Offshoring -regiatering an LLC

Is this for an active business or would it be for investment income?

TitusBobby wrote: ↑ So I was just watching Sorelle Amore's youtube video on offshoring and it made a lot of sense to register a corporation in UK or HK for the 0% corporate tax. (Link to the video below). Especially the registering an LLC part in the UK whiich according to her only costs 50 Euro and gives you the added benefit of being able to have a UK bank account (unfortunately that doesn't mean having an EU bank account anymore ).

Anyone have any practical experience in this regard and can reccomend more resources?

crossborderguy wrote: ↑Is this for an active business or would it be for investment income?

Active business ..

Your offshore corp can be deemed resident of Canada and pays cdn taxes if its central management and control are in canada. etc

A non reisdient corp also pays cdn taxes if it carries on a business in Canada thru a pemanent establishment (i.e., office, factory, etc),

READ MORE HERE:
https://www.canada.ca/en/revenue-agency ... ation.html

fkungery wrote: ↑Your offshore corp can be deemed resident of Canada and pays cdn taxes if its central management and control are in canada. etc

A non reisdient corp also pays cdn taxes if it carries on a business in Canada thru a pemanent establishment (i.e., office, factory, etc),

READ MORE HERE:
https://www.canada.ca/en/revenue-agency ... ation.html

Doesn't this depend on the tax treaty that exists between the two countries, ie. between Canada and where the offshore is registered?

TitusBobby wrote: ↑ Doesn't this depend on the tax treaty that exists between the two countries, ie. between Canada and where the offshore is registered?

Yes, the cdn tax treaty with another country would override the cdn tax act. If an offshore affiliate is deemed to be a cdn resident corporation, but the tax treaty says otherwise, subsection 250(4) would consider that offshore affiliate not a cdn resident corp.

However, all cdn tax treaties with other countries are modelled after the OECD Model Treaty, that provides the tie breaker rules to decide the residency of a corporation. Article IV.3 states that the corp is considered to be a resident in a country where its place of effective management is situated. So, if u set up an offshore affiliate in HK or in any tax haven countries, but u manages that corp from Canada, that HK corp would be considered as a cdn resident corp under the relevant tax treaty.

fkungery wrote: ↑ Yes, the cdn tax treaty with another country would override the cdn tax act. If an offshore affiliate is deemed to be a cdn resident corporation, but the tax treaty says otherwise, subsection 250(4) would consider that offshore affiliate not a cdn resident corp.

However, all cdn tax treaties with other countries are modelled after the OECD Model Treaty, that provides the tie breaker rules to decide the residency of a corporation. Article IV.3 states that the corp is considered to be a resident in a country where its place of effective management is situated. So, if u set up an offshore affiliate in HK or in any tax haven countries, but u manages that corp from Canada, that HK corp would be considered as a cdn resident corp under the relevant tax treaty.

So this is why many offshores hire a local resident as director and get a local address on paper

TitusBobby wrote: ↑ So this is why many offshores hire a local resident as director and get a local address on paper

Hiring a local resident as a director and get a local address on paper do not necessary make an offshore affiliate a non resident of Canada. You have to show that hired local director, not you in Canada, make all top level management and business decisions of the offshore affiliate, because u need to satisfy the deciding factor of "place of effective management" as defined in the OECD Model Tax Treaty commentary.