Restricted token units (RTU) resemble restricted stock units (RSU) in the way they are treated.
At grant the employer promises to issue the recipient a certain number of tokens in the future, which are tied to specific requirements that must be met during the vesting period. A crucial difference to RT is the ownership characteristic of the RTUs, as the recipient only becomes the legal owner at vest, which is also the taxable event.
Failure to meet the requirements during the vesting period typically, depending on the leaver circumstances, lead to the loss of unvested tokens granted, similar to RT. Like restricted stock awards, the taxable value is determined by the number of tokens issued, multiplied by the FMV of the tokens at the taxable event (vest), which are subject to ordinary income tax and social security contributions.
As the vesting period typically extends over a longer period (e.g. 3-4 years), various tax compliance risks can occur between the grant and vest date, particularly where the recipient has worked in multiple tax jurisdictions. Multi-country payroll reporting and withholding compliance is the most common and complex challenge for multinational corporations delivering token awards. Depending on the relevant tax legislation, employers may be required to apply withholding and remit taxes in more than one jurisdiction with respect to a single award. Individuals, on the other hand, can suffer from double taxation in multi-country situations, which can cause frustration, impact cashflow and diminish employee satisfaction. In order to mitigate such risks, responsible employers typically seek expert advice to determine the correct rules in each jurisdiction.
For Swiss tax purposes, any profits made on the sale of RT/ RTU after the restrictions are lifted are considered as tax-free capital gain and not subject to income tax or social security contributions.