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Equity Awards from a US Parent: Taiwan Taxes Options at Exercise and Has No RSU Ruling
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Equity Awards from a US Parent: Taiwan Taxes Options at Exercise and Has No RSU Ruling

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Your Taiwan engineers hold options, ESPP shares and RSUs from a Nasdaq-listed parent: does Taiwan tax any of it? For options, yes, in the year they are exercised, and only for the part of the gain tied to days spent in Taiwan. Taiwan's Ministry of Finance (MOF) set that rule in 2005 for options a foreign company grants to staff of its Taiwan subsidiary, branch or office and to employees it posts to Taiwan (MOF order Tai-Cai-Shui No. 09404527550, May 17, 2005).

RSUs are the gap. We searched the MOF's ruling database (財政部各稅法令函釋檢索系統) on October 7, 2026 and found no ruling that deals with RSUs granted by a foreign parent.

Options: the spread on the exercise date

Under the 2005 order, the taxable amount is the excess of the shares' market price (時價) on the exercise date over the exercise price. The order classifies that spread as "other income" (其他所得) under category 10 of Article 14 of the Income Tax Act, included in income for the year of exercise. It is not treated as salary.

Taiwan's share depends on a window running from the grant date to the first date on which the employee may ask to exercise (得請求履約之始日). An employee who did no work in Taiwan during that window has no Taiwan-source income from the options. Otherwise the spread is multiplied by the days the employee stayed in Taiwan during the window, divided by the total days in it.

Picture a four-year cliff-vesting grant, with the engineer moving from Austin to Hsinchu halfway through (an invented example). Roughly half the spread at exercise is Taiwan-source.

US dollar prices are converted into New Taiwan dollars at the average of the Bank of Taiwan's spot buying and selling closing rates for that currency on the exercise date (MOF order No. 09504528030, July 12, 2006). One carve-out: an employee who, in the grant year, valued the options under the tax law of the foreign company's home country and filed and paid tax on that basis may be relieved of the exercise-year rule (point 4 of the order).

ESPP shares and stock appreciation rights

A 2007 MOF ruling addressed employees of a foreign company's Taiwan branch who bought shares under the overseas head office's purchase plan. The excess of the shares' market price when acquired over the purchase price is other income. The Taiwan entity does not withhold on the delivery date; it files an information return and issues a non-withholding statement (MOF letter No. 09604503990, February 27, 2007). For the foreign plan, the ruling's subject line names Taiwan branch employees; it does not mention subsidiary staff.

Stock appreciation rights from a foreign parent pay cash or equivalent shares based on the gap between the parent's share price on the exercise date and the agreed price. The MOF treats the payout as other income in the year received. No withholding applies, but the Taiwan entity must report it and issue the statement (MOF letter No. 09600112810, June 15, 2007).

RSUs: no published rule

Published rulings cover options, purchase plans and SARs. One deals with restricted shares, but it concerns new shares that a company issues under Taiwan's Company Act (限制員工權利新股) (MOF order No. 10100549471, July 11, 2012). Nothing we found says whether a foreign parent's RSUs are taxed at vesting or at delivery, what value applies, or whether the option rule's days-in-Taiwan proration carries over. Even for options, the rulings we read do not say which price of a foreign-listed share, such as that day's close, is its market price.

That leaves a practical step: before the first vesting date, take the plan documents to the competent National Taxation Bureau (國稅局) and ask.

Are the older rulings still current? None of the foreign-parent rulings above is on the list of rulings the MOF amended or repealed on November 12, 2025 (order No. 11404634280), and all of them appear in the 2025 (114年版) edition of its income tax ruling compilation (Executive Yuan Gazette).

What the Taiwan subsidiary files

When its employees exercise the parent's options, the Taiwan company does not withhold. By the end of January of the following year, it must report to the tax office each employee's name, address, ID number and Taiwan-source income, and issue each employee a non-withholding statement (免扣繳憑單) (point 2 of the 2005 order; Income Tax Act Article 89, paragraph 3). The statement is due to employees by February 10. If January has three or more consecutive national holidays, the deadlines move to February 5 for the return and February 15 for the statements.

Late, missing or inaccurate returns, and late statements, draw a fine of NT$1,500 to NT$20,000 together with a deadline to correct. If that deadline is missed, the fine rises to NT$3,000 to NT$90,000 (Article 111, paragraph 2, as of October 2026).

Seconded staff are handled differently. A second 2005 order treats the pay of employees a foreign company posts to work for its Taiwan subsidiary, branch or office as pay for services performed in Taiwan under Article 8, item 3. The Taiwan entity may expense the option cost, prorated by the employee's days of work in Taiwan within the grant-to-exercisable window. When it pays, it must withhold under Article 88 and Article 92 and file withholding statements (MOF order No. 09404528910, May 17, 2005).

So the employment contract matters: the subsidiary's own employee triggers a January information return; a secondee whose option cost the Taiwan entity carries triggers withholding. We found no ruling reconciling the two for recharge arrangements. Payroll withholding is covered in Taiwan Payroll for US Assignees and Foreign Hires.

The employee's own return

With nothing withheld, the employee pays. A person without a domicile in Taiwan is a resident for a tax year if present for 183 days or more in total (Article 7). Residents file and pay between May 1 and May 31 of the following year (Article 71). Other income is taxed with the rest of consolidated income at progressive rates, 5% to 40% for tax year 2026 (MOF table for tax year 2026).

A resident who gives up a Taiwan domicile or residence and leaves during the year must file and pay for that year before departure, unless a resident spouse stays in Taiwan and files jointly (Article 71-1, paragraph 2).

What if the employee exercises after going home? The 2005 formula looks at days in Taiwan between grant and the first exercisable date, not in the exercise year. On the formula alone, a Taiwan-source share can survive departure. The official materials we checked do not say how a non-resident reports it or at what rate; ask the tax office before the employee leaves. Day counting is explained in Taiwan Income Tax Residence When You Arrive or Leave Midyear.

Selling the shares later

When the shares are sold, the sale price minus the market price on the exercise date is a securities transaction gain or loss (point 1 of the 2005 order). For shares listed in the US, that gain may fall under Taiwan's overseas-income rules for the alternative minimum tax (所得基本稅額, AMT). The MOF's eTax Q&A says the AMT Act has no exemption for overseas securities gains (eTax Q&A 1756). Confirm the classification with the tax office.

For residents, household overseas income below NT$1 million a year stays out of the AMT base. At NT$1 million or more, all of it counts (AMT Act Article 12, paragraph 1, item 1). Share gains count in the year of the settlement date (point 3 of the MOF overseas income review rules). The basic tax is 20% of the AMT base after a deduction of NT$7.5 million for tax year 2026 (MOF table). Tax paid where the income arose can be credited within a cap and with certified proof (Article 13). AMT is due only when the basic tax exceeds the regular income tax (eTax Q&A 1746).

The foreign special professional regime

Since January 1, 2026 the tax relief for foreign special professionals sits in Article 22 of the Act for the Recruitment and Employment of Foreign Professionals. It was moved from Article 20 without change (Taipei National Taxation Bureau Q&A). It covers qualifying professionals with no Taiwan household registration who first received residence for work. For five years from the first year with 183 days in Taiwan and salary above NT$3 million, half of the salary above NT$3 million is excluded in each year with 183 days. Overseas income is kept out of the AMT in those years.

Relief is measured on salary income (薪資所得) (Regulations Article 4, paragraph 3). We found no official statement on whether parent equity, classed as other income, enters that calculation. The claim must be made with that year's annual or departure return, or it is lost (Article 5).

A US tax adviser can confirm how the US side treats the same income and whether a foreign tax credit is available.

Send the grant notices, vesting and exercise statements, and each employee's Taiwan entry and exit dates to Hovering International Law Firm at wei@hoveringlaw.com.tw, and we can review the Taiwan timing and the subsidiary's reporting together.

Keep the exercise-date share price. It fixes the other income in the exercise year and the gain when the shares are sold. If overseas income enters the AMT base and the cost cannot be proved, 20% of the sale price is treated as income (point 16 of the review rules).

Official sources

Checked: October 7, 2026

Frequently Asked Questions

When does Taiwan tax stock options granted by a US parent to our Taiwan staff?
In the year of exercise. Under a 2005 Ministry of Finance ruling, the spread between the share price on the exercise date and the exercise price is other income. Only the Taiwan-source share is taxed: the spread times the employee's days in Taiwan between grant and the first exercisable date, divided by the days in that period.
Must our Taiwan subsidiary withhold tax on option or ESPP gains from the US parent?
Not for its own employees. It reports each employee's Taiwan-source amount to the tax office by the end of January of the following year and gives the employee a non-withholding statement by February 10. For staff seconded by the parent whose option cost the Taiwan entity bears and pays, a separate ruling requires withholding at payment.
How does Taiwan tax RSUs from a US parent?
As of October 7, 2026, we found no Ministry of Finance ruling that deals with RSUs granted by a foreign parent. The published rulings cover options, share purchase plans and stock appreciation rights. The timing and value for RSUs should be confirmed with the local National Taxation Bureau, ideally before the first vesting date.

This article provides general information and is not legal advice on any individual matter.

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