Global — RSU Vesting Compensation Expense (ASC 718 / IFRS 2) and Multi-Country Payroll Tax on Vest

💡 Accountant's Note

RSU taxation varies significantly across jurisdictions — the vest date is generally the taxable event, and employers must handle withholding and reporting in every country where employees work. USA: RSUs taxed as ordinary income at vest (FMV of shares on vest date). Federal withholding: supplemental rate 22% (37% if aggregate supplemental exceeds $1M in the year). FICA: SS at 6.2% if not yet at $168,600 wage base + Medicare 1.45% (+ 0.9% if over $200K). State: California taxes RSUs at vest as ordinary income (13.3% top rate); Texas — no state tax. Net share settlement: employer withholds shares worth the tax due — common mechanism. Section 83(b) election not available for RSUs (only for restricted stock). UNITED KINGDOM: RSUs are UK employment income at vest — PAYE and NI Class 1 apply on the FMV at vest. Employer NI at 13.8% is a significant employer cost; many UK RSU plans include a National Insurance agreement (Joint Election) to transfer employer NI to the employee (reducing the employer's cost but increasing the employee's). Form 42 (annual share scheme return to HMRC). CANADA: RSUs are taxed as employment income at vest — withholding required on the FMV of vested shares. CPP applies if not yet at YMPE; EI applies if not yet at maximum. Section 7 of Income Tax Act applies. GERMANY: RSUs are taxed as wages at vest — Lohnsteuer and all four social insurance contributions apply on the vest-date FMV. Assessment ceilings for RV and AV may have already been reached for high earners. FRANCE: RSUs/free shares (actions gratuites) have a specific French tax regime — taxed at capital gains rates if held for 1+ year after a 1-year mandatory holding period (total 2+ years after grant). Social contributions: CSG/CRDS applies at vest. Pre-2018 RSUs: income tax at vest. This is a significant planning point — French free share plans structured differently from US RSUs. ASC 718 (US GAAP) ACCOUNTING: Grant-date fair value amortized over the requisite service period (vesting period). For graded vesting (25% per year over 4 years), each tranche is treated separately as a separate award. Forfeitures: either estimate at grant date or account for as incurred. At vest, if the actual deductible amount (tax basis = FMV at vest) exceeds the cumulative book expense (FMV at grant), an excess tax benefit is recorded in APIC/retained earnings. If less, a deficiency is recorded.