Stock Options and RSUs Cross-Border Tax: Who Taxes What

An RSU vesting in London for shares that were granted while the employee lived in San Francisco is not UK-source income for its full value, and it is not US-source income for its full value either. Both countries have a partial claim, apportioned by workdays between grant and vest. Getting the split right — and pulling the correct treaty relief on top — is where cross-border equity taxation actually lives. Get it wrong and the same dollar of gain is taxed twice.

This article works through how the United States, the United Kingdom and Singapore tax stock options and restricted stock units for employees who move mid-cycle, why payroll withholding almost never matches the final answer, and where the treaty machinery either rescues the outcome or fails to catch it. Rules cited are current as of 2026; readers should verify any specific position with a qualified adviser before filing.

The three taxable moments in an equity award

For any cross-border analysis, the calendar of the award matters more than the label:

• Grant date — the employer commits to a future issue of shares (RSUs) or a future right to buy at a fixed price (options). Usually no immediate tax.
• Vest date — the employee's right becomes non-forfeitable. RSUs are typically taxed here as ordinary employment income at the fair market value of the shares. Options usually are not taxed on vest.
• Exercise date — for options only. The spread between the strike price and the market price is taxed as employment income, with variations for US incentive stock options and other qualified plans.
• Sale date — the eventual disposal of the shares. Any subsequent price movement is a capital gain, taxed under whichever country claims the individual as resident at that point.

Employment-income taxation and capital-gains taxation are treated differently under most tax treaties. The first sits under the "income from employment" article and follows workdays; the second sits under the "capital gains" article and usually follows residence at the time of sale. Confusing the two produces almost every double-tax accident in this area.

The sourcing rule: grant-to-vest workday apportionment

Where an employee has performed services in more than one country between the date an award is granted and the date it vests (for RSUs) or vests-and-becomes-exercisable (for options), the OECD Model Commentary treats the resulting income as employment income for services performed over that whole period. The taxable amount at the vest or exercise event is then apportioned between countries by workdays.

The formula, in plain form: workdays in Country A between grant and vest ÷ total workdays between grant and vest × income recognised at vest. Country A taxes that share as domestic employment income; Country B taxes its share on the same basis. Weekends, statutory holidays and paid leave are typically excluded from the denominator, though each country defines "workday" slightly differently — the US, UK and Singapore all publish their own guidance.

This is why the "who taxes what" question is almost never binary. A four-year RSU tranche granted in New York, held through a two-year London posting and vested after return, will have US and UK employment-source components in a ratio that traces the calendar rather than the residence status on the day the shares hit the account.

How the United States taxes mobile equity income

The United States uses a progressive federal schedule of 10% to 37% (the seven-bracket TCJA structure was made permanent by the One Big Beautiful Bill Act signed on 4 July 2025), plus state income tax of 0% to 13.3% and, above certain thresholds, the 3.8% net investment income tax on the sale gain portion. Because the US taxes its citizens and green-card holders on worldwide income regardless of residence, a US person is always fully in scope on the entire vested amount — with a foreign tax credit for tax the other country charges on the foreign-workday portion.

For non-US persons who spent some of their grant-to-vest period working in the US, the US taxes only the US-workday portion as US-source employment income, generally through non-resident withholding administered by the employer. The Foreign Earned Income Exclusion (US$132,900 for 2026) can be relevant to US persons whose vesting occurs while they qualify as tax residents abroad, but the exclusion does not apply to the portion attributable to US workdays and is often less useful than the foreign tax credit for high-income equity awards.

State tax is the trap. California, for example, applies its own workday sourcing to equity income earned while a California resident or attributable to services performed in California, and will follow up years after departure. Leaving the state does not extinguish the state's claim on the pre-departure workday share of an award that vests later.

How the United Kingdom taxes mobile equity income

The United Kingdom taxes employment income at 0% to 45% (England and Northern Ireland; Scotland uses its own bands). All UK residents are taxed on worldwide income on the arising basis from 6 April 2025 — the non-dom remittance basis was abolished on that date and replaced by a narrower four-year Foreign Income and Gains regime for qualifying new residents after ten consecutive non-resident years.

For internationally mobile employees, HMRC applies its own grant-to-vest apportionment for equity awards under the rules in Part 7 of the Income Tax (Earnings and Pensions) Act 2003. The UK-workday share is taxed as UK employment income at vest for RSUs, or at exercise for options, regardless of where the shares end up being sold. The Statutory Residence Test determines whether an individual is UK resident in each tax year, which in turn drives which portion of an award UK payroll must operate PAYE on. See the Statutory Residence Test explainer for how the day-counting and ties work in practice.

Capital gains from the eventual sale of the shares sit under a different regime: 18% at the lower rate and 24% at the higher rate from the 30 October 2024 Budget, generally taxed only if the individual is UK resident at the point of sale, with anti-avoidance rules for short-term departures under the temporary non-residence rules.

How Singapore taxes mobile equity income

Singapore's personal income tax runs 0% to 24% from Year of Assessment 2024 and is territorial: foreign-sourced income received by an individual is generally not taxable unless received in Singapore, with specific exceptions. There is no capital gains tax for individuals on the sale of shares.

For equity compensation, however, Singapore applies a rule that catches many departing employees off-guard: the deemed exercise rule. Under IRAS practice, unvested stock options and unvested share awards held by a foreign employee, or by a Singapore permanent resident who is leaving permanently, are deemed to be exercised or vested one month before the date of departure, or the date employment ceases, whichever is earlier. The gain calculated at that deemed date is subject to Singapore income tax even though the shares have not actually vested and may never be exercised at the assumed value. A "tracking option" exists to defer to actual exercise or vesting under employer administration, but it must be arranged and applied for in advance.

The Not Ordinarily Resident scheme, which historically gave qualifying inbound professionals a time-apportionment concession on equity income, ended after Year of Assessment 2024 and is no longer available to new entrants. New arrivals with unvested awards from a prior country now fall under Singapore's standard residence-based rules with no equity-specific relief on entry.

Country comparison at a glance

Payroll withholding mismatches

Employers withhold on equity income at the vest or exercise event, usually through the local payroll of the entity that employs the individual on that date. That mechanic breaks down at the border in two ways.

First, the local payroll usually only knows about the local employment period. A UK payroll operating PAYE on the full value of a vesting RSU that was granted during a prior US employment period will over-withhold in the UK — the correct answer is that only the UK-workday share is UK-source income, and the US-workday share is taxed by the US and, if applicable, by the US home state. Second, the shares withheld to cover tax ("sell-to-cover") are typically sold at a single blended rate, which never matches the marginal tax rates that ultimately apply once the individual files in both countries.

The practical consequence is that the employee owes a top-up in one country and is due a refund in the other, sometimes for tens of thousands of dollars, and the refund arrives twelve to eighteen months later after the foreign filing is complete and a treaty claim has been made. Cash flow, not final tax burden, is the acute pain point for mobile employees with large equity awards.

Treaty relief and the risk of true double taxation

The US-UK income tax treaty and the UK-Singapore treaty both contain an "income from employment" article that assigns primary taxing rights to the country where services were performed, with the residence country eliminating double taxation through a credit. There is no comprehensive US-Singapore income tax treaty, however, which materially increases the risk of unrelieved double taxation for US persons vesting equity while working in Singapore — relief runs through the US foreign tax credit only, with no treaty backstop for characterisation or timing disputes. The double-tax treaty guide covers the general mechanics; equity awards apply those mechanics to an apportioned base.

Two failure modes come up repeatedly. The first is a timing mismatch: the source country taxes the workday share at vest (say, 2026), while the residence country taxes the full amount at a different event (say, sale in 2028) and offers no credit because the source-country tax was paid in a different year. Some treaties address this through competent authority procedures; many do not, in practice. The second is a characterisation mismatch: one country treats a portion of the award as capital gain, the other as employment income, and the credit-method mechanics deny relief because the "same income" test is not satisfied.

Where two countries both claim the individual as tax resident for part of the grant-to-vest period, the treaty tie-breaker in the residence article determines which country's residence claim wins — typically running through permanent home, centre of vital interests, habitual abode and nationality in that order.

Practical questions to answer before you move

Before an international move for anyone holding meaningful equity, the following are worth mapping in detail:

• Vesting calendar overlay. Which tranches vest before departure, which straddle the move, and which vest after arrival? The straddling tranches drive the apportionment work.
• Exercise timing on options. Exercising in a lower-rate country the year after arrival can shift the taxable event out of a high-rate residency, but only if the option itself has not accrued value in the high-rate country during the grant-to-vest period — otherwise the source-country claim persists.
• Deemed-exercise exposure. Singapore's rule applies on departure; some other jurisdictions have similar mark-to-market or exit charges on unvested awards. The tax residency guide covers the residency-loss triggers that activate these.
• Payroll coordination. Whether the employer is a single legal entity with an internal transfer, or two separate entities with intercompany billing, changes which payroll can operate on which portion of the award and whether relief is applied at source or must be claimed on the return.
• Social security. Equity income is subject to social security contributions in most countries, with rules that diverge from income tax. A totalization agreement, or a similar bilateral certificate mechanism, can prevent duplicate contributions but must be claimed correctly.

None of the above substitutes for a personalised review. Cross-border equity taxation is one of the areas where facts drive outcomes: the same nominal award produces very different bills depending on grant date, vest schedule, workday count, entity structure and treaty position. Modelling the specific award against the specific calendar, before the move rather than after, is the only reliable way to avoid the payroll surprises this article describes.

Where to go next

For the underlying framework, start with the tax residency guide and the double-tax treaty guide. Country-level detail lives at United States, United Kingdom and Singapore. For a broader look at how mobile employees are taxed on non-equity compensation, see the remote-work tax guide, and use the country comparison tool to sanity-check headline rates before running the equity numbers.