Cross-border M&A tax due diligence — how much of this can I do myself?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: diligence prices those exposures, decides which are covered by indemnity and which by escrow, and shapes the acquisition structure so the buyer inherits a defensible base rather than an open one.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
What tax problems usually show up in cross-border acquisition due diligence?
Less often than buyers expect, the problem is on the income tax return. The recurring findings are unfiled information returns, intercompany pricing that was never documented, and withholding that was deducted in principle but never remitted. Each has its own limitation position, and each is priced differently in a deal: some are quantifiable and go to the price, some are contingent and go to an indemnity, and some are large enough that the buyer wants cash held back. Diligence exists to sort them into those categories before signing rather than after.
Should a tax exposure go into an indemnity or an escrow?
It depends on whether you can measure it and whether you can collect on it. An exposure you can quantify, such as a known filing gap with a calculable cost, can usually be dealt with in the price. One that depends on a tax authority taking a view, and might arrive years later, belongs in an indemnity. An escrow is for the case where the indemnity is worth only as much as the person giving it: the money sits with a third party so the promise does not rely on the seller still being solvent when the assessment lands.
Do we inherit the seller's tax history if we buy the shares?
Buying shares means buying the company with everything that has already happened inside it, including filings that were never made. The entity's history stays with the entity. Buying assets leaves most of that behind, but brings its own consequences, because the price has to be allocated and some obligations follow the business rather than the company. Where diligence finds a history nobody can bound, the structure is often the answer rather than the warranty package, because a warranty only helps if the exposure surfaces while it is still enforceable.
Why does intercompany pricing matter so much in a deal?
Because it is the one exposure that is both invisible on the face of the accounts and open in more than one country at once. If the agreements between group companies do not describe what the entities actually do, every year in which profit was allocated on those terms is arguable, and an adjustment in one country does not automatically produce relief in the other. For a buyer that means the exposure is not capped at the tax in a single jurisdiction. It is priced accordingly, and the fix normally starts after closing with documentation written to match the real functions.
What tax work is needed after a cross-border deal closes?
Integration has filing consequences everywhere the group touches. Moving people onto one payroll, redirecting intercompany flows, merging or liquidating entities, changing who owns what: each is a taxable or reportable event somewhere, and the order matters. The practical risk is that the commercial integration plan runs ahead of the tax one, so entities are collapsed before their accumulated position is understood, or contracts are novated to a company that then has a presence it did not have before. The work is to sequence the steps and file what each one triggers.
Does an unfiled information return matter if no tax was owed?
Usually yes, and that is what makes it a diligence issue rather than an accounting one. Information returns report positions and relationships, so the exposure attaches to the failure to file and not to a balance of tax. An entity can be fully paid up and still carry years of open exposure, and because nothing was owed there is nothing in the accounts to prompt anyone to look. On a share purchase that exposure moves with the company, which is why the file is read return by return rather than by looking at the tax charge.
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.
How much foreign income is tax-free in Canada?
None of it is tax-free for being foreign. A Canadian resident is taxed on worldwide income, so foreign salary, interest, dividends, rent and gains all go on the return, converted to Canadian dollars. What genuinely reduces the bill is the basic personal amount, the credit for foreign tax already paid, and any treaty article that exempts a specific type of income. The reporting thresholds people have in mind — the foreign property statement, for one — govern reporting, not exemption. See the foreign tax credit.
