What this guide covers
What a subsidiary, a branch and an independent incorporation actually cover when a company already exists elsewhere. The consequences for profit taxation, for the parent’s liability, for your personal status, and for the cost of unwinding if the activity stops.
What exists
The subsidiary
A separate US company owned by the foreign one. A liability shield between the two, separate books, and a structure both banks and investors know how to read.
The branch
An extension of the foreign company, with no legal personality of its own. The parent answers for commitments made, and its worldwide result can fall within reach of the US tax administration.
Independent incorporation
A US company with no ownership link to the existing one. Simple to set up, but it closes the visa categories based on intra-group transfer, which assume an ownership link between the two entities.
What surprises people arriving from Europe or Quebec
The choice is often made on tax grounds, while its heaviest consequence lies elsewhere: some visa categories require an ownership link between the foreign and the US entity. Creating an independent company closes that route, and it is noticed afterwards, when restructuring is expensive.
Where it gets complicated
The applicable tax treaty depends on your country, not your language. France, Belgium, Switzerland, Morocco and Canada each signed a different text with the United States, and the rules on permanent establishment, withholding and relief from double taxation are not identical. An arrangement copied from a French founder does not transpose to a Quebecer.
Official sources
- IRS, Tax treaties by country
- IRS, Foreign businesses
- Florida Division of Corporations, foreign entity
What French Executive Network can do
Introduce you to the French-speaking business lawyers, accountants and tax advisers in the network who handle this subject, and to the members who have already been through it.