One of my clients is a foreign owned (Norway) Canadian Corporation, which now wishes to have its proprietory product manufactured in the USA for sale to US clients. They would like to manage those transactions under the Canadian Corp. I’m not sure where to start to look for the tax implications of this sort of arrangement. I’d appreciate being pointed in the right direction.
Look into permanent establishment rules in the US as that drives whether you have to file US tax returns for this company. Tax Returns are likely to be 1120-F (branch tax return) if only some of the company’s activities are in the US or an 1120 (full corporate return) possibly. From the sounds of it a US return would be required. I suspect however that if they want to open manufacturing and sales in the US they would be better off just incorporating in the US. Check into tax rates and whether they are affected by ownership structures like in Canada - where you can’t access the small business deduction if it is not a CCPC. I don’t know much about US corporate tax rules myself unfortunately.
Thanks Laurie, I expect you are right about a separate US Corporation – so getting outside my comfort zone.
Try Lyle Moline at Continental Tax or Tony Batti at Compasstax - both in Calgary - who probably have international US corp tax experience.
Thank you, I’ll do that