NSO Options vs tax

Hi there,

I’m faced with a rather puzzling topic.
I work indirectly (via a 3rd party) for an US startup that also granted me Options.
This means that I am not employed by the US startup.

Out of those options:

  • 1/4 vested last year
  • the rest are vesting now monthly

The questions puzzling me are:
a) do they need to be declared if I did not exercise them yet?
b) when I exercise them is there any tax?
b1) by this I mean do they ask/calculate (Strike Price - FMV/fair-market-value) = something to be added to the income in case the Strike Price is lower than the FMV?
b2) do they consider the FMV at the time the Options were granted or at the time of exercise?
c) how do they calculate the FMV or is it trust based (I can only provide a screenshot from a portal, nothing more)

Does anyone happen to have the magic answer for all my doubts?
I feel this topic is not an easy one.

Thank you!

Here is the link for Canton Geneva tax authorities which I think explains the scenarios quite clearly (DeepL translation to English is good if you don’t speak French) . Suggest to contact your cantonal tax authority if you have more specific questions

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Thank you!
I am okay also with French :slight_smile:

I found as well this one with study case = Switzerland:

I don’t fit the typical cantonal tax regulation as I got the Options from a 3rd party (US based) and not from my employer (Swiss based).

As the UK article says:
“As the only exception, unrestricted quoted options are taxed at grant. The taxable amount is calculated as the difference between the fair market value of the option (at grant) and the (lower) price, if any, paid by the employee for the option. If income tax is charged at grant, no income tax arises at vesting or exercise.”

The problem being that there’s no taxed at grant as the company is not in Switzerland.

How I see it (also combined with the Geneva article) → tax at exercise on diff ( FMV - Strike Price).

The FMV is also a relative thing…who is the trusted authority for a non listed company, especially with a portal just listing a value which can be anything.

I do love a good mystery :slight_smile:

FYI it’s pretty common for the grant to not come from the local company. I think that’s the case for big tech (the option/RSU are given from Foo LLC, not Foo GmbH). I think for tax purpose they consider it coming from your employer in practice.

In any case, just ask your friendly tax authorities, I’m sure that’s the kind of stuff they can give guidance.

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