7,000+ companies established Book a free consultation
Mon–Fri 8 am–7 pm, Sat 10 am–4 pm

Follow us

Company formation, licensing, visas and tax registration across the UAE, Oman, Saudi Arabia, Bahrain and the UK. Book a free consultation or call us — we reply within one working day.

US Subsidiary of a Foreign Company

Easy in, harder out

US Subsidiary of a Foreign Company

Forming a US subsidiary is straightforward. Repatriating its profits to the parent is where the planning sits.

GCC business setup specialists

Plan the cash flow out, not just the structure in

A US subsidiary is typically a corporation, formed in a day. What deserves attention is what happens afterwards: dividends to a foreign parent are subject to withholding unless a treaty reduces it, interest and royalty payments to the parent face their own withholding and deduction limits, and intercompany pricing has to be defensible. Groups that form first and think about repatriation later find the structure works against them.

  • Repatriation route considered before the entity is formed
  • Treaty position identified with your US tax adviser
  • Intercompany arrangements documented from the start

Request a setup assessment →

20+

Mainland, free zone and offshore jurisdictions we file in — so the recommendation is based on your activity, not on which authority we happen to be registered with.

7,000+

Companies successfully established.

Black Swan Business Setup Services•Black Swan Business Setup Services•Black Swan Business Setup Services

Plan these first

Getting value out of a US subsidiary

Each route has its own treatment.

RouteConsideration
Dividends to the parentWithholding applies; a treaty may reduce it.
Interest on parent loansWithholding, plus limits on deductibility.
Royalties to the parentWithholding; treaty rates vary.
Management or service feesMust be priced defensibly.
Capital reduction or saleDifferent treatment again.
Treaty eligibilityDepends on the parent, not just the country.

Withholding rates, treaty eligibility, interest deduction limits and transfer pricing rules are set by federal law and treaty and change. These are matters for a US tax adviser, with whom we co-ordinate. We handle US formation and compliance set-up and co-ordinate with a US tax adviser where advice is needed. We do not give US federal or state tax advice.

How it works

Setting up the subsidiary

Structure for the exit of cash, then form.

01

Plan the flows

How the parent expects to be paid — dividends, interest, royalties or service fees — and what each implies, settled with a US tax adviser.

02

Form and register

Corporation formed in the right state, governing documents prepared, tax identification obtained and foreign qualification completed where needed.

03

Document and operate

Intercompany agreements put in place, bookkeeping established and the federal and state filing calendar set.

From the parent

What we need

No legalisation, but real information.

Talk it through →

  • Parent name, jurisdiction and ownership
  • Ownership chain to ultimate beneficial owners
  • How the parent expects to be paid
  • Whether parent loans are contemplated
  • Whether intellectual property will be licensed in
  • Whether the parent will provide services
  • States where the subsidiary will operate
  • Whether US employees will be hired
  • Expected revenue and profit
  • Fiscal year end preference
  • Existing US tax advisers, if any
  • Timeline

Scope

What is included, and what is not

Stated plainly, so nothing is added once the engagement starts.

Included in the service fee

  • State and entity recommendation
  • Formation filing and registered agent
  • Bylaws or operating agreement
  • Tax identification number application
  • Foreign qualification where needed
  • Intercompany agreement co-ordination
  • Bookkeeping and filing calendar set up
  • Co-ordination with a US tax adviser on repatriation

Not included, quoted separately

  • State filing fees, paid at cost
  • US federal and state tax advice
  • Transfer pricing studies
  • Treaty eligibility opinions
  • Tax return preparation unless quoted
  • Parent-company accounts
  • Payroll processing unless quoted
  • Bank account opening decisions

Verify independently

Relevant US authorities

We file directly with these bodies on your behalf.

Internal Revenue ServiceSecretary of State of the state of formationState departments of revenueUnited States Patent and Trademark OfficeCounty recorder and clerk officesFinancial institutions and their compliance functions

Questions

US subsidiary — FAQs

Should the subsidiary be a corporation or an LLC?

For a foreign parent a corporation is usually the starting point, because an LLC can pull the parent into US filing obligations directly. It is a question to settle with a US tax adviser before forming.

Will dividends to my parent be taxed?

Withholding applies unless a treaty reduces it, and treaty eligibility depends on the parent itself rather than simply on its country. This is the main thing to settle early.

Can I fund the subsidiary with a loan instead of equity?

You can, and interest may be deductible, but withholding and deduction limits apply. The balance between debt and equity is a planning decision, not an afterthought.

Do intercompany charges need documentation?

Yes. Pricing must be defensible and agreements should exist before the charges start, not be written up afterwards.

Do you advise on the tax treatment?

We handle formation, registrations and documentation and co-ordinate with a US tax adviser on the tax questions. We do not give US tax advice ourselves.

Careers

Apply for a role

Tell us which role you are applying for and what you have done that is relevant. If you have UAE or GCC experience, say which jurisdictions and authorities you have worked with.

See all current openings

    Connect with us

    Request a setup assessment

    For founders and business decision-makers considering paid business services. Not for job applications, employment searches or personal visa-only requests.

    Call +971 56 658 2477

      Request a Setup Assessment

      For founders and business decision-makers considering paid business services. Not for job applications, employment searches or personal visa-only requests.

      1. Your Business Plans
      2. Your Contact Details

      Black Swan will use the details you submit to respond to your business enquiry. See our Privacy Policy. Advertising consent above is optional and separate.

      Black Swan is a private service provider and assists clients with applications and obtaining documents. We are not a government authority. Authorities decide eligibility and approvals; authority fees are separate from our service fees.

      Talk to a consultant