Inbound and Outbound Entity Structuring
Our SD Global tax professionals have expensive experience in developing optimal tax structures for both inbound and outbound investments. The structuring of inbound and outbound investments starts with an understanding of the business expansion plans and objectives, and then a careful analysis of the applicable tax rules and rates for the home country and foreign jurisdictions.
The business questions that need to be addressed include:
- Will NewCo have losses in the early years?
- Will the income of NewCo be reinvested in the foreign jurisdiction, or will it be repatriated back to the home country?
- Do longer term plans include a sale of NewCo?
The tax analysis includes a variety of factors, such as:
- Corporate and individual income tax rates for the home and foreign country
- Withholding tax rates on dividends, interest and royalties
- Applicable tax treaty provisions
- Transfer pricing rules
- Thin capitalization rules
- Foreign holding company structures
- Value added taxes
In connection with the above considerations, one of the most important decisions regarding entity structure is whether to have NewCo taxed as a separate corporate entity or to have it treated as a disregarded entity for US tax purposes by making a “check-the-box” election.
Our SD Global tax professionals have an in-depth understanding of the tax issues facing middle market companies as they seek to expand internationally. We are ready to assist with practical solutions aimed at minimizing the Company’s worldwide effective tax rate.