If you are an advisor or a software developer and the company that you advise/consult for, pays you 10K USD, then you pay tax on the 10K received eventually.

But if you chose to opt for 10K USD worth of SAFE notes instead, when do you pay tax?

  • Is it when the SAFE note is issued OR
  • During the financing round when SAFE convert to equity of the company OR
  • During exit?
  • 7
    I don't know what a "SAFE note" is, but I don't think it matters. You got something of value in exchange for your work. That's a taxable event. Nov 18, 2021 at 17:26

1 Answer 1


This is a useful reference about SAFE Notes.

In essence and in the ordinary sense, as SAFE notes aren't a loan, and investors don't receive any sort of interest or payments nor do they provide dividends, there is no guarantee that it will ever convert into equity which in effect, for revenue purposes could mean that that there is, in fact, no consideration at the time of issue.

So, in answer top the specific question:

when do you pay tax?

I would agree with the view expressed:

During the financing round when SAFE convert to equity of the company

I would suggest that to be the correct position and the only mechanism for determining the value of stock on which payment for services has been made which can generate a tax liability, albeit delayed. The OP may never be paid for the service provided.

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