Selling post-relocation

[liroyb]

John Doe is a resident of country A.

John creates a product while residing in country A (No income from the product at this point).

John relocates to country B (Completely genuine, and even received tax certificates every year).

While being resident of country B, John sells the product he created (including intellectual property rights) to a third-party company.

In a nutshell:
Created the product as a resident of country A.
Sold the product as a resident of country B.

In which country the sale proceeds should be taxed?

 

[Sols]

Depends on the laws of Country A and Country B.

Generally speaking, though...

John might be required to pay tax in Country A for some period until he ceases to be tax resident in Country A.
John might be required to pay tax in Country B right away and definitely once he becomes tax resident in Country B.

If John sells the product while still tax resident in Country A, Country A can seek to tax him.

If there is a period during which John must pay tax in both countries, John can hopefully leverage a tax treaty or tax credit law to avoid paying double tax.

 

[daniels27]

I would say it really depends on the countries. What you are talking about is the typical case of exit tax on (corporate) goodwill. When moving out of A, your company would be taxed on the goodwill created. Upon taking up corporate residence in country B, you may be granted an immigration step-up whereby your goodwill will result in a tax credit that can be applied for a certain number of years post migration.