Domestic and International Tax Planning

When businesses want to expand internationally, tax planning becomes infinitely more complex. Both countries’ tax codes must be considered as well as international treaties between the two countries. Whether you are a United States-based company venturing out into the wide world or an international company coming into the United States, you want an attorney who understands the legal rules and business issues and can devise tax-efficient solutions to help your business succeed.

Structuring and Operating the New Business

United States tax laws can differ significantly from those in other countries. Companies operating in the United States must comply with a complicated array of federal, state, and local tax laws, which can be confusing to businesses coming to the U.S. for the first time. U.S.-based companies expanding abroad may face unfamiliar international taxation, such as VAT taxes and new reporting requirements in the U.S. and other countries.

We start by helping clients choose the appropriate business structure for their needs. Selecting the right legal entity (S Corp, C Corp, LLC, etc.) involves consideration of tax, corporate, and securities laws in both countries.

International companies must obtain either an International Tax Identification Number or Employer Identification Number from the Internal Revenue Service if they will employ people in the United States. They must register with the state(s) where they wish to transact business.

Reducing taxes is important but the cost of ongoing compliance requirements is also a significant concern. Our attorneys assist the inbound or the outbound enterprise to understand their obligations and provide advice on how to stay out of legal trouble. Failure to follow the law can have serious consequences in the United States, including the imposition of fines, penalties, personal liability for directors and officers, criminal prosecution, private lawsuits, and other sanctions.

FinCen Reporting and Corporate Transparency Act

The Corporate Transparency Act is a 2024 law that requires entities operating in the United States. to register their “beneficial owners” with the FinCEN. A “beneficial owner” is defined as a person who owns or controls at least twenty-five percent (25%) of the ownership interests or has substantial control of the business. The Act applies to a wide range of small companies including limited liability companies (LLCs), professional corporations (PCs), limited liability partnerships (LLPs), and other entities with some exceptions. The Corporate Transparency Act applies to foreign-owned companies that do business in the U.S.

The goal of the Act is to reduce money laundering, fraud, and other financial crimes by requiring companies to be transparent about their ownership. Failing to comply with the law can result in monetary fines of up to Ten Thousand Dollars ($10,000) and up to two (2) years in jail.

FBAR and FATCA Reporting Requirements

Foreign Bank Account Report (FBAR) and Foreign Account Tax Compliance Act (FATCA) are two reporting mechanisms that apply to certain U.S. taxpayers (individuals and entities) with assets in foreign financial accounts.

FBAR applies to U.S. taxpayers with over $10,000 in assets in foreign financial accounts. Taxpayers must complete FinCEN Form 114 and send it to the Financial Crimes Enforcement Network of the U.S. Treasury Department.

FATCA (Form 8938) is filed annually with the IRS. FATCA reporting has higher reporting thresholds than FBAR. Foreign financial institutions must disclose information about U.S. citizens who hold accounts overseas under FATCA. The United States government can verify financial information in international databases, so it is crucial to follow disclosure requirements.

How We Help

Our goal is to guide companies that want to grow internationally. We provide comprehensive advice that helps them structure and operate their businesses in a way that minimizes taxes and other costs, accomplishes their business goals, and complies with all laws.

If you are ready to expand to new countries, contact us for a consultation.