- Are there any prohibitions or restrictions on foreign investment in the U.S.?
- Can foreign investors establish wholly owned operations in the U.S.?
- Which business forms in the U.S. are available to foreign investors?
- What is a "C" corporation?
- What is a limited liability company?
- What is a partnership?
- Can a foreign investor establish a branch operation in the U.S.?
- What is the branch profits tax?
- What is FIRPTA?
- For what purpose is IRS Form 5472 used?
- Are there any prohibitions or restrictions on foreign investment in the U.S.?
In general, there are no laws, either on a federal or state level, that prohibit investments by foreign persons or business entities or that require prior governmental review of investments by foreigners. Some constraints on foreign investment in the U.S. do exist, however. These constraints take the form of antitrust laws, the Exxon Florio amendment to the Defense Production Act and various statutes which may have a bearing on the foreign partner's participation in a venture in the U.S., if the venture is to engage in certain specific activities or own certain specific assets.
- Can foreign investors establish wholly owned operations in the U.S.?
Yes.
- Which business forms in the U.S. are available to foreign investors?
"C" corporations, limited liability companies and partnerships.
- What is a "C" corporation?
A separate legal entity formed under state law that has authority to act in a manner which is distinct and independent from its shareholders. A "C" corporation is subject to U.S. federal income taxation at the entity level -- the income or losses of a "C" corporation do not flow through to the "C" corporation's shareholders. Since a "C" corporation is distinct and independent from its shareholders, the shareholders are not responsible for any share of the "C" corporation's liabilities.
- What is a limited liability company?
A company that is characterized by limited liability, management by members or managers, and limitations on ownership transfer.
- What is a partnership?
An unincorporated organization which is not separate and distinct from its owners (partners) in that the partners have unlimited liability for a partnership's liabilities. A partnership is not a taxable entity for U.S. federal income tax purposes as the income or losses of a partnership flow through to the partners based on a partner's pro rata ownership share of the partnership.
- Can a foreign investor establish a branch operation in the U.S.?
Yes, but the use of a branch of a foreign-based corporation to operate a business in the United States presents significant complexity primarily as a result of the way deductible interest expense is computed and the application of the branch profits tax.
- What is the branch profits tax?
Used in connection with the tax imposed on foreign corporations equal to 30% of the dividend equivalent for the taxable year. The dividend equivalent amount refers to the foreign corporation's effectively connected earnings and profits for the taxable year adjusted as provided in the Code.- What is FIRPTA?
An acronym for the Foreign Investment and Real Property Tax Act. The Act provides that gains or losses realized by nonresident aliens and non-U.S. corporations on the disposition of U.S. real estate generate U.S.-source income which is subject to U.S. income tax.- For what purpose is IRS Form 5472 used?
IRS Form 5472 is an information return of a foreign owned corporation. It is used for reporting the activities between foreign owned coporations and persons related to transactions made by the corporations.