How does tax mobility work?

Through the stakeholder ledger, a history or timeline of addresses can be attached to each stakeholder, with each address in this history will tied to an effective date that represents the date the stakeholder moved to the address.

If tax mobility is enabled, Carta’s tax system will use these effectively dated addresses to estimate option exercise withholding amounts by comparing the vesting period of the to-be-exercised option grant to the effectively dated addresses for the stakeholder.

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How do I turn on tax mobility?

Navigate to Compliance & Tax > Tax rules.
On the Withholding overview tab, click Configure.
Click to Enable or Disable the feature.

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When tax mobility is enabled:

Carta’s tax system will first look at the vesting period for the to-be-exercised option grant. If the stakeholder has lived in multiple locations during the vesting period, based on the effective dates of their addresses, Carta’s tax system will split tax estimates across each jurisdiction depending on whether the stakeholder moved from one US state to another, or from one country to another.
If the stakeholder moved from one US state to another, Carta’s tax system will estimate and split the total tax withholding amount across each jurisdiction based on how long the stakeholder lived in each jurisdiction. The longer a stakeholder lived in a location during the vesting period, the more tax will be apportioned to that jurisdiction at time of exercise.
If the stakeholder moved from one country to another, Carta’s tax system will estimate the total tax owed to each jurisdiction and disregard country-specific treaty rules, as international tax treaties are currently unsupported by Carta’s tax system.

How to get more accurate tax estimates in Carta