Doing business across borders
For a foreign company, a central question is whether its activity in the United States amounts to a US trade or business or, under a tax treaty, a permanent establishment, which determines whether the US can tax its business profits. Choosing between a branch and a US subsidiary affects how profits are taxed and how money is sent home. For a US company expanding abroad, owning foreign subsidiaries brings rules that can tax some foreign earnings currently, even if the cash stays overseas. State taxes add another layer, since states are generally not bound by federal income tax treaties. The structure chosen at the start is often hard to change later.
Payments, prices, and paperwork
Payments that cross borders, such as dividends, interest, royalties, and service fees, can carry US withholding obligations for the payer, and treaty rates usually require proper documentation from the recipient. Prices charged between related companies in different countries are subject to transfer pricing rules, and tax authorities on either side may challenge them. US companies with foreign owners, and US persons with interests in foreign companies, face information returns with significant penalties for missing or incomplete filings, even when no tax is due. Many countries have adopted a global minimum tax, and how it applies to groups with a US parent should be checked against current guidance.
Setting priorities
We start by mapping the group: which entities exist, where they are organized, who owns them, and where employees and customers are located. Then we look at the flows of goods, services, money, and intellectual property between them, since each flow can raise withholding, pricing, or reporting questions. For a new expansion, the goal is a structure that is simple to run and fits the business plan. For an existing group, we check whether past filings were complete and whether any correction is needed. We coordinate with accountants and with counsel in other countries where that is needed.
