I moved abroad but my medical corporation stayed here — what now?
You now have two tax positions to manage instead of one, and they interact. The corporation does not stop being your problem because you left the country: it carries on filing where it has always filed, keeps its obligations for anyone still working in it, and keeps whatever year end and instalment pattern it had. What changes is that the person directing it is no longer in that country, and that you are now resident somewhere with a view of its own about a company you control abroad. Both halves move on the same date, the date you leave, and the answers to them sit in two different countries' rules. Settle them together in the first year. Fixing one and leaving the other is what creates the expensive version of this.
Where is my medical corporation resident if I direct it from overseas?
Residence for a company follows management, and management means the place where the real decisions are taken, rather than the registered address or the address on the letterhead. If you have moved and you are the sole director, board decisions are being taken where you now live. That can make the corporation resident in your new country while it remains resident in the country of incorporation under that country's own rules. Where a treaty applies there is normally a mechanism to resolve a company with two residences, but it has to be applied deliberately and evidenced. The evidence is your minutes, your signatures, and where meetings actually happen.
Can I keep billing through my dental corporation after I emigrate?
Often you can, but the corporation may no longer be the right vehicle, and the answer turns on where the clinical work is now being performed. If you are treating patients in your new country, that income arises there, and the professional licensing rules there usually govern how it may be billed. A corporation left behind that invoices for work done elsewhere tends to attract questions from both tax authorities. Take advice on the structure before the first invoice is raised under the new arrangement. Unwinding a billing pattern after a year of it is harder than choosing one at the start.
Are my associates employees or contractors when they cross the border?
The two countries may answer that differently on the same facts, which is how practices end up treating comparable associates inconsistently. The tests generally look at control over how the work is done, who provides the premises and equipment, who carries the financial risk, and whether the associate may send someone else. A clinic supplies the surgery, the equipment, the staff and the patient list, which is why associate arrangements so often look like employment when a tax authority examines them. Write the agreements to match how the practice actually operates, and apply the same treatment to every associate engaged on the same terms.
Do I need to value goodwill before restructuring my practice corporation?
Yes, and it is a step that is often skipped. A restructuring moves assets between people or entities, and each movement is measured at value for tax purposes whether or not money changes hands. In a practice the equipment is the easy part. The goodwill, meaning the patient list, the location and the recurring recall book, is where the value usually sits and where nothing has ever been written down. If the value is not established at the time, it will be established later by someone else, working backwards, without your evidence. Commission the valuation before the transaction, not when a query arrives.
Is my professional corporation a foreign company now that I have left?
From your new country's point of view it probably is, and that is a reporting question as much as a tax one. Most countries require a resident who controls or holds a substantial interest in a company abroad to disclose it, and some tax part of that company's income in the shareholder's hands before any dividend is paid. The obligation usually starts with your residence, not with a payment out of the company. So the first year abroad is often the first year something is due, even though you received nothing. Establish what the disclosures are in the year you arrive.
Would a state exit tax even be constitutional?
A levy imposed purely for leaving would face serious challenge under the constitutional protections for interstate commerce and the right to travel, which is part of why proposals stall. But that is not what most states are doing. Taxing income that was earned or sourced within the state before you left is conventional, long upheld, and where almost all real disputes sit — which is why the useful question is sourcing and domicile, not constitutionality. See state non-resident returns.
What is double tax relief and how is it given?
Three mechanisms, and which one you get depends on your residence country's law and the treaty. Exemption leaves the foreign income out of the residence-country base. Credit taxes it and then subtracts the foreign tax, capped at the residence-country tax on that income. Deduction merely reduces taxable income by the foreign tax, and is usually the weakest. Canada and the United States lead with credit; several treaties give exemption for specific income types. See claiming the credit.
