Choosing A Branch Or Subsidiary For Overseas Expansion
选择分支机构或子公司进行海外扩张
By Samuel Pollack and Naoko Watanabe (April 1, 2021)
由 Samuel Pollack 和 Naoko Watanabe（2021 年 4 月 1 日）
由 Samuel Pollack 和 Naoko Watanabe（2021 年 4 月 1 日）
When expanding your business operations into a new jurisdiction, whether organically or through an acquisition, one of the first decisions you will need to make is whether to operate though a branch or a subsidiary entity. It is often a threshold decision, taking into account several factors including legal characteristics and tax consequences of each alternative.
当将您的业务扩展到新的司法管辖区时，无论是通过有机扩张还是通过收购，您需要做出的第一个决定之一是选择是通过分支机构还是子公司进行运营。这通常是一个门槛性决定，考虑到包括每种选择的法律特征和税务后果在内的几个因素。
当将您的业务扩展到新的司法管辖区时，无论是通过有机扩张还是通过收购，您需要做出的第一个决定之一是选择是通过分支机构还是子公司进行运营。这通常是一个门槛性决定，考虑到包括每种选择的法律特征和税务后果在内的几个因素。
Each jurisdiction has its own distinct rules and options, making it crucial for U.S. based multinational companies to have a good handle on the relevant local laws, and their interaction with U.S. tax law, prior to making
每个司法管辖区都有其独特的规则和选择，这使得总部设在美国的跨国公司在制定之前对相关的当地法律及其与美国税法的互动有很好的掌握至关重要。
每个司法管辖区都有其独特的规则和选择，这使得总部设在美国的跨国公司在制定之前对相关的当地法律及其与美国税法的互动有很好的掌握至关重要。
a foray into a foreign market.
进军外国市场。
Prior to the enactment of the Tax Cuts and Jobs Act at the end of 2017,[1] U.S. multinationals were not eager to operate through foreign branches, which, unlike corporate subsidiaries, did not offer a deferral benefit.
在 2017 年底《减税和就业法案》生效之前，美国跨国公司并不急于通过外国分支机构运营，因为与公司子公司不同，外国分支机构并不提供递延利益。
在 2017 年底《减税和就业法案》生效之前，美国跨国公司并不急于通过外国分支机构运营，因为与公司子公司不同，外国分支机构并不提供递延利益。
The TCJA effectively ended the U.S. deferral regime and the option to operate through a foreign branch began to grow in appeal. However, the TCJA included ambiguous rules that specifically applied to foreign branches and to their owners' ability to access tax benefits, such as foreign tax credits and the foreign derived intangible income, or FDII, deduction.
TCJA 有效地结束了美国的递延制度，并开始增加通过外国分支机构运营的吸引力。然而，TCJA 包含了一些模糊的规则，专门适用于外国分支机构及其所有者获取税收优惠的能力，如外国税收抵免和外国衍生无形收入（FDII）扣除。
TCJA 有效地结束了美国的递延制度，并开始增加通过外国分支机构运营的吸引力。然而，TCJA 包含了一些模糊的规则，专门适用于外国分支机构及其所有者获取税收优惠的能力，如外国税收抵免和外国衍生无形收入（FDII）扣除。
Naoko Watanabe 渡边直子
Regulations clarifying the terms of those rules were released in December of 2020, opening the door for U.S. companies to choose to operate through a foreign branch, without much of the uncertainty that had persisted since the enactment of the TCJA.
2020 年 12 月发布了澄清这些规定条款的法规，为美国公司选择通过外国分支机构运营打开了大门，消除了自 TCJA 实施以来一直存在的许多不确定性。
2020 年 12 月发布了澄清这些规定条款的法规，为美国公司选择通过外国分支机构运营打开了大门，消除了自 TCJA 实施以来一直存在的许多不确定性。
In this article, we discuss key corporate and U.S. federal income tax law considerations in selecting the most efficient option for offshore business operations.
在本文中，我们讨论了在选择离岸业务运营的最有效选项时，关键的公司和美国联邦所得税法律考虑因素。
在本文中，我们讨论了在选择离岸业务运营的最有效选项时，关键的公司和美国联邦所得税法律考虑因素。
Legal Personality 法律人格
A branch is an unincorporated, direct extension of a parent company that operates business activities on behalf of the parent to the extent the business purposes of the parent permit.
分支机构是母公司的非法人、直接延伸，代表母公司开展业务活动，只要符合母公司的业务目的。
分支机构是母公司的非法人、直接延伸，代表母公司开展业务活动，只要符合母公司的业务目的。
In contrast, a subsidiary is a separate entity that is incorporated or formed by the parent company, may have its own business purposes separate from its parent's and has its own management structure - although, in the case of a single-member, member-managed limited liability company, the sole member, i.e., the parent, will manage the business of that entity.
相比之下，子公司是由母公司设立或组建的独立实体，可能有自己独立于母公司的业务目的，并拥有自己的管理结构 - 尽管在单一成员、成员管理的有限责任公司的情况下，唯一成员即母公司将管理该实体的业务。
相比之下，子公司是由母公司设立或组建的独立实体，可能有自己独立于母公司的业务目的，并拥有自己的管理结构 - 尽管在单一成员、成员管理的有限责任公司的情况下，唯一成员即母公司将管理该实体的业务。
In many jurisdictions, from a corporate law perspective, a branch is considered the same entity as its parent, and thus, does not have a separate legal personality.
在许多司法管辖区，从公司法的角度来看，分支机构被视为与其母公司相同的实体，因此，没有单独的法律人格。
在许多司法管辖区，从公司法的角度来看，分支机构被视为与其母公司相同的实体，因此，没有单独的法律人格。
For example, in the United Arab Emirates, a branch may not enter into an agreement on its own. Its parent will be the contracting party in its capacity as the owner of the branch.
例如，在阿拉伯联合酋长国，分支机构可能无法独自签订协议。其母公司将以其作为分支机构所有者的身份成为合同方。
例如，在阿拉伯联合酋长国，分支机构可能无法独自签订协议。其母公司将以其作为分支机构所有者的身份成为合同方。
However, in Brazil, that is not the case. Brazilian corporate law recognizes a separate legal personality of branches, allowing branches to enter into contracts with third parties without having to involve their parent entities.
然而，在巴西，情况并非如此。巴西公司法承认分支机构具有独立的法律人格，允许分支机构与第三方签订合同，而无需牵涉其母公司实体。
然而，在巴西，情况并非如此。巴西公司法承认分支机构具有独立的法律人格，允许分支机构与第三方签订合同，而无需牵涉其母公司实体。
From a U.S. tax perspective, a foreign branch is generally viewed as part of its owner and
从美国税务角度来看，外国分支通常被视为其所有者的一部分。
not as a separate entity. As a result, transactions between a branch and its owner are disregarded.
不作为独立实体。因此，分支机构与其所有者之间的交易被忽略。
从美国税务角度来看，外国分支通常被视为其所有者的一部分。
not as a separate entity. As a result, transactions between a branch and its owner are disregarded.
不作为独立实体。因此，分支机构与其所有者之间的交易被忽略。
The rules for foreign currency gain or loss, foreign tax credits, and FDII are notable exceptions, when, in some respects, a branch and its owner are viewed as separate under complex rules specifically tailored to the treatment of foreign branches.
对于外币收益或损失、外国税收抵免和 FDII 的规则是值得注意的例外情况，当在某些方面，分支机构及其所有者根据专门针对外国分支机构处理的复杂规则被视为分开时。
对于外币收益或损失、外国税收抵免和 FDII 的规则是值得注意的例外情况，当在某些方面，分支机构及其所有者根据专门针对外国分支机构处理的复杂规则被视为分开时。
Additionally, for U.S. federal income tax purposes, a company can achieve branch status for a foreign - or domestic - operation even when, for corporate purposes, the operation is held through a legal entity. Any entity that is not specifically identified as a per se corporation under Treasury regulations can elect to be treated as "disregarded" from is sole owner.
此外，根据美国联邦所得税法规定，一家公司可以在外国或国内运营中实现分支机构地位，即使在公司目的上，该运营是通过法律实体持有的。根据财政部法规，任何未被明确确定为法定公司的实体都可以选择被视为其唯一所有者“被忽略”。
此外，根据美国联邦所得税法规定，一家公司可以在外国或国内运营中实现分支机构地位，即使在公司目的上，该运营是通过法律实体持有的。根据财政部法规，任何未被明确确定为法定公司的实体都可以选择被视为其唯一所有者“被忽略”。
A disregarded entity that maintains separate books and records, and operates a business generally, is treated in the same manner as a branch. However, unlike a true branch, a disregarded entity may be treated as regarded for a number of nonincome tax purposes, e.g., employment and certain excise taxes.
维护独立账簿和记录，并通常经营业务的被忽视实体，被视为分支机构。然而，与真正的分支机构不同，被忽视实体可能被视为受到一些非所得税目的的重视，例如就业和某些消费税。
维护独立账簿和记录，并通常经营业务的被忽视实体，被视为分支机构。然而，与真正的分支机构不同，被忽视实体可能被视为受到一些非所得税目的的重视，例如就业和某些消费税。
Control 控制
Because of the very nature of branches, it may seem that this type of foreign enterprise will guarantee its parent more control over its business activities. However, it is worth noting that subsidiaries may, and many do, appoint their parent entities' directors and officers as their own directors and officers - subject to residency requirements - so that they can stay aligned on the overall business strategies.
由于分支机构的本质，这种类型的外国企业似乎会保证其母公司对其业务活动拥有更多的控制权。然而，值得注意的是，子公司可能会，并且许多公司确实会任命其母公司实体的董事和高管为自己的董事和高管 - 须符合居住要求 - 以便他们可以在整体业务战略上保持一致。
由于分支机构的本质，这种类型的外国企业似乎会保证其母公司对其业务活动拥有更多的控制权。然而，值得注意的是，子公司可能会，并且许多公司确实会任命其母公司实体的董事和高管为自己的董事和高管 - 须符合居住要求 - 以便他们可以在整体业务战略上保持一致。
Additionally, single-member, member-managed limited liability companies will provide to their sole members directors control over their business affairs.
此外，单一成员、成员管理的有限责任公司将为其唯一成员提供对其业务事务的控制权。
此外，单一成员、成员管理的有限责任公司将为其唯一成员提供对其业务事务的控制权。
In some jurisdictions, like Canada, it is also possible to put in place a shareholder declaration that restricts the powers of the directors of the subsidiary entity, vesting the directors' authority in the parent entity.
在一些司法管辖区，比如加拿大，也可以设立股东声明，限制子公司董事的权力，将董事的权力授予母公司。
在一些司法管辖区，比如加拿大，也可以设立股东声明，限制子公司董事的权力，将董事的权力授予母公司。
Transferability From Parent to Another Entity
从父实体转移至另一实体
Because branches are not considered to have a separate legal personality in many jurisdictions, unlike subsidiaries, it is not possible to transfer a branch to another entity, for example, as part of a transaction at the parent level. The branch must be deregistered and then registered by the new parent entity.
由于在许多司法管辖区中，分支机构并不被视为具有独立的法律实体，与子公司不同，因此不可能将分支机构转让给另一个实体，例如，作为母公司层面交易的一部分。分支机构必须注销，然后由新的母公司实体注册。
由于在许多司法管辖区中，分支机构并不被视为具有独立的法律实体，与子公司不同，因此不可能将分支机构转让给另一个实体，例如，作为母公司层面交易的一部分。分支机构必须注销，然后由新的母公司实体注册。
Note, however, that in Brazil, because it gives a separate legal personality to branches, it is possible to transfer branches to another entity. Further, uniquely, the United Arab Emirates also allow branches to be transferred, both in the mainland and in the free zones.
请注意，在巴西，由于分支机构拥有独立的法律实体，可以将分支机构转让给另一个实体。此外，独特的是，阿拉伯联合酋长国也允许将分支机构转让，无论是在内地还是在自由贸易区。
请注意，在巴西，由于分支机构拥有独立的法律实体，可以将分支机构转让给另一个实体。此外，独特的是，阿拉伯联合酋长国也允许将分支机构转让，无论是在内地还是在自由贸易区。
The transfer of a branch - or of an entity treated as a branch - is different for U.S. tax purposes than the transfer of a separate entity. When an acquirer purchases a branch, the acquirer generally receives a stepped-up tax basis in the assets of the branch, which is particularly beneficial with respect to assets subject to depreciation or amortization and with respect to subsequent asset dispositions.
分支机构的转让 - 或被视为分支机构的实体的转让 - 对于美国税务目的而言，与独立实体的转让是不同的。当收购方购买一个分支机构时，收购方通常会获得该分支机构资产的增加税基础，这在涉及折旧或摊销的资产以及随后的资产处置方面尤为有利。
分支机构的转让 - 或被视为分支机构的实体的转让 - 对于美国税务目的而言，与独立实体的转让是不同的。当收购方购买一个分支机构时，收购方通常会获得该分支机构资产的增加税基础，这在涉及折旧或摊销的资产以及随后的资产处置方面尤为有利。
When an acquirer purchases the stock of a corporation, the acquirer generally receives a stepped-up tax basis only in the shares of the acquired corporation.
当收购方购买一家公司的股票时，收购方通常只会在被收购公司的股份中获得提高的税基。
当收购方购买一家公司的股票时，收购方通常只会在被收购公司的股份中获得提高的税基。
Options such as the elections under Section 338 of the Internal Revenue Code[2] can provide a stepped-up basis, but may raise other issues - e.g., imposition of additional tax
选项，如《内部税收法典》第 338 条规定的选举，可以提供增加基础，但可能引发其他问题 - 例如，征收额外税款
on a seller. 在一个卖家身上。
选项，如《内部税收法典》第 338 条规定的选举，可以提供增加基础，但可能引发其他问题 - 例如，征收额外税款
on a seller. 在一个卖家身上。
Exposure to Liabilities 暴露负债
Because in many jurisdictions, a branch is a mere extension of its parent, the parent will be directly exposed to all liabilities and risks associated with conducting business overseas. They may include tort liabilities, product liabilities, employment-related litigations, etc., which could have a severe business impact depending on the local laws and policies.
由于在许多司法管辖区，分支机构只是其母公司的延伸，母公司将直接承担与海外业务有关的所有责任和风险。这些可能包括侵权责任、产品责任、与就业有关的诉讼等，根据当地法律和政策，这可能会对业务产生严重影响。
由于在许多司法管辖区，分支机构只是其母公司的延伸，母公司将直接承担与海外业务有关的所有责任和风险。这些可能包括侵权责任、产品责任、与就业有关的诉讼等，根据当地法律和政策，这可能会对业务产生严重影响。
With subsidiaries, however, unless the parent chooses to incorporate an unlimited company, where local laws allow for this option, such as in the United Kingdom and certain provinces in Canada, all liabilities of the subsidiary are contained within the subsidiary. In other words, subsidiaries add a layer of protection for their parents.
然而，除非母公司选择将子公司纳入无限公司，当地法律允许这种选择，例如在英国和加拿大某些省份，否则子公司的所有责任都包含在子公司内。换句话说，子公司为其母公司提供了一层保护。
然而，除非母公司选择将子公司纳入无限公司，当地法律允许这种选择，例如在英国和加拿大某些省份，否则子公司的所有责任都包含在子公司内。换句话说，子公司为其母公司提供了一层保护。
One important thing to keep in mind related to limited or unlimited liability in foreign jurisdictions relates to the default U.S. federal income tax status of a foreign entity.
在涉及外国司法管辖区的有限或无限责任方面需要牢记的一件重要事情与外国实体的默认美国联邦所得税地位有关。
在涉及外国司法管辖区的有限或无限责任方面需要牢记的一件重要事情与外国实体的默认美国联邦所得税地位有关。
A foreign entity that is eligible to elect to be treated as a corporation or as a transparent entity - an "eligible entity" - defaults to treatment as a corporation if any of its owners have limited liability. This presents a stumbling block to some because a U.S. eligible entity always defaults to treatment as a transparent entity.
符合条件选择作为公司或透明实体进行处理的外国实体 - “合格实体” - 如果其任何所有者具有有限责任，则默认为公司处理。这对一些人构成了障碍，因为美国的合格实体总是默认为透明实体处理。
符合条件选择作为公司或透明实体进行处理的外国实体 - “合格实体” - 如果其任何所有者具有有限责任，则默认为公司处理。这对一些人构成了障碍，因为美国的合格实体总是默认为透明实体处理。
Allocation/Transfer of Assets and Liabilities
资产和负债的分配/转移
The legal personality of an entity also has an impact on how its assets and liabilities are treated. With subsidiaries, the assets and liabilities are considered to be held by the subsidiaries. Thus, when distributing assets to the parent entities, subsidiaries must satisfy certain financial thresholds as provided by local laws - such as having sufficient distributable reserves - to declare a dividend.
实体的法律人格也会影响其资产和负债的处理方式。对于子公司，资产和负债被视为由子公司持有。因此，在向母公司分配资产时，子公司必须满足当地法律规定的一定财务门槛，例如具有足够的可分配储备，才能宣布派息。
实体的法律人格也会影响其资产和负债的处理方式。对于子公司，资产和负债被视为由子公司持有。因此，在向母公司分配资产时，子公司必须满足当地法律规定的一定财务门槛，例如具有足够的可分配储备，才能宣布派息。
In many countries, because directors or mangers of a subsidiary owe fiduciary duties to the subsidiary, the decision to declare a dividend must be evidenced by a written board approval. Further, in some jurisdictions, such as in Singapore, if noncash assets will be distributed, then additional steps are required, such as executing a distribution agreement, obtaining a shareholders consent and registering such consent with the Accounting and Corporate Regulatory Authority of Singapore.
在许多国家，由于子公司的董事或经理对子公司负有受托责任，因此决定宣布股息必须有书面董事会批准作为证据。此外，在一些司法管辖区，如新加坡，如果将分配非现金资产，则需要采取额外步骤，例如签署分配协议、获得股东同意并将该同意注册在新加坡会计和公司监管局。
在许多国家，由于子公司的董事或经理对子公司负有受托责任，因此决定宣布股息必须有书面董事会批准作为证据。此外，在一些司法管辖区，如新加坡，如果将分配非现金资产，则需要采取额外步骤，例如签署分配协议、获得股东同意并将该同意注册在新加坡会计和公司监管局。
However, with branches, the allocation of assets and liabilities are typically done via accounting entries. Often, only a simple letter of notice from the branch entity to the parent entity is needed to document the allocation from a legal perspective.
然而，对于分支机构，资产和负债的分配通常是通过会计分录完成的。通常，从法律角度来看，分支机构向母公司发出的一封简单通知函就足以记录分配情况。
然而，对于分支机构，资产和负债的分配通常是通过会计分录完成的。通常，从法律角度来看，分支机构向母公司发出的一封简单通知函就足以记录分配情况。
As noted above, for most purposes the transactions between a branch and its owner - or between branches owned by the same owner - are disregarded for U.S. federal income tax purposes. In this way it is easier for a company to access the cash and assets of its branch than it is to access the cash and assets of a corporate subsidiary.
如上所述，对于大多数目的，分支机构与其所有者之间的交易 - 或者同一所有者拥有的分支机构之间的交易 - 在美国联邦所得税目的上被忽略。通过这种方式，公司更容易访问其分支机构的现金和资产，而不是访问公司子公司的现金和资产。
如上所述，对于大多数目的，分支机构与其所有者之间的交易 - 或者同一所有者拥有的分支机构之间的交易 - 在美国联邦所得税目的上被忽略。通过这种方式，公司更容易访问其分支机构的现金和资产，而不是访问公司子公司的现金和资产。
However, as also noted above, in the context of a foreign branch, there are three major rules that deviate from this general rule, which are the rules pertaining to: (1) foreign currency gain or loss; (2) the foreign tax credit limitation; and (3) the FDII deduction.
然而，正如上文所指出的，在外国分支的背景下，有三条主要规则与这一通则不同，即涉及以下规则：（1）外币收益或损失；（2）外国税收抵免限制；和（3）FDII 扣除。
然而，正如上文所指出的，在外国分支的背景下，有三条主要规则与这一通则不同，即涉及以下规则：（1）外币收益或损失；（2）外国税收抵免限制；和（3）FDII 扣除。
Name Restrictions and Traceability
名称限制和可追溯性
If your company has any sensitivities around disclosing markets that your firm operates in, then it should be taken into account that in many jurisdictions, branches are required to adopt the names of their parent entities.
如果贵公司对披露公司经营市场有任何敏感性，那么应考虑到在许多司法管辖区，分支机构被要求采用其母公司实体的名称。
如果贵公司对披露公司经营市场有任何敏感性，那么应考虑到在许多司法管辖区，分支机构被要求采用其母公司实体的名称。
For example, in China, a branch name must be in Chinese and contain (1) the nationality of the parent entity, (2) the Chinese name of the parent entity, (3) the city where the branch is located; and (4) the suffix "representative office." There are no such restrictions with respect to subsidiaries, allowing subsidiaries to select names that do not give away which global enterprise group it is a part of.
例如，在中国，分支机构的名称必须是中文，并包含（1）母公司实体的国籍，（2）母公司实体的中文名称，（3）分支机构所在城市；以及（4）后缀“代表处”。对于子公司则没有此类限制，允许子公司选择不透露其所属全球企业集团的名称。
例如，在中国，分支机构的名称必须是中文，并包含（1）母公司实体的国籍，（2）母公司实体的中文名称，（3）分支机构所在城市；以及（4）后缀“代表处”。对于子公司则没有此类限制，允许子公司选择不透露其所属全球企业集团的名称。
There are, however, exchange of information rules under which U.S. tax law requires some degree of reporting on relationships between business operations, whether an operation is through a foreign branch or a foreign corporation.
然而，根据美国税法规定，存在信息交换规则，要求在业务运营之间报告某种程度的关系，无论是通过外国分支机构还是外国公司。
然而，根据美国税法规定，存在信息交换规则，要求在业务运营之间报告某种程度的关系，无论是通过外国分支机构还是外国公司。
The two most significant rules related to international reporting are the country-by-country filings that large U.S. multinational corporations must file on Form 8975, Country by Country Report, and reporting under the Foreign Account Tax Compliance Act. Generally, reporting under these regimes is supposed to remain confidential between a taxpayer and relevant governmental agencies.
Ease of Setting Up a Branch Versus a Subsidiary
分支机构与子公司的设置便利性
It is a common misconception that branches are easier to establish. It may be just as cumbersome as opening a subsidiary, and may require extensive disclosure of the parent entity information.
分支机构更容易建立是一个常见的误解。它可能和开设子公司一样繁琐，并且可能需要对母公司信息进行广泛披露。
分支机构更容易建立是一个常见的误解。它可能和开设子公司一样繁琐，并且可能需要对母公司信息进行广泛披露。
For example, in the United Kingdom, where opening a branch is relatively straightforward, the registration form must include the following:
例如，在英国，开设分支机构相对简单，注册表格必须包括以下内容：
例如，在英国，开设分支机构相对简单，注册表格必须包括以下内容：
- Incorporation details: name, legal form, identity of the relevant commercial registry in which the parent entity is registered, etc.;
公司注册详情：名称、法律形式、母公司注册的相关商业登记机构的身份等； - Details of the directors of the parent entity and the extent of the directors' power to represent the parent entity;
母公司董事的详细信息以及董事代表母公司的权力范围； - The name, address, and details of the business carried on, and the contact details for the branch;
公司的名称、地址和经营详情，以及分支机构的联系方式； - A certified copy of the parent entity's constitutional documents, and a certified English translation if they are not in English; and
- In most cases, a copy of the latest set of audited accounts of the parent entity, and a certified English translation if they are not in English.
In the wake of the TCJA, nothing about foreign operations is easy, whether it be through a branch or through a corporate subsidiary. Through a foreign corporate subsidiary, you now have the global intangible low taxed income regime, the Section 245A dividends received deduction,[3] the previously taxed earnings and profits regime, as well as old favorites like
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On top of that, there is the TCJA's far more complex approach to indirect foreign tax credits. Foreign branches should be easier, but they too must contend with added complexity owing to their special treatment with respect to the foreign tax credit limitation and to their impact on FDII.
One dramatic element of simplification from operating through a foreign branch relates to the base erosion anti-abuse tax.
A U.S. company can run afoul of the base erosion anti-abuse tax by making payments to its foreign subsidiaries, even if no actual base erosion or abusive behavior is taking place. For this reason, some U.S. taxpayers have opted to transform foreign operations - to which they make payments - into branches to avoid the negative impact of this tax.
Other Considerations
This article does not address any regulatory or employment considerations that should be considered as well in determining the best structure. For example, some countries, such as the United Arab Emirates, require all foreign entities engaging in certain business activities to have at least a majority local shareholder, driving many multinational companies to open a branch instead.
Other U.S. Federal Income Tax Considerations
Generally, from a U.S. tax perspective, a U.S. corporation is better served operating its foreign business through a branch for the period that the foreign business generates net deductions and operating through a foreign corporation for the period that the foreign business generates net income.
However, with the sweeping changes to the U.S. international tax system under the TCJA, and the complicated international tax regime assembled by U.S. Department of the Treasury in its wake, much more consideration must now go into whether to operate through a foreign subsidiary or foreign branch.
Samuel Pollack and Naoko Watanabe are associates at Baker McKenzie.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[2] Internal Revenue Code Section 338 .
[3] Internal Revenue Code Section 245A .