Legal arrangements – forms of uses
A non-resident corporate may have commercial or civil activity in ALL states of the USA and the World in general, except of course in the state of origin of the registration.
There are not as in some countries the differences between commercial companies, trading real estate or otherwise.
We recall that a “Corporate” has no social purpose defined and limited, but can do ANYTHING (obviously in the limits of what is legal by the courts of the Country, which is to be verified case by case).
A basic rule is that a company if it intervenes in a country must respect its laws including tax.
– Respect the rules of the regulated professions requiring qualifications, endorsements, approvals ….
– Respect the social and fiscal rules
There are therefore different solutions to carry a business activity in a State:
– In another US State: apply for authorization to operate. File a tax return with the IRS Service (Internal Revenue Services = US Tax Services) and pay local taxes.
Watch out: TVA (or VAT) does not exist in the USA. Only local taxes may vary from one state to another.
– In another European countries, such as France for example:
1) total or partial takeover of a national law company, by purchase or exchange of shares.
In this case, the Foreign company becomes shareholder as a legal person of the national firm, which will remain as such and continue its normal operations.
Only the shareholder will have changed, and will receive its dividends, which will be taxed in his country (or a flat tax in the abovementioned states).
2) Creation of a French legal person as a branch (first secondary establishment of a legal person established abroad).
This branch will have a SIRET a Kbis with all the privileges and obligations of a
French firm. It can perform commercial acts, issue invoices, banking, hive staff etc …
Of course, this branch will be subject to the social security and tax obligations of the country.
The advantage is that the profits as dividends to ascend the US headquarters
3) Simple statement INSEE a “LIAISON OFFICE” NOT TO RCS REGISTERED
This liaison office will receive a SIRET but no Kbis.
It will not be an autonomous Legal Entity. Legal Entity will remain only the originator company.
This office will not have commercial activities, won’t be able to issue invoices.
On the other hand it will be able to rent an office or business premises, buy and register vehicles (registration card in the name of the US company), and employ staff (There is a special URSSAF center in the Bas-Rhin for these case).
The Liaison Office aims to “provides services” to its headquarters,
(Supervision, facilitating requests, information).
But it should not have autonomous economic activity, and therefore taxable.
It that case we would return to the previous point!
It is obvious that the choice of using a foreign company is important and a mistake can lead to serious problems: tax adjustments, legal problems etc ..
The choice is important and we can guide you in such an approach.
Any direct commercial activity with complete cycle in a national country is subject to local taxation.
In this case the setting up as first registered branch of foreign company, will be favored.
On the other hand, if the activity is really relocated, direct use with a single liaison office will be efficient:
This will be the case of intangible activities:
– Tarot Online
– Assistance in the management of real estate owned by the originator company
The list can be long.
In this case, the activity is deemed to be made abroad. It’s headquarter whist will be issuing the invoices and cash income.
The liaison office receiving only limited allocations of the headquarters to pay its operating costs, with no benefit or provision of check-operating revenues.
This is an area of activity in which the existence of a foreign subsidiary or holding company takes all its interest.
This can enable a European company to establish itself for example in USA and facilitate orders, invoicing and regulations.
A supplier of a nationality will be to charge the company for example US, which in turn will charge its European subsidiary.
The principle is to achieve the biggest profit in a state with lower taxation, and the smallest in a state practicing a high taxation remains a textbook case, long know and used for a long time.
We recall that the capital of a US company is represented by “physical” shares.
It’s who holds the securities, that owns the company and all its assets.
There is no formality (recorded deed of assignment) or taxation in case of transmission of shares of a US company.
A private agreement protocol can be signed (if the parties so wish), but without registration requirement.
The transfer may be the subject of a paid transaction (sale of shares), by exchange of shares with another company (takeover)
Or for free of charge.(in connection with an inheritance).
In the latter case, the owner of shares in a company, will simply deliver them to their beneficiaries (family, relatives …).
These will become the new owners of the company and its assets.
They will retain the title of Director, or simply changing it by simple decision of the Board of Directors.
The Department for “corporate” at the State Secretary doesn’t keep records of the shareholders. There is no need to report the successive changes.
An “internal” register is reset with the “Corporate Kit” but again, no regulations oblige to keep it updated. (Except for convenience and practical operation).