Tax Article - Before Expanding Globally, Consider the Tax Consequences

Never before has the phrase If it seems too good to be true carried more meaning than when business owners look to expand internationally. For all the positives associated with opening up a European office or acquiring a competitor in East Asia, navigating the murky waters of international tax laws can be an incredibly complex process. From repatriation of foreign earnings to proper reporting of independent contractor earnings, business owners new to the global game may have a difficult time making sure they have checked all the appropriate boxes. Moreover, domestic companies seeking tax havens and loophole entities have come under increasing scrutiny by the IRS, making global expansion a much more regulated process than in prior years.

Business owners must decide exactly how they plan to do business in foreign countries before tackling tax issues. Will the foreign location operate as a branch, or as an international subsidiary? Will the domestic company acquire a foreign competitor? Who will handle payroll for the foreign employees? Are there any state tax implications to be considered?

These questions are major checkpoints for international expansion. As companies consider growing globally, business owners should consult attorneys and accountants well versed in international tax law. Without solid answers, companies can easily find themselves in a multinational Pandora’s Box of tax penalties and obligations.

Find out how our expertise in tax and accounting can add value to your business. Email us or call us at 1 (888) 875-9770.

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