Tying It All Together
James05
GoingGlobal-1.pptxGoing Global
Most businesses today are global businesses. Whether you are building a mobile app or selling a physical product, as an entrepreneur reaching a global audience of users or customers is often key to the success of your business.
Objectives
Entity choice for international operations
Tax considerations
Using your corporate name
In this lesson we will cover considerations that need to be made as you take your business global.
We will discuss how to choose the preferred business formation for your international operations.
We will preview some of the tax considerations that come into play when you are doing business in various jurisdictions.
Finally, we will spend time discussing the use of your corporate name in international operations.
Entity Choice
International expansion
Representative office
Branch
Subsidiary
Hybrid
International expansion – anything from direct sales up to M/A. Varying degrees of benefits for each method, and each has its own set of requirements. Similar to the entity analysis we did when you chose your initial entity type.
Representative office – minimal presence but often strict limitations. Usually have to direct back to home office.
Branch – not separate legal entity; a part of the home office. Often requires disclosure of financial statements as part of application and may need to set up separate financial statements for the branch if local authorities require filing financial statements
Subsidiary: separate legal entity; subsidiary has limited liability as long as corporate formalities are followed
Hybrid: parent company forms subsidiary; subsidiary sets up representative offices or branches in countries as needed
Tax Considerations
Forms of international taxes
Permanent establishment
Goods and services
Employment taxes
Forms of Intl Taxes
Corporate, sales, VAT, employment, etc.
Critical factor in expansion decision
Permanent Establishment
used to determine whether/how corporate entity should be taxed
Rules vary widely as to what level of activity is required for permanent establishment
Goods and services
VAT, GST, etc.
Local registration requirements
Employment taxes
International employees are typically subject to local tax laws
Hiring a local payroll or accounting firm is often advisable
Corporate Name
Check availability of corporate/business name in target expansion countries
Trademark considerations if local company is using same/similar name
Business name registrations
Summary
When expanding your business internationally, consider the type of legal presence and tax implications of your international operations
Keep in mind that laws vary by country and local jurisdiction
It is critical to obtain professional advice before setting up international operations; remedial measures are often costly
