The Foreign Entity

1185 WordsDec 3, 20155 Pages
There are a few significant tax considerations of which you should be aware if you decide to take Tout Suite, Inc. global. It is important to first decide how you will structure the foreign entity. You have a few options available to you, and the details of each alternative are described below. We have also included information on tax consequences of your move to Belgium. It is important to note that the United States currently has an income tax treaty with Belgium which may impact both Tout Suite’s income and your individual income in an attempt to minimize double taxation. The first option for organizing Tout Suite’s foreign entity is to structure it as a foreign subsidiary. This form will create a separate legal entity that will be subject to the laws of Belgium and will allow the company to defer U.S. taxation on the foreign-source income until the income is repatriated to the U.S. In addition, by choosing to be structured as a foreign subsidiary, the subsidiary will have more control over when to recognize income, which also affects the timing of the foreign tax credit. However, any losses incurred by the foreign subsidiary will not be deductible on Tout Suite’s U.S. tax return. Since Tout Suite will be a 100% owner of the foreign entity, it will be considered a “controlled foreign corporation” (CFC). As such, it will be subject to Subpart F rules, which would require Tout Suite to recognize some of its income each tax year as foreign base company income, regardless

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