Winding up a foreign subsidiary — 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: the liquidation distribution is characterised under the parent's rules, which may treat part of it as a dividend and part as proceeds.
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.
Do I still have to file after the foreign subsidiary is dissolved?
Yes, and the final period is usually the one people forget. Dissolution ends the company's existence under local company law; it does not retrospectively cancel the tax and information returns due for the period up to that point. A final return covering the stub period is normally required, information returns for the group may be due for that period even where nothing traded, and the parent's own reporting on the foreign entity continues for the year of the wind-up. Leaving the filings until after deregistration is harder than doing them before, because the people and access needed to prepare them tend to disappear with the entity.
How is money received when a foreign subsidiary is wound up taxed?
The distribution on liquidation is characterised under the parent's own rules, not by what the local company law calls it. Part of what comes out may be treated as a dividend and part as proceeds on the disposal of the shares, and the split depends on the entity's accumulated profits and the parent's cost in the shares. That matters because the two components can be taxed differently and can attract different relief for foreign tax. Establishing the surplus position and the share cost before the distribution is made is what allows the treatment to be stated rather than argued about afterwards.
Can I just stop filing for a dormant foreign company?
Abandonment is not a wind-up. A company left alone remains registered, and registration carries obligations that accrue quietly: annual returns, minimum charges in some jurisdictions, and the parent's own information reporting on a foreign entity it still controls. Penalties often accumulate per return rather than by reference to tax owed, so an entity with no income can build a real liability. Directors may also remain personally exposed under local law. The wind-up is a process with an end point and a clearance; walking away leaves an open file that surfaces later, usually during a transaction.
What is tax clearance and why is it holding up my deregistration?
Most jurisdictions will not strike a company from the register while its tax position is open, so the registry waits for confirmation from the tax authority that nothing is outstanding. That confirmation depends on every return being filed, every assessment being settled, and often on payroll and sales tax accounts being formally closed rather than simply left inactive. Clearance is therefore the last step, not the first, and it is where an unfiled return from an earlier year will surface. The practical approach is to work backwards from what clearance requires and complete those items before the application is made.
The subsidiary had no activity last year — is a return still due?
Almost certainly. Filing duties usually attach to the existence of the company and the relationship between it and its parent, not to whether money moved. Information returns reporting a controlled foreign entity are the clearest example: they are due because the entity exists and is controlled, and a year of no activity is reported as such rather than skipped. A nil return filed on time costs very little. A missing one, on a form where the penalty is set per failure rather than as a share of tax, costs the same whether the company traded or not.
In what order should I wind up a foreign subsidiary?
Work backwards from clearance. Settle intercompany balances first, because a loan written off or left outstanding at the end can be characterised in ways that change the tax outcome. Deal with employees and any statutory obligations to them next, then close payroll and sales tax accounts formally. Establish the surplus position and the share cost before any distribution, since that is what determines how the distribution is treated. File the final returns, obtain clearance, then apply to deregister, and keep the books and records afterwards for the period the local rules require.
What is a permanent establishment, and how easily do we create one?
A taxable presence in another country under the treaty — typically a fixed place of business such as an office, branch, factory or workshop, or a dependent agent habitually concluding contracts on your behalf. Some treaties add a services test measured in days. Purely preparatory or auxiliary activity is excluded, but that carve-out is narrower than it sounds: one senior employee working from home in the other country, with authority, has been enough. See business profits and permanent establishment.
Why are corporations double taxed?
Corporate double taxation happens because the company and its owners are separate taxpayers. The company pays tax on its profit; when the after-tax profit is distributed, the shareholder pays tax on the dividend. Canada softens this with the dividend gross-up and credit, which is meant to leave a shareholder roughly where they would have been earning the income directly. The United States taxes the C corporation and then the dividend, with no equivalent integration. See dividends to a foreign parent.
