The CFC rules and 3 countries

[gnud]

If I live in country A near a border with country B, I have a company incorporated in country C, it has no employees there, and I rent an office on the company name in country B, commute there every day and work and manage the company from there, where will the company be taxed?

country A has CFC rules
country B has no CFC rules
country C had CFC rules

 

[Marzio]

As soon as you perform work in country B you are creating a permanent establishment there so the company will pay taxes in country B.

Of course as soon country A will find out that you own an offshore company will ask you to pay taxes on all the income generated by that company minus what you already paid in country B.

 

[gnud]

marzio said:
As soon as you perform work in country B you are creating a permanent establishment there so the company will pay taxes in country B.

Of course as soon country A will find out that you own an offshore company will ask you to pay taxes on all the income generated by that company minus what you already paid in country B.
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Why would country A demand any taxes when the company is not incorporated there, has no permanent establishment there, and is not managed from there?
Country B doesn't have any CFC rules.

 

[cangarooo]

Country A will ask taxes on what you (as person) will get as potential compensation.
If there's a double taxation treaty between country A and B, then taxes on personal income might be reduced or completely avoided.

 

[Marzio]

gnud said:
Why would country A demand any taxes when the company is not incorporated there, has no permanent establishment there, and is not managed from there?
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Because you are tax resident there?

 

[gnud]

Yeah, but that's my personal income, i.e. what I pay myself.
But I'm interested in how the itself company would be treated, since it's not incorporated in country A, has no permanent establishment there, and is not managed from there. I don't see how country A can appropriate it. Country B wouldn't because it has no CFC rules.

Last edited: Oct 5, 2021