What is ODI and do I have to report it every year?
It is overseas direct investment made from India, meaning money or assets put into a company abroad, and yes, it brings annual performance reporting that runs for the life of the investment. That last point is the one people miss. The reporting is not a formality completed when the investment is made and then forgotten. It continues year after year while the holding exists, and it asks how the overseas entity has actually performed. An investment made once creates an obligation that has to be diarised, and a subsidiary nobody thinks about is still one that has to be reported.
I set up a company abroad from India, what do I have to file?
Two things, and they are easy to confuse. There is the reporting of the investment itself, which records what went out and into what, and there is the continuing annual reporting on how that investment is doing, which keeps running afterwards. The second depends on the overseas entity producing accounts, so the practical constraint is usually the foreign company's own reporting calendar rather than anything in India. Build the annual cycle backwards from that date, and make someone responsible for it, because an overseas structure set up by a founder is typically the thing nobody in the finance team has been told about.
What happens if I stopped filing my annual ODI reports years ago?
The obligation does not lapse because it was ignored, so the gap remains until it is addressed. The work is to rebuild the record year by year from the overseas entity's accounts, which means going back to the foreign auditor or accountant for statements that may never have been sent to India. Where the entity has been dormant, that is itself something to report rather than a reason not to report. Expect the reconstruction to take longer than the reporting does. Start it before a sale, a bank query or a restructuring puts a deadline on it.
Does ODI reporting stop when the overseas company stops trading?
Not on its own. The reporting attaches to the investment for as long as it is held, so a subsidiary that has stopped trading but still exists is still a holding to report on, and a dormant year is a reportable year. What ends the obligation is unwinding the investment properly, by disposal or liquidation or whatever the local law requires, and recording that it has happened. Companies often stop filing at the point the business stops, which leaves an open reporting trail behind an entity that no longer does anything. Close the structure deliberately rather than letting it go quiet.
Do I report an overseas subsidiary that has never made a profit?
Yes. The annual reporting is about performance, and a loss, or no activity at all, is performance. There is nothing to be gained by waiting until the overseas company has something positive to report, and a gap in the record is harder to explain than a run of poor years. Where the entity has genuinely done nothing, the reporting itself is short. The work sits in obtaining accounts that say so, in a form that can be used in India, from an overseas accountant who may not understand why they are being asked for them.
I have moved abroad, do my old ODI obligations follow me?
Emigration changes your residence, but it does not by itself tidy up a structure set up while you were resident, and whoever is on record as the investor in India remains associated with the holding until the position is formally dealt with. This is a common shape: a founder leaves, the overseas subsidiary carries on, and the annual reporting quietly stops. Establish which years you were resident, what was reported in those years, and what the current structure actually looks like. Then decide whether the investment is to be unwound, transferred or continued, and report accordingly.
How would a foreign tax authority know I am resident there?
Mostly from information you or your bank already provided. Account-opening forms ask you to self-certify tax residence, and that certification is reported between authorities under the Common Reporting Standard or, for US accounts, under the FATCA framework. Beyond that: employer and payroll filings, property registries, immigration records and the tax filings of anyone who paid you. The realistic planning assumption is that the data arrives. See FATCA and information reporting.
Do Canada and the United States share tax information?
Yes, through more than one channel. The treaty has an exchange-of-information article that supports both routine and on-request exchange. Separately, an intergovernmental agreement has Canadian financial institutions identify US-reportable accounts and report them to the CRA, which passes them to the IRS, with the reverse flow for Canadian residents. Most other country pairs use the Common Reporting Standard for the same purpose. See FATCA reporting.
