Move IP offshore?

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arbutus
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Move IP offshore?

Post by arbutus »

Hi everyone!

I own a company that sells digital products online - ebooks, e-courses etc. We have started to make some decent money, and I'm trying to figure out some ways to cut our taxes.

We are already looking into a Holdco and potentially a Family Trust. Plus some other things. But I want to ask everyone's opinion about moving our IP offshore.

Here's what I guess we would do:
1. Open a Bahamas company (IPco) as a subsidiary of our Canadian Opco.
2. IPco purchases the IP from Opco.
3. Opco leases the IP back from IPco.

The advantages I can see are that:
A. You protect your IP from lawsuits/creditors.
B. The money paid for licensing the IP goes offshore, and no corporate income tax is paid on it. Then you can transfer it back up to Opco, also tax-free, thanks to the tax treaty.

The disadvantages are that:
A. It will cost more for accounting, fees etc.
B. Opco would crystallize a capital gain on the sale of the IP.

Before anyone suggests this... yes, I will be discussing it with my accountant. And I would only go ahead after consulting with a lawyer as well. We would value everything appropriately, and make sure that we're 100% above the law.

Thanks!
gobsmack
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Re: Move IP offshore?

Post by gobsmack »

I always thought this type of move would only be worthwhile in the case of very large companies.
arbutus
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Re: Move IP offshore?

Post by arbutus »

Thanks for your reply. I have a feeling that this might fall foul of the General Anti-Avoidance Rule. When I speak to my accountant, I'll put his answer in here.
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