Rubin Law US and Cross-Border Tax Assistance

US and Cross-Border Tax Assistance

Specific Scenarios

Moving to the US?

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Most individuals who move to the US benefit by delaying the date they become US tax residents. With the correct advice, US tax residency can legitimately be delayed through a variety of processes, sometimes for a number of years.

Aside from delaying the date of US tax residency, it is essential for tax planning and tax return purposes that the individual knows in advance the date on which his tax status will change.

On the date an individual’s tax status changes to US tax resident, the tax status of his assets (for example, interests in foreign companies and trusts) is effectively reclassified – with the result the tax rules applicable both to the individual and his assets change substantially.

The transition from non-resident to normal US tax status requires careful planning from practitioners experienced in this area. Many foreign corporate and trust structures are undesirable from the US tax perspective, and typically need to be modified early in the transitionary period.

We have the experience to advise you on delaying the change to US tax residency, planning for the change, and preparing your US tax returns for the transitionary period.

Investing into the US

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Structuring investment into the United States entails a number of considerations, and can be tricky.

Because of the high US taxes and withholding taxes that usually apply to returns on inbound investment, structures need to take advantage of US domestic opportunities that permit lower US tax.

It’s also important to take full advantage of reductions in withholding tax under applicable US Tax Treaties. This entails compliance with the Limitation On Benefits (LOB) requirements that apply under most Treaties.

Dealing with LOB requires skill and experience, especially where the investors reside in more than one country, or in a country with unfavorable Treaty provisions.

In addition to LOB, intermediate holding structures need to satisfy additional requirements, including intermediate country tax efficiency, the existence of suitable infrastructure and substance in intermediate countries, and in some cases, acceptable intermediate country perception.

We have significant experience with inbound investment structures. We work with select non-US firms to ensure satisfaction of the non-US components.

Exporting to the US?

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When a non-US business exports product to the US, a number of tax and regulatory factors come into play, some impacting the product imported, and others impacting the exporter’s US structure and activities.

Where the exporter appoints a US distributor, and as a result does not get involved with US structures or activities, the US regulatory requirements are generally limited to matters such as Tariff classification, import security, labeling, and satisfying the requirements of any relevant US government agencies (such as the FDA, USDA, etc).

Where the exporter undertakes their own US distribution, US tax becomes a vital consideration. The difference between US tax rules and the tax rules of other countries make it essential to obtain US tax advice on the structure and related tax consequences prior to export.

IRS Audit?

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Non-US entities require highly specific US tax treatment in many situations, including cases where they conduct business in the US; own US entities; are owned by US taxpayers; are funded by US taxpayers; make distributions to US taxpayers; or are managed by US taxpayers.

Care needs to be taken to avoid US taxpayers from being taxed on the income earned by some foreign entities, for example, certain Controlled Foreign Corporations (CFCs) or Foreign non-Grantor Trusts.

Care also needs to be taken to avoid US taxpayers from penalties or other harsh tax treatment often accorded to investments in Passive Foreign Investment Companies (PFICs) such as certain foreign hedge fund investments.

We can advise you on US tax planning and US tax reporting relating to non-US entities.