Branch Profits Tax

Foreign businesses operating either a U.S. location or through a transparent entity structure (a U.S. LLC, for example) are generally subject to a branch profits tax. The purpose of the tax is to require a foreign entity to pay an equivalent amount of tax on any earnings that are deemed distributed from the U.S. to the foreign entity as if the business were operating through a U.S. corporation and paying a dividend. The tax is 30% of any deemed distributions from the U.S., but can be reduced to either 0% or 5% depending on applicable treaty benefits. Our analysis determines the appropriate rate, and if a tax is required, minimization strategies are available through certain elections available.