(Planning for IP transfers into and out of the US)

The large potential value of IP, as well as the ease of transfer makes IP one of the most effective tools for achieving tax efficiency.

Correctly treated, and provided the norms of transfer pricing are observed, the development, sale, and licensing of IP typically yields significant tax benefits, especially when the IP is licensed into or out of the US.

In many cases the appropriate transfer and treatment of IP can position a group for sale or listing in addition to maximizing after tax earnings.  See Transferring IP?

Ensuring that IP is held by an appropriate entity is fundamental both for tax efficiency and for value recognition with a sale or listing. (See Forming a US Entity? and Non-US Entity?)

(Planning for IP transfers into and out of the US)

The large potential value of IP, as well as the ease of transfer makes IP one of the most effective tools for achieving tax efficiency.

Correctly treated, and provided the norms of transfer pricing are observed, the development, sale, and licensing of IP typically yields significant tax benefits, especially when the IP is licensed into or out of the US.

In many cases the appropriate transfer and treatment of IP can position a group for sale or listing in addition to maximizing after tax earnings.  See Transferring IP?

Ensuring that IP is held by an appropriate entity is fundamental both for tax efficiency and for value recognition with a sale or listing.

Forming a US Entity?

Non-US corporates and individuals who wish to form a US entity face a number of decisions both as to the type of entity and in which US state it should be formed. We assist clients select and form the entity best suited to their needs.

Non-US Entity?

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.

(Planning for funds that cross a US border)

Investment or funding across a border generally entails a number of specific tax consequences, both to the investor and the recipient.

Investment into the US generally entails consideration of the purpose to which the funds will be put and the related structure to determine the tax treatment of the funding in the US, whether the income on the funding may be tax deductible, and whether withholding taxes may need to be paid on this income or on profits flowing from the funding.

Depending on the circumstances, investing  into the US may entail additional specific considerations.

Forming a US Entity?
Non-US corporates and individuals who wish to form a US entity face a number of decisions both as to the type of entity and in which US state it should be formed. We assist clients select and form the entity best suited to their needs.

Investing in the US Real Estate?

Investing in US real estate entails a number of tax and structural considerations for non-US resident investors.

Nonresident investors in US real estate are subject to special US tax rules, with the result investment of this nature requires specific attention.

Aside from the US tax position, consideration also needs to be given to the tax position in the investor’s home country, as well as the impact of any relevant Tax Treaty. Planning for these issues is fundamentally important, but so is correct proper compliance and reporting.

Opening a US bank account?
Individuals who do not have a social security number or any party that does not have a US tax number may have difficulty opening a bank account in the US. We can generally assist clients who fall into these categories.

Applying for a US Tax Number?
We assist clients in obtaining US tax numbers. While US tax numbers can be obtained in a variety of situations, much depends on the facts as in some instances the IRS refuses to issue a tax number.

Although each question is considered relative to the specific facts and related tax rules, one factor is universally true: the more information the client provides, the better it allows us to deal with the question and determine the best result.

Investment from the US to another country entails consideration inter alia of the type of income that will be earned from the funding, the type of US structure, and whether income tax as well as withholding tax that may have been paid in the foreign country can be claimed as a credit in the US.

Depending on the circumstances, investing from the US to another country may entail additional specific considerations.

Non us Entity?

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.

Foreign Trust?
Of all non-US entities, foreign trusts require the most careful consideration due to the US tax consequences attaching to foreign trust transactions, and the highly specific US disclosure requirements in many situations, including where a foreign trust has one or more US beneficiaries, or is funded by US taxpayers.

The US distinction between Grantor Trusts and Non-Grantor Trusts is fundamental, yet does not exist in other countries. Special classification rules apply to trust classification where the Grantor is a foreign (non-US) taxpayer.

Where individuals will be moving to the US, pre-immigration planning generally requires a review of their foreign trust interests as early as possible and in any event before they become US tax resident.

Foreign Accounts?
Foreign (non-US) bank and other financial accounts (including pensions, annuities, endowment and some life policies) require special US disclosure and treatment for taxpayers who file US tax returns.

“U.S. owners of foreign accounts (including the entities they own) should generally file Foreign Bank Account Reports (FBAR’s) with Treasury.”

Under recent FATCA (Foreign Account Transaction Compliance Act) legislation, taxpayers filing US returns are required to make certain additional disclosures.

Where foreign account(s) have not been disclosed in US tax returns, in most cases we assist clients to make voluntary disclosure of the account(s) and have significant experience dealing with the IRS in this regard.

Whether or not the foreign account(s) have been disclosed, owing to the sensitive nature of this type of matter, you simply need to provide us your contact details and we will contact you.

Foreign Trust? and Foreign Accounts?

(Between US and non-US parties)

Services between US and non-US parties entails planning for the tax consequences that will arise both to the party rendering the service and receiving the service.

Where the party rendering the services is related to the party receiving the services, provided the norms of transfer pricing are observed, the cross-border nature of these transactions lend themselves to tax arbitrage.

Where a non-US party renders services to US customers, one of the considerations is whether a US entity should be formed.

Forming a US entity?
Non-US corporates and individuals who wish to form a US entity face a number of decisions both as to the type of entity and in which US state it should be formed. We assist clients select and form the entity best suited to their needs. Similarly, where a US party renders services to non-US customers, consideration needs to be given to whether a non-US entity should be formed.

Non-US entity?
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.

If the non-US party resides or was formed in a country with which the US has a tax treaty, this cross-border rendering of services often gives rise to questions under the treaty (see Tax Treaty Question?).

Whether the services are rendered in the US or in another country, in many cases there will be a US tax compliance requirement (see Tax Return Question?).

(Planning for goods moving across a US border)

Imports into and exports from the US typically entail a range of US tax and related considerations.

At a minimum, imports into the US entail tariff classification and valuation for Customs purposes, as well as compliance with non-tax requirements relating to security and clearance procedures, labeling, certificate of origin, etc.

If the party importing into the US has any US activities other than appointing an unrelated distributor, they will need to consider the nature of the entity that will perform these services as well as the structure for holding the US entity.

Forming a US entity?
Non-US corporates and individuals who wish to form a US entity face a number of decisions both as to the type of entity and in which US state it should be formed. We assist clients select and form the entity best suited to their needs.

Exporters from the US can generally expect tariff classification and Customs valuation requirements when their goods enter the foreign country. It is generally possible to structure export activities tax efficiently from the US perspective, including distribution and other activities in the foreign country, which may entail forming a foreign entity.

(Planning for payments that cross a US border)

Because US rules often tax the income earned by different entities at different rates and often tax different types of income at different rates, planning for income and distributions that cross a US border is essential.

Forming a US entity?
Non-US corporates and individuals who wish to form a US entity face a number of decisions both as to the type of entity and in which US state it should be formed. We assist clients select and form the entity best suited to their needs.

For example, US recipients of cross-border dividends are taxed at beneficial rates under certain circumstances; while US recipients of cross-border trust distributions are often taxed at heavy rates 

Foreign Trust?
Of all non-US entities, foreign trusts require the most careful consideration due to the US tax consequences attaching to foreign trust transactions, and the highly specific US disclosure requirements in many situations, including where a foreign trust has one or more US beneficiaries, or is funded by US taxpayers.

The US distinction between Grantor Trusts and Non-Grantor Trusts is fundamental, yet does not exist in other countries. Special classification rules apply to trust classification where the Grantor is a foreign (non-US) taxpayer.

Where individuals will be moving to the US, pre-immigration planning generally requires a review of their foreign trust interests as early as possible and in any event before they become US tax resident.

On the other hand, non-US recipients of income from the US typically face a variety of US withholding tax rates depending on the type of income – especially if they reside in a country with which the US has a tax treaty.

Tax Treaty Question?

Tax Treaty Question? The US has tax treaties with a number of countries that modify the usual US tax position. Most of these treaties deal with income tax, but some deal with estate tax, exchange of information, or social security (totalization).

“U.S. tax treaties differ from the OECD Model in certain important respects.”

Most US treaties contain provisions that are not found in tax treaties unrelated to the US, for example Limitation of Benefits (LOB) provisions, and Savings provisions.

Any treaty question needs to be considered in light of the wording of that specific treaty, as the wording of provisions sometimes varies from treaty to treaty.

If the income is paid by a party who is related to the recipient, planning is then aimed at global tax efficiency, taking account of the overall tax inclusion and tax deduction rates of both parties.

FATCA is a US tax reporting regime that has been adopted by a number of countries outside the US.

Although the details vary slightly between countries, in most cases banks and financial institutions in the foreign country where FATCA has been adopted are required to report accounts held by US citizens and green card holders.

In most cases the institutions report these accounts to the revenue authority of the foreign country, and the revenue authority the reports the accounts to the IRS.

It is imperative that US citizens and green card holders disclose their foreign accounts to the IRS before the foreign accounts are reported to the IRS. This includes citizens and green card holders who may be living abroad.

US Citizen or Green Card Holder living abroad?
US citizens and green card holders are required to file US tax returns on their worldwide income, even if they live outside the US.

Although required to file regular US tax returns, different rules apply to these individuals if they live abroad. In the case of green card holders, failure to comply with these rules may place their green cards in jeopardy.

We have the experience to advise citizens and green card holders living abroad and to prepare their US tax returns.

US citizens and green card holders should generally disclose their unreported foreign accounts through Voluntary Disclosure. Some forms of Disclosure provide strong protection against criminal proceedings, but can be costly as far as penalties are concerned; while others do not provide protection against criminal proceedings, but allow for low or minimal civil penalties. 

Foreign Accounts?
Foreign (non-US) bank and other financial accounts (including pensions, annuities, endowment and some life policies) require special US disclosure and treatment for taxpayers who file US tax returns.

“U.S. owners of foreign accounts (including the entities they own) should generally file Foreign Bank Account Reports (FBAR’s) with Treasury.”

Under recent FATCA (Foreign Account Transaction Compliance Act) legislation, taxpayers filing US returns are required to make certain additional disclosures.

Where foreign account(s) have not been disclosed in US tax returns, in most cases we assist clients to make voluntary disclosure of the account(s) and have significant experience dealing with the IRS in this regard.

Whether or not the foreign account(s) have been disclosed, owing to the sensitive nature of this type of matter, you simply need to provide us your contact details and we will contact you

We have the experience to identify the best procedure and to assist clients through the Disclosure process.

(to or from the US)

Immigrating to the US entails changing from nonresident tax status to US tax status.  Planning for this change is important because it is generally possible to delay or accelerate the change date if the correct steps are taken at the right time. See Moving to the US?

Planning is even more important for prospective immigrants who own shares in non-US companies or have interests in foreign trusts. 

Relocation from the US and taking up residency in another country does not change a US citizen or green card holder’s US tax status. However, US tax status is terminated where US citizenship is renounced  or US permanent residence formally abandoned.  In certain circumstances an “exit tax” is levied based on wealth.

(for people or transactions that cross a US Border)

Special tax returns are generally required for people who move to the US, and for transactions that cross a US border. A number of these tax forms entail subtle nuances, so if they are not filed or if they are filed but completed incorrectly, the consequences can be costly.

For example, non-US ownership of US corporations needs to be specifically reported under certain circumstances.  Where US persons own interests in, or are directors of, a foreign company, this also requires specific reporting.

Specific reporting is also required where a US person makes a transfer to, or receives a distribution from, a foreign trust.

Foreign Trust?
Of all non-US entities, foreign trusts require the most careful consideration due to the US tax consequences attaching to foreign trust transactions, and the highly specific US disclosure requirements in many situations, including where a foreign trust has one or more US beneficiaries, or is funded by US taxpayers.

The US distinction between Grantor Trusts and Non-Grantor Trusts is fundamental, yet does not exist in other countries. Special classification rules apply to trust classification where the Grantor is a foreign (non-US) taxpayer.

Where individuals will be moving to the US, pre-immigration planning generally requires a review of their foreign trust interests as early as possible and in any event before they become US tax resident.

Where a person moves or immigrates to the US, special tax reporting is generally required for the year that they transition to US tax residency