Central mind and management

In Landbouwbedrijf Backx BV v Canada, 2019 FCA 310, the Court agreed that a Dutch company was resident in Canada because the central mind and management of the company was in Canada. The Court found the following facts to be determinative:

  1. the Dutch director had no prior experience in the business of the corporation (the operation of a dairy farm);
  2. the director merely accepted instructions from shareholders regarding the payment of bills and the execution of documents without participating in the decision-making process; and
  3. the director did not participate in certain e-mail exchanges between the shareholders and the advisers to address tax-planning issues.

The Court remitted the matter back to the Tax Court because it had not adequately analyzed section 128.1 of the Income Tax Act (Canada) or the effect of the Dutch treaty.

Shaira Nanji, “Corporate Residency: Landbouwbedrijf Saga Continues” (February 2020) 10:1 Canadian Tax Focus

Print Friendly, PDF & Email