Your Target Market. Taking Your Company Global. International Tax & Accounting Services

Transcription

1 Your Target Market Taking Your Company Global & Company (415) San Francisco Silicon Valley Associated Firms Worldwide International Tax & Accounting Services Executive Tax Planning - Corporate Tax Planning & Compliance - Representation for IRS and State Tax Audits - Compensation Planning [Stock Options] - Gift, Trust & Estate Tax - Nationals with Income or Investments Corporate Services - and International Planning & Compliance - Formation of Country: Operating Companies, Joint Ventures - Representation for IRS & State Audits - Valuation - Mergers & Acquisitions, Due Diligence - Forensic and Litigation Support - Compensation Planning - Auditing for Private & Public Companies

2 Tax Structure Tax Rates: Inc. Federal 35% State - 5 to 12% - Effective Rate 6% CA Nevada NY 41% 3 Target Structure Holding Co Management fee charges Tax Rates: holding Co. -0- operations 40% * operations 0 50% * 1 2 FC 1 FC 2 Operations Operations * Limited to Taxable Income Work for hire contracts & foreign income 4

3 Target Structure - Driving Revenue to Low Tax Jurisdictions Holding Co Management fee charges Accumulation of cash for investment / expansion Dividends Operations Operations (Europe) Holding Co (Low Tax Rates) Royalty Charges IP Servers Website Service Fees 5 Irish Structure Holding Co * Irish Tax Rates: 12.5% VS. Inc. Irish Co Employees In Ireland Tax Rate: 41% * Must be a Qualified Company Contract: Support services Customer service contracts & trading income 6

4 vs. Tax Rate Comparison All Funds Remitted to Shareholder Irish $59 Dividend $87.50 Dividend Inc. Inc. Irish Ltd. Irish Ltd. Net income $100 tax $41 Profit $59 Federal & state = $12.40 tax on dividend Total tax = $52.40 Net income $100 Irish Tax $12.50 Profit $87.50 $87.50 Federal & state = $18.40 tax on dividend Total tax = $30.90 Savings = $ Challenges to Offshore Tax Deferral 1. Inversion Rules 2. Corporation Doing Business in 3. Investment in Property - Distribution to Owner - Long-term Loan to Owner or Affiliate - Investment in Affiliate 4. Outbound Transfers of Property Taxable 5. Controlled Corporation Rules 6. Transfer Pricing 8

5 Flip Inversions / Doing Business in the Inversion Rules Revenues Cayman Ltd. Inc. Officers & Directors Tax Rates Still Apply Inversions after % Continuity: Cayman = Corporation % Continuity: Taxable Transaction Exception: Business Operations in Country CA Nevada NY 9 Outbound Transfers of Property to Companies - Appreciated Capital Assets Taxed upon transfer - Intellectual Property (e.g. Customer Lists) Taxed upon transfer - Exception: Transfers to Partnerships 10

6 Controlled Corporations Profits currently taxed as deemed dividends Profits currently taxed as deemed dividends Inc. (Break-even) sale FC (profits) sale Customer Inc. Contract for support services F Corp Cayman Service revenues Exceptions - High tax rates in foreign country - Services actually rendered in foreign country 11 Avoiding CFC Status Investors Investors 49.9% 50.1% Corp ownership eliminates deemed dividends Partnership Income passes through to owners & Operations & Operations 12

7 Transfer Pricing Holding Co. Best Method Inc. Ltd. - Cost Plus Contract - High Value? - Low Value? - R & D Arrangements Contracts for services to company must be at arms length 13 Annual Required Reporting by Persons Tax Forms Federal Penalties for Noncompliance - Signature or interest in a foreign account Up to 50% of Treasury Form highest balance in account - Ownership in - Corporation Report Form 5471 $10,000 per company, per year - Partnership Report Form 8865 $10,000 per company, per year - Trust Report Form % of Assets in Trust - Other tax return disclosures may be required - IRS Audits (domestic or otherwise) Standard questions on above are included in all audits. 14

8 Asset Protection Trust Transfers title of assets to foreign trust Beneficiaries E Trade account in Trust E Trade account in foreign country Trustee Litigation subject to foreign laws and foreign jurisdiction Protection from: (1) Civil divorce Yes (2) Litigation Yes (3) income tax No (4) estate tax No (5) Confidentiality Yes (6) Jurisdictions: - Bahamas - Cayman - Nevis - Cook Islands - New Zealand - Gibraltar - Others 15 Summary structures provide significant benefits when: (1) Revenues are from foreign sources (2) Revenues are from and business processes can be transferred to a foreign country company (3) There is an ability to defer receipt of foreign profits (4) There is an appreciation for the additional cost and ongoing complexity of operating in another country (5) You have good advisors 16