Rethinking corporate structure

[marct]

Hi all,

I’m looking for some advise as I consider restructuring. I have a number of companies, all around the same or similar area (IT/hosting/infrastructure and consulting), in the US and Canada. It is definitely costly to maintain all of this, so I’m looking at consolidation.

For context, I am and always will be a Canadian tax resident, I will not leave Canada for more than 193 days at a time.

I’m looking at consolidation and want to find the best jurisdiction. I need to maintain an aspect of privacy from the general public, unfortunately the niche I’m in comes with some harassment, and having my personal information public isn’t fantastic.

Here’s my general requirements:

1. It must be a single corporation for operating;
2. I am open to a holding company being the shareholder (onshore or offshore);
3. There must be reliable enough banking (US$ for all transactions);
4. It must be able to transact with PayPal, Stripe and GoCardless;
5. There must not be any public disclosure of directors / shareholders, I am fine if the governing body has the information, but not the general public;
6. Bank account opening should be able to be done remote, I’m open to doing it via correspondent banks that are domestic to me in Canada;

The businesses, once condensed, will only do approximately $250K USD/year currently, and that will grow. Most profits are kept in the company, and very little dividends are issued.

I suspect I’ll get a lot of suggestions to just go DE/WY/FL on this, but I’m not a huge fan of the legal system in US or CA, especially with the attack on privacy that seems constant in US&CA.

With all this in mind, what do you recommend for consolidation?

 

[sebastian]

Isn't it possible to simply appoint nominees in a company, such as in a US LLC, Cyprus, BVI, or Estonia?

 

[daniels27]

I suspect I’ll get a lot of suggestions to just go DE/WY/FL on this, but I’m not a huge fan of the legal system in US or CA, especially with the attack on privacy that seems constant in US&CA.

Surprisingly, there is not much as in transparent as those. You would need nominee directors and I'm most cases also nominee shareholders. Hong Kong, Singapore etc. all have public registers as does Europe.

How much are you willing to spend for the setup annually?

And how would you deal with a BVI company? Would you register it in Canada to pay taxes there? Wouldn't that registration defeat all the offshore privacy benefits?

 

[marct]

Isn't it possible to simply appoint nominees in a company, such as in a US LLC, Cyprus, BVI, or Estonia?

I suppose it is, but I would prefer privacy out of the box. I’m more concerned about easy public disclosure versus government awareness.

Surprisingly, there is not much as in transparent as those. You would need nominee directors and I'm most cases also nominee shareholders. Hong Kong, Singapore etc. all have public registers as doors Europe.

How much are you willing to spend for the setup annually?

And how would you deal with a BVI company? Would you register it in Canada to pay taxes there? Wouldn't that registration defeat all the offshore privacy benefits?

I’d like to spend something reasonable on it provided it does what I need it to. I know that’s not a great answer, but I’m largely unsure what cost I’m looking at. In an ideal world there’s the operating company, which will feed all the money off to the holding company. That holding company would be the UBO of the operating company, and I’d sit as UBO of the holding company.

 

[daniels27]

Yes, in this case US LLCs and Canadian LLPs work best. For other jurisdictions, there is no privacy out of the box combined with your banking requirements.

GoCardless supports EU, GB, CH, ZA, AU, NZ, US, CA. You may want to look into a Swiss AG with nominee director if you don't like North America.

 

[Marzio]

How much of your business is US vs Canada?

 

[jorge]

I can say you would out of interest (not to defiantly find a solution) upgrade your account to mentor group and study these threads
https://www.offshorecorptalk.com/forums/anonymity.51/

Also you can see @EliasIT thread, he managed to do exactly what you are looking for in Switzerland. I have no clue how and if it is possible for you in Canada.

 

[PhantomOf ThePits]

I can say you would out of interest (not to defiantly find a solution) upgrade your account to mentor group and study these threads
https://www.offshorecorptalk.com/forums/anonymity.51/

Also you can see @EliasIT thread, he managed to do exactly what you are looking for in Switzerland. I have no clue how and if it is possible for you in Canada.

Keep in mind if UBO shareholder is NOT a Swiss resident, there's a risk of UP TO 35% Swiss withholding tax on dividends

https://taxsummaries.pwc.com/switzerland/corporate/withholding-taxes

Therefore, as non Swiss resident, look for example in Liechtenstein or such

 

[marct]

How much of your business is US vs Canada?

Most clients are US, EU and APAC based. There is very little Canada based.

 

[Marzio]

Most clients are US, EU and APAC based. There is very little Canada based.

If that's the case this is a prime opportunity to test out one of the Canada greatest loopholes i ever read.

This is what i would do: I would form a company in Barbados and then an EPC in Canada where I will be managing the daily operations.

Your EPC will deal with Canada banks so you can open one even online and in Barbados there are at least 2 Canada Banks. If i'm not mistaken there's Scotia and RBC so i guess it should be relatively easy to open a bank account for your Barbados company.

If the informations in that article are correct all income from US, EU and APAC will be tax free and you will only have to pay Canada taxes if you have income from Canada.

All that income will flow from the Canada EPC to the Barbados company tax free ready to be distributed again tax free because it's foreign sourced income.

You, as the EPC manager could decide your salary based on the personal income tax bracket you are comfortable with.

Now, this is the theory. You have to consult with somebody in Canada to verify that those informations are correct. If you are going to go down this path please update this thread.

 

[daniels27]

I think this won't work as he has a permanent establishment in Canada and is managing the company from Canada. He would have to hire managers in Monaco etc.

But as per my post above US LLC and Canadian LLP would provide him the privacy he wants. Although in a jurisdiction he does not want.

 

[Marzio]

I think this won't work as he has a permanent establishment in Canada and is managing the company from Canada

Yes, he is managing the company from Canada through the EPC registered in Canada.

He would have to hire managers in Monaco

Not sure what Monaco has to do with it.

 

[daniels27]

Yes, he is managing the company from Canada through the EPC registered in Canada.

But then it would be tax resident there?

Not sure what Monaco has to do with it.

A place where you can manage a company without running into PE and tax problems.

 

[Marzio]

But then it would be tax resident there?

Yes, read the article.

it says that the EPC will have its own tax identification number, Canadian business address and it will be able to open bank accounts.

So it's a PE without tax any implications if it doesn't do business in Canada.

As i said this has to be verified but i thought it would be a great opportunity both for OP and us to verify those informations.

If confirmed this could be one of the greatest loopholes i ever read (if you don't do business in Canada)

 

[marct]

Yes, read the article.

it says that the EPC will have its own tax identification number, Canadian business address and it will be able to open bank accounts.

So it's a PE without tax any implications if it doesn't do business in Canada.

As i said this has to be verified but i thought it would be a great opportunity both for OP and us to verify those informations.

If confirmed this could be one of the greatest loopholes i ever read (if you don't do business in Canada)

I’ll reach out to my local accountant and lawyer to see if this loophole would work.

 

[Marzio]

I’ll reach out to my local accountant and lawyer to see if this loophole would work.

Better ask a really good one and even seek a second advice.

Please report to us your findings.

 

[jorge]

Keep in mind if UBO shareholder is NOT a Swiss resident, there's a risk of UP TO 35% Swiss withholding tax on dividends

https://taxsummaries.pwc.com/switzerland/corporate/withholding-taxes

Therefore, as non Swiss resident, look for example in Liechtenstein or such

True, but there are such in Switzerland I discussed it with someone, so no problem at all.

 

[daniels27]

True, but there are such in Switzerland I discussed it with someone, so no problem at all.

There are what in Switzerland? Fake UBOs to get around WHT? Yes, there certainly are, but then, they are taxed on their personal / coporate level on dividends.

 

[daniels27]

Yes, read the article.

The article is from denationalize.me. The are catering to PTs that are far off from Canada. Like the ones that buy their Paraguay residency. It won't work for Canadians.

 

[Marzio]

It won't work for Canadians

Why not?

It's not like he is managing the offshore company from Canada pretending to not be tax resident in Canada.

His offshore company will form an EPC to do business where he lives.

He will do business throught the EPC.

The day to day activities will be performed by him in Canada.

The fact that he "unfortunately" doesn't have many clients in Canada isn't his fault!