Should I sell the shares or the assets of my company?
The two routes are taxed differently, and the difference is often the largest single number in the deal. A share sale puts the gain in the founder's hands, where the reliefs that attach to shares can be available. An asset sale puts the proceeds in the company first, so the profit is taxed there and taxed again when the money is drawn out to the founder. Buyers commonly prefer assets, because they take a fresh cost base and leave historic liabilities behind. That preference is negotiable and it has a price. Model both before the letter of intent, because after it the form of the deal is part of a bargain you have already struck.
How early should I start planning an exit from my company?
Years rather than months. The reliefs that change the net proceeds are tested on the transaction date, but what they test is history: whether the shares qualified, how long they were held, what the company owned over the period before the sale, and where the founder was resident. None of that can be created at closing. The practical consequence is that planning done early is ordinary housekeeping, while the same steps taken close to a deal look like steps taken for the deal, and are read that way. The useful question at the start is not what the company is worth, but what would be true on the day it sold.
Do my shares qualify for the lifetime exemption or not?
Qualification is a condition of the shares and of the company behind them, and it is tested on the transaction date and over a period running back from it. What tends to break it is not the trade but what has accumulated alongside it: surplus cash that was never paid out, an investment portfolio held inside the trading company, property the business does not use. Those are not defects in the business; they simply are not what the relief is aimed at. Checking this early gives time to move the passive items out in the ordinary course, which is a different thing from moving them out because a buyer has appeared.
Can we still restructure after signing the letter of intent?
Usually not usefully. Two things have already happened by then. The tests that matter look back over a period, so a step taken now does not change what was true over the months behind it. And the purpose of the step is visible: it sits in the data room, dated after the deal was agreed, and it will be read alongside the transaction rather than apart from it. There is still work to do at that stage, but it is documentation and allocation work rather than structuring. If a restructuring is worth doing, it is worth doing before there is a buyer to date it against.
Will moving abroad before closing change the tax on my sale?
Residency at closing is one of the facts the outcome turns on, so a move that straddles a sale changes the question rather than answering it. Leaving a country has consequences of its own for assets held on departure, and arriving in another brings that country's rules to bear on what happens afterwards. A treaty may then allocate the gain between them. What we see go wrong is a move made for family or commercial reasons with the closing date fixed independently, so the two collide. Fix the order deliberately: decide when residency changes, then place the closing, rather than the reverse.
My company is in one country and I live in another, who taxes the sale?
Both may have a claim under their own law, and the treaty between them decides how that is resolved. Broadly, a gain on shares is often taxable where the seller is resident, but treaties commonly reserve a right to the country where the company sits when the company's value comes mainly from land and buildings there. So the answer depends on what the company owns, not only on where it is registered. Read the treaty that actually applies before assuming the residence country has the only claim, and keep the evidence of the company's asset mix, because that is what the analysis rests on.
Is "fund transfer pricing" the same thing as transfer pricing?
No — and if you came here to calculate FTP, this is not it. Fund transfer pricing is a bank's internal allocation of funding costs and benefits between its own business units, a treasury and asset-liability management discipline used to measure branch or product profitability. Tax transfer pricing is about prices between legally separate related parties across borders, and about which country taxes the resulting profit. The words overlap; the fields do not. See our transfer pricing work.
Do American citizens living abroad have to pay taxes?
American expats and green card holders need to file US returns for life, and many of them pay little or no US tax once the relief is applied — but the filing is what unlocks the relief, so the two questions have different answers. The exclusion for foreign earned income, the credit for foreign tax already paid and the treaty between the two countries between them usually leave the total at roughly the higher of the two countries' tax rather than the sum. Skip the return and none of it applies. See Americans abroad.
