Hypothetical question

[manwithtoupe]

Imagine there's a guy called Rob.

Rob lives in a high tax EU13 country.

Rob plans to move to a country with territorial taxation later this year.

Rob also plans to form an IBC later this year.

To form the IBC, Rob will need to provide his residential address.

From a tax perspective, and taking CFC/CRS rules in the new country into account, would it be better for Rob to form the IBC before he is moving (using his old residential address, in the high tax country) or after he has moved (using his new residential address, in the territorial taxation country)?

 

[TacitusKilgore]

Just wanted to mention that for CFC purposes it won't matter what your residential address is recorded as. The IBC will still be a CFC under most CFC legislation.

For CRS/tax purposes it probably makes sense to open the company and bank account with the new residential address in the territorial taxation country.

The money will be being earned in the country of the bank account, and assuming this is a different country to the new residential country it will be considered foreign income by the taxation authority when reported through CRS and most likely not subject to taxation.
This is only if the bank account is not in the same country as the territorial taxation country, because obviously the income is going into a local bank account and then probably taxed.

Probably best to speak to a professional who can give you tailored advice though!

 

[JohnLocke]

It depends, most agency service will only update their records once every year. So, if there is a benefit in regards to tax regulations in his current country compared to the new country he moves to, then it may be a good solution, but it will be limited on time.

 

[James Turner]

If you intend to move to a territorial tax system in the future, I would suggest that it makes no difference if the company is created using your current address for the time being. This will be updated anyway when you have moved and by moving to a system of territorial tax CFC will by its nature generally not exist. If you intend to trade the company prior to moving and operate a bank account where CRS is applicable then you will be taxed up until the point you reside elsewhere at which point it will no longer apply. Any CRS sharing of information at that point would not be of concern.