- April 6, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Foreign Stock Option Grant and Tax Implications in Japan
Hi all, I have a somewhat complex situation regarding a large stock option grant from abroad and its taxation implications. I couldn’t find a specific answer to my question on the sub, so I’m reaching out for advice.
I have a significant stock option grant that was allocated several years ago and vests in yearly increments. As a non-US citizen, the taxation regime surrounding this grant will impact my immediate liquidity. Recently, I relocated to Japan, where I am not yet paying resident tax, but I will be required to do so starting this year. Additionally, I am in the process of obtaining Permanent Residency in Japan.
One important detail is that once the Restricted Stock Units (RSUs) reach a certain number of years from the grant date, I can sell them tax-free in my home country, Estonia.
Now, let’s consider the specifics of my situation:
– The stock options are currently 3 years and 6 months from the grant date, with yearly vesting.
– I have been living in Japan for approximately 4 months, during which time none of the stock has vested in Japan.
– The grant value is now $100,000, with a negligible strike price of $0.1, making the grant value equal to the realized value.
As of now, I have vested and can sell 3/4 of the total grant amount, which amounts to $75,000. None of this amount has vested in Japan, but I have spent 10% of the total time working in Japan.
My question is this: If I were to sell $75,000 of stocks, how much would I owe in taxes to the Japanese government?
1. 10% of the total vested amount, meaning tax on $7,500
2. Nothing, since none of the Non-Standard Options (NSOs) have vested in Japan
3. 10% of the total grant amount, resulting in tax on $10,000
Thank you for any assistance or insights you can provide.
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