Turner Little - Company Formation Agents & Banking Intermediaries.Chat to a member of our sales team.
Mentor Group

Canadian parent company

If you are looking for professional assistance and information about everything that people do not write about.
NEW! We offer text link placements in two of the busiest forums.
Requires active Mentor Group Gold membership!

Xerkki

New member
Hello.

Any experience to pay dividends from UK holding company to Canadian Ltd. which own 100% shares of this UK holding company?
(UK company gets dividends and interests from EU)

Is there 5% tax for dividends or how between UK and Canada on this case?

This is not under Canadian corporate tax either?
Im not a citizen of UK or Canada.
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
You need to pay CIT @20% then the dividends are free to be delivered wherever you want.
 

Xerkki

New member
But is it like this....
Income from Denmark to Danish company.
Danish company pay corporate tax to Denmark.
After this UK holding company takes dividends.
5% witholding tax but no corporate tax to UK based on DTA between UK and Denmark (because corporate tax already paid to Denmark)
UK company then pays dividends to Canada (UK and Quebec do not tax non-residents from their foreign income).
So on this point corporate tax is paid or not?
UK and Canada have also DTA.
But on this Action there is 5% witholding tax also?
 

JustAnotherNomad

Entrepreneur
There shouldn’t be WHT from DK to UK because of the parent-subsidiary directive (PSD). But of course that can change with Brexit.

The way I understand it, the UK generally does not charge WHT on dividends:

So you should probably also be able to send the dividends from the UK company to Canada without paying additional taxes. But that would only work if there is substance in the UK.

I’m assuming your plan is to use the UK holding company to avoid Danish WHT on dividends? That’s called treaty shopping, so it’s important that you have substance in the UK and good advisors in DK.
 
Last edited:

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
The plot thickens.
You have Danish regulations, UK, Canadian and the final jurisdiction of the funds for you to access.
It seems over complicated, so to give you a full opinion we need to know where the funds will end up.
 

JustAnotherNomad

Entrepreneur
But why the complicated setup? You don’t live in Canada, do you?
Just use an Estonian holding company (to avoid issues with Brexit):

Or even better, just move to Estonia:

If you live in Estonia and your company actually has operations in DK (employees etc.) and it is not managed from Estonia, then you only pay the Danish CIT. No personal income tax will need to be paid. Estonia is a Schengen country and there is no minimum number of days to spend in the country. You would just have to make sure you’re no longer tax resident in DK, but that should be quite easy.
 

Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
Income from Denmark to Danish company.
Danish company pay corporate tax to Denmark.
Ok

After this UK holding company takes dividends.
UK company makes use of EU parent subsidiary so no further tax is due on dividends distributed to EU parent company (i.e UK company). This was implemented by EU to avoid the same corporate income being taxed twice between a parent company and its subsidiary.


5% witholding tax but no corporate tax to UK based on DTA between UK and Denmark (because corporate tax already paid to Denmark)
No. See EU Parent subsidiary above discussed above.

UK company then pays dividends to Canada (UK and Quebec do not tax non-residents from their foreign income).
5% tax is applies where Canadian company owns at least 10% of paying UK company. If dividends are paid to a Canadian person and not company than tax is 15%. If you are a non-resident in Canada check DTA to see if you even have access to the DTA.

So on this point corporate tax is paid or not?
Yes its paid

UK and Canada have also DTA.
Yes

But on this Action there is 5% witholding tax also?
Yes. Dividend WHT rate of 5% for Canadian company and 15% for Canadian person. So depends who receiving it.
 
Last edited:

NicolasMaduro

Active Member
As Justnomad says you cant use UK as a pass trough entity then Denmark will tax you. And I think his suggestion to simply use Estonia Holding is one of the cheapest and headache-free solutions. You have eID to sign eveything. And you only pay Danish Corporate tax since Estonia dont tax dividends and they dont do 20% cit tax if u already paid in Denmark
 

Xerkki

New member
Thank you for your answers.
My colleague just want the money out from EU (Ok, UK is not an EU member anymore but he rather want more far) this is why Canada was there as a reputable jurisdiction.
 

JustAnotherNomad

Entrepreneur
Ah, I see. Because with the Estonian holding company you would also be able to get the money out of the EU, but the structure would be much simpler.
However, we don’t know anything about the recipient. Danish CFC rules etc. could foil the plan.
 
Fast Offshore - Company Formations Since 1998
Mentor Group
Mentor Group
Top