Taxes

U.S. Taxes

NAVIGATE U.S. AND INTERNATIONAL TAX LAWS.

If you have decided to offer your goods, merchandise, or services in the U.S., you are facing decisions that need to be carefully thought through. Your venture into the U.S. market should be thoroughly planned in advance to avoid obstacles to your company’s economic success. Our experts know how to navigate U.S. domestic and international tax laws and can ensure that your actions today won’t be obstacles to your company’s economic success in the future.

From a tax advisor standpoint, the following topics require special attention.

SEMINAR TOPICS.

Fundamentals of the Tax System in the USA

Taxation of U.S. Companies and their Shareholders in Germany

Company Formations and Tax Effects USA / Germany

Pitfall: U.S. Business Establishment

Posting Employees Abroad

Sales & Use Tax

WHAT KIND OF LEGAL ENTITIES ARE COMMON IN THE USA?

Legal entities are not the same! Besides the well-known Corporation or Inc., which can be compared to a German corporation, there are various forms of partnerships such as the General Partnership (GP), the Limited Partnership (LP) or also the Limited Liability Partnership (LLP). Furthermore, there are hybrid forms such as the Limited Liability Company (LLC/LC) and Limited Liability Limited Partnership (LLLP). The choice of the legal entity in the U.S. and available tax elections will determine entities tax classification and thus the taxation in the USA and the tax implications for your parent company in Germany.

WHAT OPPORTUNITIES DO YOU HAVE FOR YOUR U.S. BUSINESS?

If you opt for an export business without a permanent establishment in the USA, you are exempt from U.S. income tax under the “U.S. Income tax treaty with Germany”, but you may be subject to U.S. sales tax in various states. If you maintain a warehouse or are represented by an independent sales agent in the U.S., your business is taxable at state and local level, wherever your business creates NEXUS.. Should you establish a U.S. company, you are required to file U.S. sales tax returns and other local returns in addition to the annual U.S. income tax returns.

THE U.S. TAX SYSTEM OR SHALL WE SAY 50+ AMERICAN TAX SYSTEM?

In Germany you are used to a lean tax system, i.e. one income tax return filed with one tax authority. What does it look like on the other side of the Atlantic? Tax sovereignty in the U.S. is divided into three bodies: The Federation, the States and the Counties and Municipalities. Each of these three levels follows its own tax laws, and what applies at the federal level might apply in one state but might not apply in another. If you sell your goods, merchandise, or services to different states, you will have to file several tax returns, the Federal tax return (Federal) and tax returns in each state you create NEXUS (State returns).

EXPATRIATE TAX.

The term “expatriates/expats” is a well-known term for internationally operating companies. The long-term assignment of employees to the U.S. is day to day business for international companies. In addition to the visa formalities, it is also important to clarify the tax situation in the U.S.. Mobile employees such as mechanics or technicians fall into the same tax category as the so-called expatriates.

TRANSFER PRICING.

Another important aspect is the U.S. transfer price documentation. The documentation describes your international corporate structure and the intercompany relationships between Germany and the U.S. In other words you document how the prices for your intercompany transactions have been calculated.

“The tax system in the United States consists in reality of 51 different tax systems: one for the federal level and 50 for the states. The respective rules and regulations often times differ very significantly, and create high risks and obstacles for foreign companies.“

Arnold Servo

Partner, CPA

“The tax system in Germany is viewed as very complicated and hard to understand by most German companies. Confronted with the U.S. tax system with its many regulations and different tax rules on state level, the same German companies see their initial assessment about the complexity of the German tax system in a completely different light!“

Maik Friebe

Partner, CPA/ WP/StB

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Do you have questions relating to our seminars or specific U.S. topics? Please do not hesitate to contact us, our U.S. experts are always available for any questions you might have!

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