American owners of corporations located outside the US must file US information returns regarding their ownership if they collectively own 10% or more of a non-US corporation.
If Americans own between 10% and 50%, you usually file Form 5471 in the year your business opens, the year it closes, and most years when your ownership percentage changes. Alternatively, you may be able to elect for your foreign corporation to be treated as either a partnership or, if there is only one shareholder, a sole proprietorship and file Form 8865 or Form 8858 instead.
If Americans own more than 50%, you usually file Form 5471 every year. Again, you may be able to elect to be treated as a partnership or sole proprietorship filing Form 8865 or Form 8858.
Form 5471 converts financials statements from foreign currency and fiscal year to US dollar and calendar year, using US GAAP and IRS rules for allowable deductions. This means that the bottom line on your corporation may be very different for US tax purposes.
Additional taxes may be due if the primary purpose of the business operation is deemed to be for investment purposes. For that reason, it’s best to take advice prior to starting your corporation.
We assist with all compliance related to foreign entities owned by Americans.
Why Choose British American Tax?
- Prearranged calls to UK-based US tax specialists accepted as late as 11 p.m. GMT.
- Managing Director Liz Zitzow, E.A. has more than fifteen years of experience waiving penalties for late filers.
- Managing Director Liz Zitzow, E.A. has more than ten years of experience filing foreign corporation forms 5471 and 1120F and have filed forms 8865 and 8858 since inception.
- One hour of free tax planning per year for all clients.
- Income tax planning inclusive of capital gains, primary residences, secondary homes, businesses, inheritance, gift, and trust tax planning.
- Tax planning before the tax year end.
- Tax planning before moving your business to another country.
- Tax planning to reduce US tax on the sale of your corporation.
- Tax planning for LGBT and other alternative lifestyles.
- Bespoke tax planning for micro and small businesses in multiple countries with shareholders in two or more countries.
- Fixed fee or ceiling fee for individual and corporate taxation.
- Accept payment in pounds, euros, or US dollars.
- Accept Paypal, credit card, cash, cheque, wire, and BACS.
- Works alongside your UK accountant to make the total tax between both countries as small as possible.
- Provide referrals to lawyers and dual US/UK IFAs for all your needs.
- US Enrolled Agents and CPAs.
If your current US tax accountant does at least seven of these, you’re doing well. If they are handling less than seven, we do all of them. Call us.