The cross-border vocabulary, defined.

The Corporate Transparency Act directs FinCEN to collect beneficial ownership information (BOI) — the natural persons who own 25% or more of, or exercise substantial control over, a reporting company. The scope of who must report has narrowed. FinCEN's interim final rule of 26 March 2025 redefined "reporting company" to mean only entities formed under the law of a foreign country that have registered to do business in a U.S. State or tribal jurisdiction, and exempted entities created in the United States, along with U.S. person beneficial owners, from the reporting requirement. Reports remain non-public and separate from state-level filings. The rule was issued in interim form, so the position in force at the time of filing should be confirmed against FinCEN's current guidance.

FATCA requires foreign financial institutions (FFIs) to identify U.S. account holders and report to the IRS, and requires U.S. persons to disclose foreign financial assets above threshold amounts on Form 8938. The threshold for unmarried U.S. persons residing in the U.S. is $50,000 (year-end) or $75,000 (any time during year).

FBAR (FinCEN Form 114) requires U.S. persons — citizens, residents, and U.S. entities — to disclose foreign financial accounts when aggregate balance exceeds $10,000 at any point during the calendar year. Filed separately from the tax return. Non-willful penalties begin at $10,000 per violation per year; willful penalties can exceed the account balance.

Form 1120-F is the income tax return filed by foreign corporations engaged in a U.S. trade or business or that owe branch profits tax. Even foreign corporations with no current-year U.S. activity often file a "protective return" to preserve the ability to claim deductions and credits in a later disputed year — those deductions and credits are allowed only if a return is filed on a timely basis, so a missing protective filing puts them at risk. The IRS Commissioner may waive that deadline where the corporation shows it acted reasonably and in good faith on the facts.

IRS Form 5472 is required of every U.S. corporation that is at least 25% foreign-owned, and of foreign-owned single-member LLCs that are disregarded entities. It must be filed annually with a Pro-Forma 1120 reporting every reportable transaction with related parties — capital contributions, distributions, intercompany loans, services. The penalty for failure to file is $25,000 per form per year. While it stays unfiled, the clock the IRS normally runs against that year to assess tax never starts, so an unfiled year stays open rather than closing on the ordinary three-year cycle.

A foreign-owned single-member LLC files a Pro-Forma 1120 — the bare-minimum form completed only to satisfy the procedural requirement that Form 5472 be attached to a corporate return. The LLC remains a disregarded entity for substantive tax; the Pro-Forma 1120 carries no tax liability.

Form W-8BEN-E is filed by foreign entities receiving U.S.-source income to (a) certify foreign status, (b) claim treaty-reduced withholding under Part III, and (c) certify FATCA classification. A properly completed W-8BEN-E with a valid treaty claim reduces FDAP withholding from 30% to the treaty rate. The form expires every three calendar years from execution.

The Delaware C-Corporation is the dominant structure for venture-backed and publicly-traded U.S. companies. It pairs cleanly with capital formation, multi-class equity, the tax break that can apply when founders sell qualifying shares later, and treaty residency claims. Foreign founders raising institutional capital typically convert to Delaware C-Corp at or before Series A.

A disregarded entity is a business structure (typically a single-member LLC) ignored as separate from its owner for federal income tax purposes. The owner reports the entity's activity on their own return. For foreign owners of U.S. disregarded entities, this creates the Form 5472 / Pro-Forma 1120 dual filing requirement regardless of activity level.

A foreign parent entity — typically a Dutch BV, UAE Mainland LLC, Singapore Pte Ltd, or Irish DAC — owns a U.S. operating subsidiary. The relationship is governed by the arm's-length transfer pricing rules, and intercompany payments (royalties, services, interest) are subject to withholding rules tempered by the parent's home-jurisdiction treaty.

Multi-tier holding structures interpose two or more jurisdictions between the ultimate beneficial owners and the operating company — typically for treaty optimization, IP location, or limited liability layering. Examples include UAE → Netherlands → U.S., or BVI → Singapore → U.S.

A U.S. blocker corporation absorbs Effectively Connected Income at the corporate level so that foreign investors receive dividends — withheld at whatever rate the applicable treaty and the investor's facts produce — rather than flow-through ECI. Used heavily by private equity, venture capital, and family offices to give foreign LPs access to U.S. operating company exposure without direct ECI reporting obligations.

Wyoming LLCs carry low annual fees, no state income tax, and minimal state reporting: the articles of organization and annual report do not call for a list of members, so member identity is generally not part of the state filing record. What the state does not collect says nothing about federal reporting, litigation discovery, or the disclosure a bank or payment processor will require under its own KYC rules. For non-U.S. residents, Wyoming is the most common single-member LLC jurisdiction, and the structure pairs with the Form 5472 and Pro-Forma 1120 federal filing cycle. The scope of any state statute is a question for your attorney.

Under most U.S. bilateral tax treaties, a foreign enterprise's business profits are taxable in the U.S. only to the extent attributable to a permanent establishment — a fixed place of business or a dependent agent with habitual contracting authority. The PE concept overrides the broader U.S.-trade-or-business determination, providing relief where a treaty applies. Where PE exists, treaty protection collapses.

A treaty claim is asserted on Form W-8BEN-E Part III (entities) or W-8BEN (individuals), supported by a tax residency certificate from the home jurisdiction. The claim must reference the specific treaty article and the limitation-on-benefits qualifier. A claim that is not properly documented is disallowed: the withholding agent must withhold at the statutory rate and remains liable for any amount under-withheld, together with interest and penalties.

A dependent agent is a representative — employee or contractor — whose habitual authority to conclude contracts on behalf of a foreign enterprise creates U.S. trade or business and potentially permanent establishment. The independent-vs-dependent agent distinction turns on legal and economic independence under the agency provisions of most U.S. tax treaties.

Effectively Connected Income (ECI) is income earned by a foreign person that is attributable to the conduct of a U.S. trade or business. Unlike FDAP income — which is taxed at a flat 30% (or treaty-reduced) rate on the gross amount — ECI is taxed at graduated corporate or individual rates on net income after deductions. Classification turns on the facts of the business itself: whether there is a dependent agent, a fixed place of business, and how the underlying assets and activities are actually used.

FDAP income is U.S.-source income to foreign persons that is fixed, determinable, annual, or periodical — dividends, interest, royalties, rents, and certain service fees. It is subject to 30% withholding at source, without any allowance for deductions, whether it is paid to an individual or to a corporation. Where a treaty applies and the claim is properly supported by a Part III W-8BEN-E, the statutory rate may be reduced; the applicable rate is set by the specific treaty article and the taxpayer's facts.

A "U.S. trade or business" is the threshold used to decide whether a foreign person's activity creates income connected to the United States. The law does not define it precisely; case law and Treasury rulings establish that considerable, continuous, and regular activity within the U.S. — directly or through dependent agents — creates a USTB. Single transactions and passive investment generally do not.

The branch profits tax imposes a second layer of tax on foreign corporations operating through a U.S. branch, applied to the "dividend equivalent amount" — earnings effectively connected with the U.S. trade or business that are not reinvested in U.S. assets. A number of U.S. tax treaties reduce or eliminate the branch profits tax; the rate that applies is set by the specific treaty and by whether the corporation qualifies for its benefits.

GILTI taxes U.S. shareholders (10%+) of controlled foreign corporations on a global minimum basis. The mechanism applies to U.S. founders with foreign holding companies and to U.S. corporations with foreign IP-licensing subsidiaries. The 2025 reconciliation act restructured the regime for tax years beginning after 31 December 2025: the inclusion is renamed net CFC tested income, the net deemed tangible income return is repealed, and the deduction percentage that shelters part of the inclusion is reduced from 50% to 40%. Because the deduction percentage, the corporate rate, and any foreign tax credit all bear on the result, the effective rate must be computed for the year and the shareholder in question rather than quoted from a headline figure.

Under the portfolio interest exception, interest paid on registered obligations to qualifying foreign lenders is exempt from the default withholding regime that would otherwise apply. The exception requires the lender to own less than 10% of the borrower (by vote, for corporations) and to certify foreign status via W-8BEN-E. Widely used for intercompany debt and foreign-sourced acquisition financing.

Transfer pricing governs every intercompany transaction in a multi-tier corporate structure — sales of goods, license of IP, provision of services, intercompany loans. Under the arm's-length pricing rules, the IRS may reallocate income between related parties to reflect what unrelated parties would have agreed. Common methods include comparable uncontrolled price (CUP), cost-plus, profit-split, and the residual profit-split method.