Anyone have experience with US stock options?
Posted: Thu Nov 18, 2021 1:33 am
I work for a US company, but with a corporate presence in Japan that is my direct employer (I'm Canadian, and a permanent resident of Japan). My company had it's IPO recently, and I'm wondering if anyone has any experience with:
- Exercising US stock options as a Japanese resident.
- Selling the actual stocks after they are exercised.
- Sending what could potentially be very large sums of money back to Japan.
Basically, from what I could figure out so far from google searches is:
- When I exercise, I'll have to pay taxes on the difference on the strike price vs actual current rate. So if the strike price is $5, and the actual market rate is $20, I pay tax on $15. This is common in most countries, but just double checking.
- There's no difference between long term and short term capital gains on stocks in japan, it's all ~20%, it seems? No need to hold the stocks for a year to get preferential tax treatment?
- It seems like when I then sell the stock, I only pay the tax on the increase compared to market rate when I exercised. So from the above example, if it goes from $20 to $30, then I sell, I pay tax on the $10 increase.
So I want to verify that the above points are correct... but then what? I'm assuming it's going to be complicated to do all this, because it'll happen in the US, but I need to pay the taxes in Japan. The US and Japan has some sort of tax agreement to let this happen without double taxation, I think?
Also, are there any complications about sending the money here? If I'm lucky, it'll be quite a significant sum, and I'll probably need to fill out some challenging paperwork beforehand?
My main plan is to retire here, and I'm not a US citizen, so I want to bring the money here and invest it here.
I'm scared that there are going to be a LOT of gotchas... I've got a friend looking for a skilled financial/tax expert that can help with this, but would love to hear from the RetireJapan community first!
Ravlen
- Exercising US stock options as a Japanese resident.
- Selling the actual stocks after they are exercised.
- Sending what could potentially be very large sums of money back to Japan.
Basically, from what I could figure out so far from google searches is:
- When I exercise, I'll have to pay taxes on the difference on the strike price vs actual current rate. So if the strike price is $5, and the actual market rate is $20, I pay tax on $15. This is common in most countries, but just double checking.
- There's no difference between long term and short term capital gains on stocks in japan, it's all ~20%, it seems? No need to hold the stocks for a year to get preferential tax treatment?
- It seems like when I then sell the stock, I only pay the tax on the increase compared to market rate when I exercised. So from the above example, if it goes from $20 to $30, then I sell, I pay tax on the $10 increase.
So I want to verify that the above points are correct... but then what? I'm assuming it's going to be complicated to do all this, because it'll happen in the US, but I need to pay the taxes in Japan. The US and Japan has some sort of tax agreement to let this happen without double taxation, I think?
Also, are there any complications about sending the money here? If I'm lucky, it'll be quite a significant sum, and I'll probably need to fill out some challenging paperwork beforehand?
My main plan is to retire here, and I'm not a US citizen, so I want to bring the money here and invest it here.
I'm scared that there are going to be a LOT of gotchas... I've got a friend looking for a skilled financial/tax expert that can help with this, but would love to hear from the RetireJapan community first!
Ravlen