THEVOZ Services for starting a new venture in a foreign country
THEVOZ Attorneys, an international tax law firm in Switzerland and the United States, performs many valuable services for our clients. But the service we find most fulfilling and important is helping clients start a new venture in a foreign country. Helping clients grow globally is at the core of what an international tax lawyer does.
There are several important questions that need to be answered right from the beginning that can affect the success of the new venture: location, structure and tax treatment.
Location selection involves business decisions like access to suppliers, infrastructure and other features. But it also requires knowledge of the host country’s tax code. Many countries provide tax incentives to attract particular kinds of businesses, but it is important to know how different countries compared to alternatives and what are the features and conditions of those tax incentives. Factors like “place of effective management,” incorporation and other rules all are part of the location decision
Structure of the new venture determines financing, investment, profit realization and other business-critical decisions. An international tax attorney helps the parent company explore various options to determine which choices are best suited for the new venture. For example, the decision to structure the new venture as a C corporation or a LLC should be taken after looking at all the possible business and tax consequences
Tax treatment is important consideration at the intersection of business and legal worlds. Once the location has been selected and a preferred structure determined, the tax attorney develops a document that lays out how the new venture will work within the requirements of the taxing authority of the host country. The tax treatment illustrates how profits are realized and distributed, how the value of various business activities is determined, how and where taxes are assessed and paid and other important business considerations. An international tax attorney understands the rules and regulations that guide global business decisions.
Other important considerations for the new venture.
Several other important topics relevant to starting a new venture in an unfamiliar foreign country require the expertise of an international tax attorney:
- What are the laws and rules regarding the payment of social security taxes for employees?
- Are there any legal impediments that need to be considered, like tariffs and embargoes, that may impact the success of the venture?
- Value added taxes (VAT) are extremely important and often opaque to business executives in the United States. A patient and knowledgeable explanation from a tax attorney is invaluable.
- If executives from the United States are going to be attached to the new venture, FATCA regulations regarding financial accounts being reported to the IRS will need to be respected.
- Privacy considerations are increasingly important, particularly in Europe. Correctly setting up the right privacy protections is required in these countries.
- Intellectual property rules and protections are variable in different countries. Failure to fully understand the limitations of those protections can be potentially expensive.
- Every legal culture has different ways of writing contracts and an experienced attorney will ensure the right language and legal customs are observed.
- Insurance issues are also important. Many countries require specific coverages to protect employees and other stakeholders, particularly malpractice insurance and product liability coverages.
These topics are not exhaustive but are merely intended to illustrate how valuable an international tax attorney is to a successful new venture in a foreign country. They are truly a valuable partner on your team.