Cross-Border Taxation Consulting

𝐘𝐨𝐮𝐫 𝐜𝐡𝐢𝐥𝐝 𝐦𝐨𝐯𝐞𝐝 𝐭𝐨 𝐭𝐡𝐞 𝐔.𝐒. 🇺🇸 𝐘𝐨𝐮𝐫 𝐭𝐚𝐱 𝐩𝐥𝐚𝐧 𝐬𝐭𝐚𝐲𝐞𝐝 𝐢𝐧 𝐂𝐚𝐧𝐚𝐝𝐚 🇨🇦 If you’re a high-net-worth Canadian business owner with one or more U.S.-resident (or U.S. citizen) children, your estate plan just crossed international borders, and with it, a whole new tax code. Here’s what you must consider to keep your legacy from becoming a liability. 🇨🇦 Meets 🇺🇸: Dual Jurisdiction = Double Trouble Canadian tax planning rarely translates smoothly to the U.S.; what works in the U.S. can create problems under Canadian tax rules. Common Issues • Canadian trusts with U.S. beneficiaries → Trigger U.S. reporting (Forms 3520/3520-A), may cause “throwback tax” • U.S. heirs to Canadian private company shares → No U.S. step-up in ACB = double tax risk • Gifting private assets across the border → Deemed disposition in Canada; disclosure requirements in the U.S. • U.S. persons holding Canadian mutual funds/ETFs → Often taxed as PFICs—high complexity, high penalty risk Trust Planning with Treaty Considerations The Canada–U.S. Tax Treaty can offer relief for: • Double taxation in certain trust situations • Tax on capital gains from certain assets • Use of foreign tax credits to offset cross-border tax But relying on the treaty requires: ✔ Careful coordination ✔ Treaty-based return disclosures ✔ A strong tax team on both sides of the border Gifting & Equalization Want to gift shares or insurance proceeds to a U.S. child? → Triggers Canadian capital gains tax → May also trigger IRS gift tax disclosures Instead: ✔ Consider gifting cash ✔ Equalize estates with life insurance ✔ Use testamentary trusts to delay rollout and preserve flexibility Annual gifting limits ($19,000 USD in 2025 per person, $38,000 per couple) won’t move the needle in HNW estates, but can reduce friction over time. 🧠 Strategic Tools • Life insurance to fund Canadian and U.S. tax liabilities • “Check-the-box” elections for CFCs held by U.S. heirs • Hybrid trust structures with U.S. exclusions • Post-mortem pipeline or redemption strategies • Corporate reorgs to split value before succession Final Thought U.S.-resident children don’t just inherit shares, it they inherit IRS filing obligations. ❌ Ignore the treaty and risk double taxation ✅ Use it smartly, and you keep your legacy intact International estate planning is never simple. But with the right structure, your business can cross borders—without taking your tax bill with it. #CrossBorderTax #EstatePlanning #CanadaUS #TaxTreaty #CanadianBusinessOwners #TrustPlanning #Inheritance #USCitizensInCanada #LegacyPlanning #LifeInsurance #HoldcoStrategy #PFIC #AdvisorLeadership

UAE Tax Alert: Mutual Agreement Procedure (MAP) Guidance Just Released! Did you know that UAE businesses and individuals facing double taxation due to cross-border issues—like transfer pricing adjustments, dual residency, or permanent establishments—can now formally apply for relief through the Mutual Agreement Procedure (MAP)? This comprehensive new guidance clarifies: 1. When MAP applies (e.g., TP audits, dual residence conflicts) 2. The strict documentation you must submit 3. How MAP interacts with domestic legal remedies 4. The 3-year time limit (and how to act before assessments hit) Feel free to reach out if: 1. You're unsure if MAP applies to your case 2. You need help preparing a MAP submission 3. You're navigating residency tie-breakers or DTA relief Let's make double taxation a thing of the past. Read the detailed analysis of the guidelines and share your thoughts! CA Sanjay Agarwal | CA Neha Agarwal | CA Vishal Thappa #tax #uae #oecd #beps #ca #dubai

BUILDING A TAX EFFICIENT SUPPLY CHAIN (TESC): LEVERAGING DTTs AND FTAs FOR GLOBAL SUCCESS INTRODUCTION: A Tax Efficient Supply Chain (TESC) minimizes tax liabilities and tariffs by leveraging Double Taxation Treaties (DTTs) and Free Trade Agreements (FTAs). This approach reduces cross-border costs, boosts profitability, and ensures compliance. DTTs: A TOOL TO AVOID DOUBLE TAXATION A DTT prevents income from being taxed twice — in the source and recipient countries. Key benefits include: Lower Withholding Taxes – Reduces taxes on dividends, interest, and royalties. Tax Credits/Exemptions – Offsets taxes paid abroad. Profit Repatriation – Ensures smooth profit transfers. Double Taxation Prevention – Covers goods, services, and IP. Example: A tech firm locates IP in Ireland, benefiting from reduced royalty taxes. FTAs: BOOSTING CROSS-BORDER TRADE FTAs eliminate or reduce tariffs and trade barriers. Benefits include: Tariff Elimination – Cuts import/export costs. Simplified Customs – Faster border movement. Rules of Origin (ROO) – Provides preferential tariffs. Market Expansion – Enables easier market entry. Example: A company sources from Vietnam and exports to the EU, enjoying zero tariffs via the EU-Vietnam FTA. INTEGRATING DTTs AND FTAs: 1. Hub Strategy: Establish hubs in DTT/FTA-rich countries (e.g., Singapore, Switzerland). 2. Import/Export Savings: Source raw materials from FTA partners. 3. IP Placement: House IP in DTT-friendly countries. DESIGNING FOR TAX EFFICIENCY: Align Transfer Pricing with Customs – Avoid disputes through DTT-compliant pricing. Bonded Warehouses – Defer duties until goods enter markets. VAT/GST Planning – Optimize indirect tax structures. CHALLENGES: Complex Compliance – Regular audits ensure smooth navigation of multiple treaties. Operational Costs – Conduct feasibility studies before establishing entities. Customs Risks – Keep detailed records to avoid misclassification. CASE STUDY: A global electronics firm used Switzerland as a hub, with manufacturing in Vietnam and China. DTTs and FTAs reduced taxes by 20% and tariffs by 15%, accelerating market entry. CONCLUSION: TESC – A WINNING FORMULA FOR GROWTH Integrating DTTs and FTAs into your supply chain is a strategic advantage that cuts costs, enhances profitability, and streamlines operations. A well-designed Tax Efficient Supply Chain (TESC) not only improves compliance but positions your business to thrive in global markets. Unlock new value today—optimize your supply chain with smart tax strategies!