INTERNATIONAL TAX PLANNING FOR BUSINESS AND CORPORATE TRANSACTIONS
Our ties to the Asia-Pacific, European, and North American regions, and our extensive professional experience, make our tax experts the perfect partners for planning inbound and outbound acquisitions and transactions.
- Tax Treaties and International Governmental Agreements—Whether your company is foreign-owned or a domestic corporation doing business in foreign nations, it is crucial to understand the impact of tax treaties on domestic law.
- Cross Border Mergers and Acquisitions—Corporations must be aware of the importance of advanced tax planning when negotiating a merger or acquisition. Our experienced international M&A team helps you manage the risk and solve problems during the entire M&A process. Our services include:
- Tax due diligence including federal, state and local tax, sales & use tax, payroll taxes and more;
- Consulting on optimal structuring for acquisitions or dispositions in a global environment;
- Advising on deductibility of various transaction costs in interplay with the foreign jurisdiction’s rules;
- Analyzing restrictions on post-acquisition utilization of net operating loss and other tax attributes;
- Analyzing available elections related to acquisition (such as 338 elections) to determine the most tax efficient manner of structuring an acquisition or disposition;
- Advising on optimum acquisition vehicle & funding.
- Outbound Investments –
- GILTI, FDII, Subpart F—These tax programs impact the bottom line of a U.S. corporation’s international prospects. We make sure that the international expansion of your company is well-structured and avoids any pitfalls.
- Repatriation Planning—Setting up the right repatriation structure from the outset can help to avoid tax headaches down the road.
- Reporting Requirements—Failure to adequately report foreign business can result in serious penalties.
- Inbound Investments –
- Choosing the right business entity—Certain business entities work better from a tax perspective with other entities in different jurisdictions. Depending on the entity type, and the way an entity is recognized in different jurisdictions, tax treatment will vary. LLCs, C Corporations, S Corporations, and disregarded entities each entail unique tax benefits and consequences.
- Permanent Establishment (PE) risk—The risks of establishing a taxable presence in the U.S. or abroad parameters may lead to used to unforeseen tax implications;
- Branch profits tax;
- Withholding taxes ;
- Tax treaty application and analysis—Foreign corporations interested in investing in the U.S. may qualify for tax savings under international governmental agreements and tax treaties;
- Transfer Pricing.
- Exit Strategy—Whether partners or shareholders are interested in moving on to new ventures, or a business is considering exiting a market, it is important to consider the financial and tax liabilities such changes may entail.
TAX PLANNING FOR INTERNATIONAL REAL ESTATE TRANSACTIONS
The U.S. real estate market offers several key advantages that keep international investors interested: stability, opportunity, and a strong record of growth. In addition, beneficial tax treatment draws the attention of European investors who want to take advantage of the lower tax rates in the U.S. while exempting themselves from taxation in their home country. These opportunities depend on the unique circumstances of the home country’s domestic law and tax treaties with the U.S. When considering such investment, it is imperative to:
- Have a thorough knowledge of the Foreign Investment in Real Property Tax Act (FIRPTA) provisions to avoid any missteps;
- Structure the investment with cross-border issues in mind—in particular, how the home country and the U.S. differ in their consideration of different entities, such as LLCs and S Corporations;
- Understand the interplay between domestic and international provisions concerning capital gains, depreciation, the tax basis of acquired property, and passive losses and credits; and
- Properly evaluate real estate transactions and assets according to the appropriate valuation principles. KNAV’s real estate valuation team is well versed in both the appropriate U.S. valuation principles and the U.S. real estate market.
TAX PLANNING, AUDITS, AND COMPLIANCE FOR AMERICAN EXPATRIATES AND BUSINESSES
As more businesses expand into global markets, more U.S. individuals find themselves working and conducting business overseas. U.S. taxpayers living abroad and American expatriates have unique and complex tax concerns both domestically and internationally. Individuals and businesses newly operating abroad may be overwhelmed by the procedures and obligations they find themselves faced with. Consulting with KNAV’s tax experts can help such individuals and businesses to plan for the tax implications of a life abroad.
FATCA AND FBAR COMPLIANCE
Many U.S. taxpayers may be surprised to learn that they are required to report their foreign asset holdings to the IRS. Those with U.S. citizenship are subject to the filing and reporting requirements of the U.S. whether they live in the U.S. or abroad, or even if they have never lived in the U.S. (accidental Americans).
Failure to comply with the U.S. filing requirements of either FATCA or FBAR on a timely and accurate basis can lead to penalties, fees, and criminal prosecution. The severity and the type of punishment for failing to file depends on the delinquent form, the magnitude of foreign asset or financial account holdings, and the willful intent (or lack thereof) which led to the incident.
It is not uncommon for taxpayers to be unaware of these obligations, or to misunderstand them. For taxpayers who find themselves out of compliance with the law, KNAV’s tax experts can help to address the failure and to mitigate the consequences entailed. We have experience guiding clients through the following programs designed to bring taxpayers back into compliance:
- Delinquent Submission Procedures—For clients who need to file delinquent forms, but have not misrepresented their foreign-source income.
- Streamlined Filing Compliance Procedures—For clients who need to file delinquent forms, and have non-willfully misrepresented their foreign-source income.
- Voluntary Disclosure Program—For clients who need to file delinquent forms, and have willfully misrepresented their foreign-source income.
The aggressive stance of the IRS and the hefty penalties involved with a failure to file means that it is generally preferable to cooperate and earn good-faith treatment. It is critical, however, to consult with a tax professional before coming into compliance with the IRS in cases where serious financial penalties or criminal prosecution are possible.
EXPATS / INPATS TAX SERVICES
With a more globally competitive world, staying informed about multi-faceted tax laws and managing the reputational risk that global employers face is essential. You need to ensure that you and your employees are aware of, and comply with, local compliance requirements.
Whether you have an inbound or outbound need, because you are entering a new market or expanding in a current one, KNAV can assist you.