.
• Vesting Date: This is the big day when the shares become truly yours. Tax authorities notice too, because the shares' fair market value becomes taxable income.
• Settlement Date: The shares actually land in your brokerage account. Usually, this happens right after vesting.
RSUs are popular because they motivate employees to stay and grow with the company. Whether you're joining a Silicon Valley giant or a scrappy London startup, chances are RSUs are on the menu.
What Happens When RSUs Vest: Here Comes Income Tax
The day your RSUs vest, it's not just champagne and celebrations, it's also a taxable event. The fair market value of your vested shares counts as employment income.
Where you owe the tax depends on where you lived and worked when you earned them.
Here's how it plays out across borders:
🇨🇦 In Canada:
The RSU value gets added to your T4 slip, taxed at your marginal rate, plus CPP and EI contributions. There's a rare rule called Salary Deferral Arrangement (SDA) that can defer tax, but it's a unicorn — it almost never applies to standard RSUs.
🇺🇸 In the United States:
RSUs show up on your W-2 and are taxed like regular salary. You'll pay federal income tax, probably state tax, Social Security, and Medicare. No, you can't use the famous 83(b) election here. You're stuck being taxed at vesting.
🇬🇧 In the United Kingdom:
Vesting triggers income tax and National Insurance through PAYE. If your total income crosses £100,000, beware — you lose your personal allowance, triggering a painful 60% effective tax rate for that band.
In all countries, employers often sell-to-cover some shares to prepay taxes. Handy — but often not enough. Expect to square up at tax time.
What Happens When You Sell RSU Shares: Capital Gains (and New Tax Bills)
After vesting, the shares are yours. Hold them or sell them, your call.
But whenever you do sell, you trigger a second taxable event: capital gains tax.
Here's what you need to know:
Your cost basis is the stock price on your vesting day. You're only taxed on any gain above that.
🇨🇦 In Canada:
Half your capital gain is taxable (reported on Schedule 3). The gain gets added to your income and taxed at your marginal rate.
🇺🇸 In the United States:
Sell within a year? Ouch — short-term capital gains at ordinary income tax rates.
Hold longer than a year? Congratulations — you qualify for long-term capital gains rates (0%, 15%, or 20%).
🇬🇧 In the United Kingdom:
You'll pay 10% or 20% depending on your total income. Don't forget your Annual Exempt Amount (£3,000 for 2024/25) — use it or lose it.
💡 Pro Tip:
US brokerages often report your RSU shares with a $0 cost basis. That's wrong and if you don't fix it, you'll pay way more tax than you owe. Always verify using your vesting paperwork.
Moving Countries With RSUs: The Real Cross-Border Puzzle
If you've already moved countries mid-vesting, or plan to, buckle up.
The world of cross-border RSU taxation is full of traps.
Here's the basic principle:
• Vesting income is sourced to where you worked between grant and vest. • Capital gains are sourced to where you live when you sell.
Example: You work in New York, move to London, and RSUs vest after you move. Both the US and UK may want a piece of that pie.
Enter tax treaties.
Canada, the US, and the UK all have treaties that prevent double taxation in theory. But claiming foreign tax credits (Forms T2209, 1116, SA106) correctly is key.
The twist?
• Canada uses a "hybrid sourcing" model (part grant-date value, part vest-date appreciation). • The US and UK use simpler grant-to-vest workday counting.
This mismatch can make it super confusing to allocate income properly.
Moral of the story: Track your workdays between grant and vest. A basic spreadsheet today will save you thousands later.
Special Expats Beware: Departure, Exit, and Step-Up Surprises
Changing tax residency triggers some sneaky traps.
🛫 Leaving Canada:
Departure tax time! You're deemed to sell assets at FMV the day you leave. Unvested RSUs are spared, but vested shares could trigger gains. You might defer tax until actual sale, but you have to elect it.
🛫 Leaving the US:
If you're a Covered Expatriate, RSUs (even unvested ones) can get hit with the exit tax. Yes, even if they aren't actually yours yet.
🛫 Leaving and Returning to the UK:
Under Temporary Non-Residence Rules, if you come back within 5 years, the UK might retro-tax your gains. Always plan moves carefully if vested shares are involved.
🛬 Moving to Canada:
Good news: most vested shares you already own get a cost basis step-up. The CRA treats you as buying them at their value on arrival, reducing future capital gains.
Smart Moves: How to Slash Your RSU Tax Bill
Managing RSUs well is like managing a foreign language — tricky at first, but worth it.
Here's your action plan:
• Time your moves smartly: Try to relocate after big RSU vestings if you can.
• Document everything: Keep vesting notices, grant letters, and track workdays in every country.
• Check your cost basis: Fix brokerage errors early.
• Sell strategically: In the US, wait a year post-vesting for lower taxes. In the UK, use your exemption every year.
• Max out foreign tax credits: Claim them fully to avoid double-taxation.
• Diversify: Don't put all your wealth in your employer's stock — no matter how cool the swag is.
• Get cross-border tax advice: Seriously. It'll pay for itself 10x over.
✅ Your RSU Expat Survival Checklist
📂 Find and organize all RSU grant notices and vesting schedules.
📆 Track vesting dates, values, and your work location between grant and vest.
✏️ Check and correct your cost basis with your brokerage.
📈 Plan RSU sales based on holding periods and annual exemptions.
🌍 Claim foreign tax credits properly and don't leave money behind.
✈️ Assess tax impact before any major international move.
🛡️ Diversify out of concentrated company stock positions.
🧠 Book a session with a cross-border tax expert early (not after something goes wrong).
🚀 Bonus: Make Cross-Border Finances Easier with Aequify
Managing RSUs and taxes across countries can feel overwhelming, but it doesn't have to be.
Aequify helps expats track accounts, monitor investments, and stay ahead of cross-border tax obligations across Canada, the US, the UK, and many EU countries.
Stay organized, stay compliant, and build your global wealth confidently.
Final Thoughts: Mastering RSUs While Living Your Global Life
Managing RSUs across Canada, the US, and the UK feels overwhelming — but with the right strategy, you can master it.
The key is early planning, record-keeping, and smart timing.
The reward? A bigger, healthier, more diversified portfolio — and way less stress at tax time.
Your global adventure is just beginning. Make sure your RSUs work for you — not against you.
💬 Share your experience of managing RSUs.