RSUs and Italian tax: two moments, two different taxes
If you work for a US big tech company, part of your compensation comes in restricted stock units. The catch is that the Italian tax system treats them in two different ways depending on the moment: at vesting the value of the shares is employment income and lands in the IRPEF brackets together with your salary, while when you sell them any gain over the vesting value is a capital gain taxed at 26%. Confusing the two almost always leads to wrong calculations, too high or too low.
TaxDemocracy lets you calculate gross salary, vesting, sales, and foreign withholding in a single account. That’s something free calculators usually don’t do: they either estimate the salary ignoring the RSUs, or compute the capital gain without accounting for the fact that vesting has already shifted your IRPEF bracket. Here you see the combined effect, free and without leaving your email.
At vesting, RSUs are salary (and it shows on your payslip)
For the Italian tax system the moment that matters is the vesting date, i.e. when the shares actually become yours. At that point their value is employment income under art. 51 of the TUIR: it adds to your salary and pays IRPEF on a bracketed scale (23%, 33%, 43%) plus the regional and municipal surtaxes. For listed shares the taxable value is the normal value, i.e. the average of the stock prices over the 30 days before vesting (art. 9 TUIR), converted into euros.
The IRPEF withholding is applied by the employer directly on the payslip. Many plans cover it with sell-to-cover: at vesting part of the shares is sold automatically to pay the taxes and only the net reaches you. If your marginal bracket is 43%, on €10,000 of vesting roughly €4,500 go to IRPEF and surtaxes before you even see the shares.
At sale you pay 26%, but only on the difference
When you sell the shares, the gain taxed at 26% is the difference between the sale price and the value already taxed at vesting, not a zero cost base. This is set by art. 68, paragraph 6 of the TUIR, and it’s the rule that avoids double taxation on the same value.
An example with numbers. You vest 120 RSUs when the share is worth $50 and the exchange rate is 0.92: the normal value is €5,520, taxed on your payslip as salary. Eight months later you sell everything at $58 with the rate at 0.90: you receive €6,264. The gain is 6,264 − 5,520 = €744, and the 26% substitute tax is about €193. If instead you sell below the vesting value you realise a capital loss, which you can offset against other gains over the following four years.
The gain must be reported in the RT section (or section T of the 730) if the broker is foreign, as is almost always the case with US share plans: E*TRADE, Schwab, Fidelity, and Morgan Stanley do not act as Italian withholding agents, so the calculation and the payment are up to you.
US withholding, foreign tax credit, and the RW form
If you have filed the W-8BEN form with your broker (usually required when opening the account), the United States does not withhold tax on the sale of the shares: the gain is taxed only in Italy. US withholding does remain on dividends, at 15% thanks to the Italy–US treaty. On that part you can recover the foreign levy through the foreign tax credit of art. 165 TUIR, but only if you report the dividends under ordinary taxation: with the 26% substitute tax the credit is not granted and the US withholding becomes a sunk cost.
On tax monitoring: shares held with a foreign broker must be reported each year in the RW section (now section W) for monitoring purposes, even if you have sold nothing. On the same shares you pay IVAFE, 0.2% of the value at 31 December: on a €20,000 portfolio that’s €40 a year. Forgetting the RW section is the most common mistake among people who receive RSUs, and penalties start at 3% of the undeclared value for each year.
Frequently asked questions
- Are RSUs taxed twice?
- No, even if many fear so when reading the payslip. At vesting you pay IRPEF on the value of the shares as if it were salary; at sale you pay 26% only on the gain accrued after vesting. The value already taxed becomes your tax cost base, so it is not hit a second time. Real double taxation only happens if, by mistake, you use a zero cost base in your tax return.
- Which euro/dollar exchange rate is used for the calculation?
- For vesting the employer normally handles it, converting the value into euros directly on the payslip. For the sale you have to convert: you use the exchange rate of the day of the transaction (in practice the ECB rate) both for the sale price and for the vesting value. This means the exchange rate enters the gain: if the dollar strengthened between vesting and sale, part of the taxed gain is pure currency effect.
- Who has to fill in the RW form?
- Anyone holding shares with a foreign broker, which is the typical case of RSU plans managed by E*TRADE, Schwab, Fidelity, or Morgan Stanley. The obligation starts from vesting and applies even if you don’t sell and receive nothing. Along with the monitoring you pay IVAFE, 0.2% of the value of the shares at 31 December. Your accountant takes care of it with the Redditi form, or section W of the 730.
- Is it worth selling the shares right after vesting?
- Tax-wise, an immediate sale is the simplest choice: the sale price almost matches the value already taxed on the payslip, so the gain is close to zero and the 26% weighs very little. Holding the shares isn’t wrong, but it’s an investment choice, not a tax one: you’re exposed to the stock and the exchange rate, and you add the RW and IVAFE obligations for each year you hold. To understand the impact on your net, calculate your RSUs in both scenarios with the tool above.
- How does sell-to-cover work, and do I have to report anything?
- With sell-to-cover the plan automatically sells part of the shares at vesting to cover the withholding, and you keep the rest. That sale is a disposal to all effects: it must be reported, even if the gain is usually minimal because it happens at the same vesting price or close to it. Be careful not to confuse the withholding covered by sell-to-cover (Italian IRPEF on the payslip) with any foreign withholding, which follows different rules.