U.S. Resident with Business Abroad?

Compliance for US investors with operations abroad can be cumbersome and stressful. Not only are there a host of forms that are required for foreign subsidiaries, partnerships and branches, but failure to file can lead to some serious penalties. On the upside, there are a many opportunities to save taxes when operating abroad, so don’t lose out.

Let us take the stress off your plate and help you save taxes along the way. We help our clients with the following:

  • Tax compliance for foreign corporations (Forms 5471, 8858, 8865 etc.)
  • Foreign Bank Account & Financial Asset Reporting (FBAR)
  • GILTI calculations, reporting & mitigation
  • Foreign tax credits
  • Tax modelling and structure optimization
  • Foreign Earned Income Exclusion for expats
  • Streamlined Filing Compliance Procedures

Non Resident with Business in the U.S. ?

Non-US residents are subject to U.S. tax in two scenarios.

First, if you have income which is “effectively connected with a US trade or business”, you have to file a U.S. tax return and potentially pay U.S. tax. Second, if you have U.S. source “non-business income” such as dividends, royalties, interest, then you likely have to file a U.S. tax return and pay U.S. tax. That’s the bad news.

The good news is that there are a variety of ways to mitigate taxes, such the use of foreign tax treaties and ensuring you are structured correctly from a tax and operational perspective.

Sounds complicated, and it is, but we are here to help.

Tips for the unwary:

U.S Resident with Business Abroad

U.S. shareholders with at least 10% ownership of a controlled foreign corporation (CFC) are required to include their pro-rata share of the CFC’s Global Intangible Low-Taxed Income (GILTI) in their taxable income.

In English. Let’s say you are a U.S. individual who owns 51% of a CFC and the CFC generates $100k profit during the calendar year. At a high-level, you would be required to include $51k as your GILTI - additional income subject to tax - on your Form 1040. For individuals, the tax rate on GILTI can get up to 37% (ouch!) while the rate for corporate shareholders can be much lower.

With careful planning and structuring, the cost for individuals as well as corporations, can be mitigated.

Non Resident with Business in the U.S.

A foreign investor with 100% ownership in a U.S. LLC is required to file a pro-forma 1120 and Form 5472 for the U.S. LLC. While you might be able to avoid paying US tax, the LLC still has a reporting obligation and failure to file a Form 5472 carries a penalty of $25,000 per omitted form.

If you have not filed the required forms, don't panic. We can help you get up to speed and assist with the penalty abatement process.