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Ensuring tax residency

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dotpedal

Active Member
Nov 22, 2016
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#1
Hi,

What can I do to ensure my company's tax residency is indeed in an offshore jurisdiction and not Canada in the eyes of the CRA? Canada has a tax treaty with Bahamas (the jurisdiction I'm looking at). I have a online web business. So far, here's what I have listed:
  • 1-2 yearly meetings with the company shareholders in the Bahamas where we make the plans for the business
  • Bahamas support representative (all emails etc. will be answered by someone who lives in the Bahamas)
  • Bahamas hosting (the website will be hosted in the Bahamas)
  • Business accounting and bookkeeping will be done by an offshore company service provider from the Bahamas
  • Registered office in the Bahamas a Bahamas law firm
Is there anything else I should do? What do you guys do to make sure your offshore companies actually serve a purpose?
 
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#2
It seems you have it all pretty much covered. Still I believe you will need to have a CPA or Tax Lawyer locally available to help you fight with the CRA once you file your annual financial tax report in Canada!

For 10 years or so it would have been the perfect tax plan, but today after all the changes and fight against tax evasion, money laundering etc. you need to do your homework carefully and have professionals on your side.
 
#4
auric said:
It seems you have it all pretty much covered. Still I believe you will need to have a CPA or Tax Lawyer locally available to help you fight with the CRA once you file your annual financial tax report in Canada!

For 10 years or so it would have been the perfect tax plan, but today after all the changes and fight against tax evasion, money laundering etc. you need to do your homework carefully and have professionals on your side.
Click to expand...
Can you recommend anyone?
 
#6
I would rather be prepared and contact this person before they contact you. pay him for one or two hours and ask him how to do it the best way! If the CRA gets you with the pants down it will properly be too late.
 
#9
Get some advice from a tax lawyer.
I don't know Canada's laws, but in some EU countries what you wrote in the first post would be NOT enough to warrant the company's tax residence in a foreign country.

This is what happens in some european countries:
  • you declare 1/2 meetings there, you even have the proof (flight tickets). but there's only one employee(yourself).
  • tax man see there's only one employee, yourself. But you're not fiscal resident in the foreign country where you have the company located...
  • you say: hey, I have customer support there
  • tax man says: who care about customer support, where is management located? you are the management, you are here, so you'll running your foreign company from this place = you have to pay us taxes.
  • then Double Taxation Agreements come into place

But but but: if you're company is offshore, your name is not in some public register or better there is not a public register, your offshore bank will not report your name etc, you wouldn't care about all of this.
 
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#11
You might look in to having your company owned by a Foundation in Seychelles, Panama etc, all with nominee directors / councillors. You sign a consultancy agreement so that you can still act on behalf of the company for certain tasks, get paid etc. The nominees probably won't cover you alone but it is an extra barrier. The foundation however lets you legally state that you do not own or manage the company. The law in Seychelles even goes as far as stating the UBO of the foundation is the foundation itself so you are not even the UBO when banks ask. It's also advisable to have the nominees as a co-signee on the bank accounts (but don't give them full or sole access).
 
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#13
mnschwarz said:
You might look in to having your company owned by a Foundation in Seychelles, Panama etc, all with nominee directors / councillors. You sign a consultancy agreement so that you can still act on behalf of the company for certain tasks, get paid etc. The nominees probably won't cover you alone but it is an extra barrier. The foundation however lets you legally state that you do not own or manage the company. The law in Seychelles even goes as far as stating the UBO of the foundation is the foundation itself so you are not even the UBO when banks ask. It's also advisable to have the nominees as a co-signee on the bank accounts (but don't give them full or sole access).
Click to expand...
Great idea.. do you setup a foundation? can you briefly explain the steps I have to go through to achieve it?
 
#14
dotpedal said:
Hi,

What can I do to ensure my company's tax residency is indeed in an offshore jurisdiction and not Canada in the eyes of the CRA? Canada has a tax treaty with Bahamas (the jurisdiction I'm looking at). I have a online web business. So far, here's what I have listed:
  • 1-2 yearly meetings with the company shareholders in the Bahamas where we make the plans for the business
  • Bahamas support representative (all emails etc. will be answered by someone who lives in the Bahamas)
  • Bahamas hosting (the website will be hosted in the Bahamas)
  • Business accounting and bookkeeping will be done by an offshore company service provider from the Bahamas
  • Registered office in the Bahamas a Bahamas law firm
Is there anything else I should do? What do you guys do to make sure your offshore companies actually serve a purpose?
Click to expand...
This sounds really good. Bahamas I read have lots of huge corporation incorporated there for tax reasons?
 
#15
@bountymounty I just updated my other thread having finally set up a Seychelles foundation. The process itself was a lot simpler than I expected. I had a few phone calls mainly for my own benefit to understand, clarify things I wasn't sure of etc. Then I filled out a questionnaire. It was about 9 pages but the company I used made it really simple with suggested answers or a 'delete the option you don't want' kinda thing. I provided scanned bank statement and passport, both notarized, and that was it. Just had to make payment and the foundation was registered in a few days. The initial assets for my foundation will be my company shares but you can also do it with as little as $1 i believe.
 
#16
thank you for your update. How much have you paid for the foundation and what is the company that you have used to setup the foundation? Can I trust this to be 100% true to be the procedure no bullshitting here because you are selling services similar?
 
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#17
bountymounty said:
thank you for your update. How much have you paid for the foundation and what is the company that you have used to setup the foundation? Can I trust this to be 100% true to be the procedure no bullshitting here because you are selling services similar?
Click to expand...
@bountymounty I don't sell anything and I have no connection with that company other than I am also a client. I can also only tell you about the opening process which I was happy enough with. I've gone through this quite recently though so I can't speak for ongoing support etc yet. As for the prices, best to look on their website. they list them all there and it will differ depending on what you want done.
 
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#18
mnschwarz said:
@bountymounty I don't sell anything and I have no connection with that company other than I am also a client. I can also only tell you about the opening process which I was happy enough with. I've gone through this quite recently though so I can't speak for ongoing support etc yet. As for the prices, best to look on their website. they list them all there and it will differ depending on what you want done.
Click to expand...
Is this protecting you from your local tax auth. you think? I'm curious and that's why I ask :)
 
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#19
@auric All I can is, in theory yes hah. I hope I never have to try prove it though and I would love to hear from anyone who has had to. But I legally own and control nothing. If an investigation ever came it would probably come down to good records I imagine. That is to show the entities as separate from myself. ie; I have a contract and invoice the IBC for work done, money in I do up a loan contract etc.
 
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#20
mnschwarz said:
@auric All I can is, in theory yes hah. I hope I never have to try prove it though and I would love to hear from anyone who has had to. But I legally own and control nothing. If an investigation ever came it would probably come down to good records I imagine. That is to show the entities as separate from myself. ie; I have a contract and invoice the IBC for work done, money in I do up a loan contract etc.
Click to expand...
Cross the fingers for you that this works. Would be awesome to hear from someone that has been through an audit!
 
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