How Indian professionals can protect RSUs from estate tax

If you are an Indian professional working at global tech companies like Amazon, Microsoft, Google, Meta, Apple, NVIDIA, Salesforce, or Adobe, chances are that a large part of your compensation is in the form of RSUs (Restricted Stock Units). 

Over time, these stock grants can grow into portfolios worth crores and often become the single biggest driver of long-term wealth creation.

But here’s the catch - “most professionals make the mistake of simply letting RSUs sit concentrated in their employer’s stock or rolling them into plain US ETFs.”

This creates three major risks:

• Estate tax risk: US assets above $60,000 can attract up to 40% estate tax for non-residents, which could significantly reduce what your family inherits if something were to happen.
• Concentration risk: when more than 20% of your net worth is tied to one company, both your income and wealth depend on the same stock price.
• Liquidity risk: for many, RSUs are held in brokers like Fidelity or Morgan Stanley. Selling is easy, but remitting funds into India or re-allocating globally without triggering compliance issues (FEMA, Form 67, Schedule FA) is much harder. This creates a liquidity trap where wealth looks large on paper but is poorly protected.

The good news is that all these risks can be addressed. 

In this guide, we’ll explain how Indian investors can de-risk RSUs intelligently, avoid estate tax pitfalls, and diversify into UCITS ETFs via Paasa, a compliant, global, and efficient way to secure your wealth.

Table of Contents

• Quick note on RSUs
• Estate tax trap most Indians miss
• De-risk RSUs with UCITS
• RSUs vs US ETFs vs UCITS
• Taxation for Indians (RSUs, US ETFs, UCITS)
• How Paasa helps you de-risk RSUs
• FAQs
• Conclusion

A Quick Note on RSUs

RSUs (Restricted Stock Units), are stock grants that companies give as part of compensation. 

Instead of receiving the shares on day one, employees get them over a vesting schedule, for example, 25% each year over four years.

Once an RSU vests, it converts into actual shares in your brokerage account, usually with providers like Fidelity, Morgan Stanley, E*TRADE, or Schwab. At that point, you can either hold the stock or sell it for cash.

For Indian professionals at firms like Amazon, Microsoft, Google, or Meta, RSUs often build into portfolios worth ₹1 crore or more. 

That’s when the real challenge begins: how to manage these concentrated holdings so your wealth is protected from market volatility, estate tax, and compliance issues.

Estate tax trap most Indians miss

Most Indian professionals with large RSU portfolios think about stock price volatility, but far fewer plan for US estate tax. This is the silent risk that can erode wealth overnight.

Here’s how much is at stake:

De-risk RSUs with UCITS

UCITS (Undertakings for Collective Investment in Transferable Securities) are European domiciled funds regulated in markets like Ireland and Luxembourg. UCITS funds are globally trusted because they follow strict regulations on diversification, risk management, and investor protection.

For Indian investors, Accumulating UCITS ETFs offer four key advantages:

• Estate tax protection
  Because UCITS are European-domiciled, they do not fall under US estate tax rules. This means Indian professionals with large RSU or US equity exposure can avoid the 40% tax hit that applies to US-domiciled assets above $60,000.
• Diversification across markets
  A single UCITS ETF can hold hundreds of global companies. For example, an S&P 500 UCITS ETF gives you the same US market exposure as its American counterpart, but with the added protection of European domicile. There are also UCITS products covering global equities, Europe, emerging markets, bonds, and thematic strategies.
• Efficient reinvestment structures
  Many UCITS ETFs are “accumulating” funds. Instead of paying out dividends that create additional paperwork and withholding tax issues, dividends are reinvested automatically, making them more tax-efficient for long-term compounding.
• Global standard, local compliance
  UCITS have become the de facto standard for cross-border investing. Large institutions, pension funds, and family offices across Asia and the Middle East use UCITS for global exposure. For Indian investors, they fit well into FEMA and LRS frameworks, making them easier to manage from a compliance perspective.

This is why UCITS aren’t just useful for de-risking RSUs.

They’re also a smarter vehicle for any Indian planning global portfolios. Whether you want exposure to US markets, Europe, or global equities, accumulating UCITS are often more tax-efficient and protective than investing directly in US stocks or ETFs.

We’ve covered this in depth in our guide: Why Indian Investors Should Choose Accumulating UCITS Over US ETFs, including how UCITS provide US market exposure, how they’re taxed in India, and which UCITS ETFs are most popular among Indian investors.

RSUs vs US ETFs vs UCITS

To see why UCITS are a smarter destination for RSU wealth, here’s how they compare with holding employer stock or shifting into US ETFs.

Please note:

• For Indian investors, dividends from US ETFs are subject to withholding tax of around 25–30%, creating a drag on long-term returns.
• UCITS “accumulating” funds reinvest dividends automatically, avoiding this leakage and compounding more efficiently.

We’ve explained these structural differences in detail, including how dividend treatment, taxation, and domicile rules impact your portfolio, in our guide on why UCITS are more efficient than US ETFs for Indian investors.

Taxation of RSUs, US ETFs, and UCITS for Indians

Understanding how RSUs, US ETFs, and UCITS are taxed is critical for Indian investors, since the differences create very different outcomes for wealth and compliance.

Note: While India’s tax treaty with the US allows you to claim credit for taxes withheld on dividends, the credit is capped at the Indian tax payable on that income. 

If the US tax is higher, the excess cannot be recovered, this is why many Indian investors experience dividend “leakage” when holding US ETFs, whereas UCITS accumulating funds avoid this issue altogether.

How Paasa helps you de-risk RSUs

At Paasa, we make the process of moving from concentrated RSUs to globally diversified UCITS portfolios seamless. Here’s how it works:

Step 1: Transfer RSUs via ACATS

Your RSUs, held in brokers like Fidelity, Morgan Stanley, E*TRADE, or Schwab, are transferred into your Paasa account through the Automated Customer Account Transfer Service (ACATS). This is the standard industry process used by global brokerages.

Step 2: Strategic liquidation

Once your RSUs are in Paasa custody, you can liquidate them, either partially or fully - depending on your goals. This reduces your exposure to a single company and unlocks liquidity.

Step 3: Reinvestment into UCITS portfolios

You can then reinvest into UCITS ETFs or Paasa’s curated managed strategies. This gives you global diversification, estate tax protection, and better tax efficiency.

Step 4: Ongoing compliance handled

We help you stay fully compliant with Indian regulations:

• FEMA/LRS reporting for cross-border remittances.
• Form 67 for claiming foreign tax credits.
• Schedule FA and FSI for annual income-tax filings.
  Note: These compliance support services are available only when you are using our managed strategies.

Typical timeline: Most transfers are completed in 3–5 business days, after which you are fully set up to diversify globally with confidence.

If you want to discuss this with our team and understand it in detail, you can schedule a call with us or write to us at [email protected].

FAQs

Can I transfer RSUs directly from my employer broker?
Yes. If your RSUs are held with brokers like Fidelity, Morgan Stanley, E*TRADE, or Schwab, they can be transferred into Paasa using the industry-standard ACATS process.

What if my RSUs are in a private company?
Private-company RSUs cannot be transferred until the company goes public or allows a secondary sale. In that case, liquidity is usually managed via tender offers or buybacks, not ACATS.

How long does the transfer take?
Typically 3–5 business days for public-company RSUs. Delays may happen if your employer broker requires additional paperwork.

Does Paasa charge transfer fees?
No. ACATS transfers are free. Some brokers may charge a small exit fee, but Paasa does not add any charges.

What if I already sold my RSUs at my US broker?
You can still wire the cash into Paasa under LRS, but you lose estate tax benefits until you switch into UCITS.

Can I transfer more than $250,000 worth of RSUs?
Yes, by splitting the transfer across family members (since each individual has a $250,000 LRS limit) or across financial years.

Are RSUs double-taxed?
They can be, unless you file Form 67 to claim foreign tax credit for any US withholding. Without that, you risk paying twice.

Why are US ETFs not enough for de-risking?
Because they still expose you to 40% US estate tax and dividend withholding of ~25%. UCITS avoid both.

What if I only want to hold cash after selling RSUs?
You can, but you’ll lose potential growth. Paasa allows you to keep uninvested cash in USD or INR until you decide on allocation.

How safe are UCITS ETFs?
They are regulated by the European Union, domiciled in Ireland/Luxembourg, and widely used by global pension funds and institutions.

Do I have to report UCITS in my Indian tax returns?
Yes. Like any foreign holding, you must disclose UCITS in Schedule FA of your income-tax return.

Can RSUs be gifted to family members?
Not directly. Once vested, you can sell and transfer proceeds under LRS, or gift shares if your employer broker allows. Tax rules apply on gifting.

What happens if I don’t sell my RSUs?
You remain fully exposed to your employer’s stock performance and US estate tax. This is the biggest risk for Indians with large RSU portfolios.

Are UCITS taxed more favorably in India than US ETFs?
Yes. UCITS accumulating funds reinvest dividends, avoiding US withholding and Indian dividend taxation. You only pay capital gains tax in India at exit.

What happens if I move abroad after holding UCITS in India?
UCITS remain globally portable and can be held even if you change residence. Tax treatment will then depend on your new country of residence.

Can I choose which UCITS ETFs I invest in?
Yes, Paasa offers both curated portfolios and the option to select from a broad UCITS universe (S&P 500, MSCI World, global bonds, thematic ETFs).

Are UCITS liquid? Can I sell anytime?
Yes. UCITS ETFs trade daily on European exchanges like the London Stock Exchange and Euronext. Liquidity is robust.

How are UCITS different from mutual funds in India?
UCITS are regulated in Europe, dollar-denominated, and globally diversified. Indian mutual funds are domestic vehicles with different tax rules.

Conclusion

For Indian professionals, RSUs are often the single biggest driver of wealth creation. But holding them as-is comes with risks that are easy to underestimate, concentration in one company, exposure to US estate tax, and dividend leakage from US-domiciled funds.

The smarter path is to de-risk RSUs into UCITS ETFs. 

At Paasa, we simplify this journey: transferring RSUs from employer brokers into your account, managing liquidation, and reinvesting into UCITS, while ensuring your compliance with FEMA and Indian tax rules. This way, your hard-earned RSU wealth does not just grow, but stays protected for your family.

If you’d like to understand how this applies to your specific situation, you can schedule a call with us or write to us at [email protected].

About Paasa

Paasa is a global investing platform, designed specifically for Indian HNIs, family offices, and professionals with international wealth. 

With Paasa, investors can go far beyond US equities. We enable access to UCITS ETFs, managed strategies, and access to global markets including China, Japan, Germany, Switzerland, Europe, and emerging economies. This makes it simple to build a portfolio that is globally diversified, tax-efficient, and fully compliant with Indian regulations.

Whether you are de-risking RSUs, planning estate tax protection, or building long-term cross-border allocations, Paasa provides the structure and support to secure your global wealth.
 

Disclaimer

This blog is for educational purposes only and should not be construed as tax, legal, or investment advice. RSU taxation, estate tax exposure, and cross-border investment rules are subject to change and may vary based on your personal circumstances.
Investing in global markets involves risks, including currency risk and market volatility. UCITS ETFs, RSUs, and other securities referenced here are used for illustration and do not constitute recommendations. Past performance is not indicative of future results.