Can a cross-border earn-out create tax problems that a lump-sum payment wouldn't?

Yes, an earn-out adds real complexity on top of what a straightforward cross-border sale already involves, precisely because the payment is contingent and spread out over time rather than received all at once. Canadian tax rules have specific approaches to when and how a gain tied to a future, uncertain earn-out payment gets recognized, and using the wrong approach can mean being taxed upfront on an estimated value before you've actually received the money, or mismatching when income is reported against when it's actually paid.

Layer a cross-border element on top of that, and currency fluctuations between when the deal is struck and when each earn-out payment is actually received can create their own gains or losses, separate from the underlying business sale gain. If you're a non-resident seller, or the buyer is a non-resident of your own country, withholding and clearance obligations can potentially apply separately to each tranche of an earn-out as it's paid, not just to an initial closing payment, and treaty relief needs to be considered at each stage to avoid double taxation between the two countries involved.

Given how many moving parts interact here, structuring a cross-border earn-out needs coordinated advice from tax advisors in both jurisdictions before the terms are finalized, not after.