Vancouver to Seattle: RSUs, the Tech Corridor, and Two Different Tax Systems

Vancouver to Seattle is the busiest tech corridor on the border, and the two cities' tax systems are mirror images: BC has a high income tax and taxes half of capital gains; Washington has no income tax and a 7% excise on large gains. BC's combined top rate of about 53.5% becomes a federal-only 37% on salary. Equity, the Vancouver home, and the day count are the planning items.

Key takeaways

• BC's roughly 53.5% top rate sets the departure tax. On a $300,000 unrealized gain, about $80,000.
• Washington has no income tax on wages or ordinary investment income.
• Washington taxes long-term capital gains above roughly $270,000 a year at 7%, plus 2.9% above $1 million.
• BC's 12% combined GST and PST becomes about 10.35% sales tax in Seattle.
• A Vancouver home kept empty faces three vacancy taxes. MSP ends on permanent departure. Washington's estate tax exemption is about $3 million.

The BC departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the departure date. BC real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 for illiquid assets. The Vancouver home is excluded, but kept empty it invites BC's Speculation and Vacancy Tax, Vancouver's Empty Homes Tax, and the federal Underused Housing Tax; rent it under NR6 and Section 216, or sell in the departure year. MSP ends on permanent departure.

Seattle's side

No state income tax on wages or ordinary investment income; a 7% excise on long-term capital gains above roughly $270,000 a year (indexed), plus 2.9% on gains above $1 million, with exemptions for real estate and retirement accounts but not stock or RSU sales; sales tax about 10.35% in Seattle; B&O gross receipts tax on businesses and consultants; property tax near 1% in King County; estate tax with an exemption near $3 million and rates to 35%.

The RRSP in Washington

Untouched on departure, federally deferred under the treaty, no state income tax to break the deferral, and exempt from the capital gains excise as a retirement account. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, with a US foreign tax credit.

RSUs and the excise

Vests are ordinary income, split between Canada and the US by working days, and not subject to the excise. Sales of vested shares are capital transactions: a large sale in one year can cross the threshold and trigger the 7%. Sell in tranches, or realize gains in Canada before departure.

The day count

Vancouver tech workers often spend months in Seattle before the formal move, for onboarding or a hybrid arrangement. The substantial presence test counts all days this year, one-third of last year's, and one-sixth of the year before. Days spent in Seattle while still living in Vancouver count, and a commuter who does not return home the same day on more than 75% of workdays loses the commuter exception.

Who makes this move

Vancouver software engineers to Amazon, Microsoft, and the Seattle startup scene, BC founders relocating startups to Seattle, Vancouver game developers to Seattle-area studios, and BC aerospace engineers to Boeing.

Worked example

A Vancouver software engineer moves to Seattle on April 30 with $300,000 of unrealized gain in a non-registered account, $200,000 of vested employer shares with a $50,000 cost base, $400,000 in an RRSP, and a Vancouver condo sold in the departure year.

• Departure tax. $300,000 plus $150,000 of gains, $225,000 taxable, at about 53.5%: roughly $120,000.
• Condo. Sold as a resident under the principal residence exemption. No vacancy taxes.
• RRSP. No tax on departure; exempt from the excise.
• Post-move share sales. Gains above the threshold face the 7% excise. Sell in tranches.
• Seattle. No state income tax. Sales tax 12% becomes 10.35%.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

Washington's capital gains tax is "a 7% tax on the sale or exchange of long-term capital assets such as stocks, bonds, business interests, or other investments and tangible assets." — Washington State Department of Revenue, Capital gains tax, https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax

"You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that." — Internal Revenue Service, Substantial Presence Test, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

Practitioner note

The Vancouver-to-Seattle file has three moving parts that the other corridors do not combine: a large equity position that Washington's excise will catch, a Vancouver home that three vacancy taxes will catch, and a day count that may have started before the move. We work all three before the date is set.

See also: Weighing Florida instead? See the Canada-to-Florida guide, or the same city's Vancouver to Miami guide.

Next step

Fairlight prepares the BC departure return, the equity timing plan, the property decision, and the first-year US return for Seattle-area clients. See cross-border pricing or book a call.