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U.S. Controlled Foreign Corporations Compliance and Consultation Services

  • A corporate holding structure should be designed with both tax and non-tax considerations in mind. A brief overview is provided below.

  • Tax considerations: 
    1. Dividend distributions
    2. Accumulated Earnings Tax (AET)
    3. Effectively Connected Income (ECI)
    4. Foreign Tax Credit (FTC)
    5. Capital gains (exit strategy)
    6. Controlled Foreign Corporation (CFC)
    7. Place of Effective Management (PEM)

  • Non-tax considerations: 
    1. Future M&A transactions
    2. Future exit strategy
    3. Capital structure
    4. Financing and funding arrangements
    5. Related legal procedures
    6. Future IPO considerations

  • In addition, from a tax perspective, under IRS regulations, qualifying taxpayers are required to file Form 5471, which is intended to disclose a U.S. tax resident’s ownership interests in foreign corporations and to prevent tax residents from using offshore companies to engage in tax avoidance.
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