# International TSX stock



## ITConsultant (Mar 5, 2014)

Does the location of a headquarters of a company on the TSX have any tax consequences? I own a TSX stock however it is listed as an "foreign security" in my monthly statements which had me concerned. RBC told me to contact a tax specialist, however before I do so I thought I should post here. The headquarters is in Dublin. Could there be adverse tax consequences to this?

Also a related question: why is it that a Dublin based company be listed on the TSX?


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## AltaRed (Jun 8, 2009)

Companies will list on stock exchanges where they believe it is worthwhile to attract the attention of and hopefully investment from institutional and/or retail investors. Or it may be because of significant operations in the country of cross-listing, e.g. the Dublin company in Canada. 

That is why many Cdn companies cross-list on the NYSE, why many European companies list on the NYSE through ADRs for example, and why an Australian mining company might list on the TSX or a Cdn mining company might list in Australia.

Cross listing costs money, to meet regulatory requirements, etc. so the company needs to feel it is worthwhile to do so to cross list. Additionally, sometimes the host government, e.g. Canada, may pressure the company to do so as part of the conditions of doing business in Canada.

Added: Regarding tax consequences, it is unlikely any dividend paid out by the stock listed on the TSX would be eligible for the dividend tax credit, OR, only a portion of the dividend might be eligible. It depends on the company structure and where/how it pays corporate taxes. Example: RDS stock dividends are not eligible for the Cdn dividend tax credit. Also, I believe a portion of Enbridge's dividends in 2013 were not eligible for the Cdn dividend tax credit because of dividends that flowed into Enbridge from dividends paid by its partially owned taxable US subsidiaries.


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## ITConsultant (Mar 5, 2014)

Thanks for your response.


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## Eclectic12 (Oct 20, 2010)

I thought I read in article back around 2000 that the determining factor was what laws the company incorporated under. 

The article was profiling a "US" company that had it's head office plus about twenty staff members in Arizona and had incorporated there. The article was pointing out that with something like 300+ staff in Vancouver and a listing on a Canadian exchange, it would appear to many as a "Canadian" company but due to the incorporation, it was a US company.


Cheers


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## AltaRed (Jun 8, 2009)

Yes, it does matter where it is incorporated. Many US companies choose Delaware but that is fairly irrelevant. For the example you use, it is a US company that will ultimately pay US taxes. It would have a US stock listing as well. That said, it could have a cross-listing on the TSX, but for those Canucks that choose to buy the stock on the TSX instead of the NYSE, the stock still comes out of the US corporate Treasury and is US stock. Any dividends paid out would not be eligible for the Cdn dividend tax credit.

There are many permuations and combinations though in corporate structures. What does happen in some cases is the parent company wants to have a partial arms length relationship with its ex-US operations. It could then, for example, incorporate the Canadian subsidiary in BC and issue stock for its Canadian subsidiary that trades on the TSX. The parent company might hold 60% of the stock for itself and float the rest on the TSX. In that case, any dividends paid on the Cdn stock of the Cdn subsidiary would be eligible for the Cdn dividend tax credit.

When I read the OP's post, I made the assumption the OP meant the company was also incorporated in Ireland, not just its HQ. It is rare for a company not to have its HQ in the same country as its incorporation. It probably has a stock listing in Ireland and the cross-listing is on the TSX. 

It is not rare for a company to be incorporated in Country X with its HQ in Country X and most of its operations elsewhere, including a cross-listing of its stock in that country where it does a lot of its business.

Added: Perhaps the OP wishes to disclose the company s/he is talking about.


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## Eclectic12 (Oct 20, 2010)

Re: location of incorporation matters for tax purposes ...

Thanks ... I recalled the article but for some reason, the terms I was using in Google was not finding confirmation easily.


Re: many structures as well as "cross listing" versus other scenarios

That is true .... the OP will either need to ask the broker or the company. 
They could check the company web site if it has an investor section. For example, many big Canadian companies will have a "tax treatment for US citizens" where they will spell out that they are a Canadian company so that a US citizen will be subject to Canada's dividend withholding tax.


re: rare that HQ is not in the country of incorporation ...

I wonder if it's less rare in Canada/US ... I recall reading one of the Canadian resource companies hiring a US CEO. After a couple of years, he decided he didn't like the travel, was not willing to move his family so he moved the HQ to the US.


Cheers


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## AltaRed (Jun 8, 2009)

Eclectic12 said:


> I wonder if it's less rare in Canada/US ... I recall reading one of the Canadian resource companies hiring a US CEO. After a couple of years, he decided he didn't like the travel, was not willing to move his family so he moved the HQ to the US.


I am not aware of that but certainly possible. I am aware that Nova Chemicals, wholly owned sub of the then Nova Corp, moved its HQ to Pittsburg I believe to be close to the majority of its customers. That was an easy choice though since Nova Chemicals was a wholly owned sub and didn't have public float. Its parent was still HQ'd in Canada and traded on the TSE.


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## ITConsultant (Mar 5, 2014)

Hi, thanks for the responses.

The company I'm referring to is: Endo International plc (TSE:ENL) 

As a side note, this stock was automatically given to me from another stock Paladin Labs (TSELB) was acquired.


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## AltaRed (Jun 8, 2009)

Endo re-incorporates in Ireland to save millions in taxes suggests it was a US incorporated company before re-inventing itself.

From the PR Newswire, Dublin, Feb 28, 2014


> Endo International plc (Nasdaq: ENDP; TSX: ENL), formerly Endo Health Solutions Inc., announced today that it has completed the acquisition of Paladin Labs Inc. in a stock and cash transaction currently valued at approximately $2.7 billion. The acquisition accelerates Endo's strategic transformation into a leading global specialty healthcare company and creates a platform for future growth in North America and around the globe.
> 
> In connection with the acquisition, Endo and Paladin Labs have been combined under a new company incorporated in Ireland named Endo International plc. Shares of Endo International plc will trade on NASDAQ under the ticker symbol ENDP and the Toronto Stock Exchange under the ticker symbol ENL.
> 
> Under the terms of the transaction, Paladin Labs shareholders received 1.6331 shares of Endo International plc stock and $1.16 (CAD) in cash for each Paladin Labs share they owned upon closing. In addition, for each Paladin Labs share owned at closing, shareholders of Paladin Labs received one share of Knight Therapeutics Inc., ("Knight Therapeutics") a newly formed Canadian company that has been separated as part of the transaction. Shareholders of Endo Health Solutions received one share of Endo International plc for each share of Endo Health Solutions Inc. they owned upon closing.



From what I can see, Endo trades on both NASDAQ and TSX, with the TSX listing occuring only as a result of the Paladin acquisition. IF so, the TSX listing is likely the cross-listing of the NASDAQ stock and any dividends received would be Other Income like any other US stock.


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