Planning for Direct Non-Real Estate Investment
As a result of the U.S. estate and gift tax, and the branch profits tax, aliens or foreign corporations are generally not used to invest in U.S. businesses. Instead, U.S. corporations have become the base vehicle of choice for foreign investment in the U.S. Structuring financing for the start-up of a new U.S. business or an acquisition of an existing business in the U.S. is one of the more important planning issues for direct foreign investment in the U.S. The objective is to maximize the value of the interest deduction, which requires an analysis of the effective tax rates in both the U.S. and the country where the investment originates. Properly structuring the debt will allow U.S. interest deductions on the borrowing, with repayments of principal free of withholding tax. At Moskowitz LLP we understand the complex rules governing utilizing financing to acquire a U.S. business or start-up a U.S. business. If you are a foreign investor looking to acquire a U.S. business or start a U.S. business, contact the international tax attorneys at Moskowitz LLP to assist you.
Minimizing Tax Consequences on Activities of U.S. Citizens and Residents Abroad
Internal Revenue Code Section 911
In order to actively promote investment outside the U.S., Congress voted to allow a limited amount of foreign wages to be excluded from U.S. income taxation. To qualify for the exclusions, an individual must have a tax home in a foreign country or countries, and earn income from employment or self-employment outside the U.S. If the U.S. taxpayer meets the tests set by the Internal Revenue Code, he or she may elect to exclude some or all of his or her foreign earnings from U.S. taxation. The individual may also elect to exclude a portion of his or her foreign housing costs, thereby further reducing U.S. taxation.