August 25


Cross Border Tax Compliance

By Jason Kovan

August 25, 2020

US companies involved in cross-border transactions, processes, financing, investments, acquisitions, and disposing of assets, etc., could face distinct and complicated cross border tax compliance issues. Businesses need to abide by tax laws and regulations on both sides of the border where they do business.

There is currently a heightened sense of scrutiny from global taxing authorities across international borders. The effect that non-compliance can have on your business and personal well-being cannot be taken lightly.

An all-encompassing strategy needs to take into account US federal and state tax laws and all tax regulations in the foreign countries where cross border transactions are done.

Corporations involved with international transactions should establish guidance policies that comply with cross border tax laws in each country where they do business.

When a company is in non-compliance, or guidelines are not current, or sufficiently researched and structured, then the resulting tax obligations could have an adverse effect on a company's profits, to the point of losses or a business forfeiture.

Each countries laws are different, and there may be unexpected personal civil and criminal implications, which could affect you if you are not informed and prepared.

When you conduct business internationally, you need a cohesive and integrated tax plan. It would be best if you had a conversation with us on how to structure your company and the relationships you create.

Cross-border transactions can get complicated in areas such as financing, investing, partnerships, acquisitions, insurances (liability, health, etc.), payroll taxes, and filings and issuing payroll tax records, retirement and pensions, sales and use tax, transactional reporting and possible exit strategies.

So, before you get involved in international transactions, you should have a conversation with us.  We have over 25 years of tax expertise in cross border transactional law and regulations. Most companies use tax attorneys and CPAs or their equivalents on both sides of the border. When needed, your representatives will be speaking to each other, to coordinate a unified effort.

At Tax Law for Expats, we advise our clients on US Federal and state income tax treatment and structuring for cross-border transactions, reporting, and tax and regulatory filings.

Here are some of the added services we provide to our clients.

Individual Income Tax Planning

If you have moved overseas, we can work with you to make sure you are not double taxed. US tax filings for individuals and businesses, vary according to a person's circumstances, especially in the international tax arena. Notwithstanding international tax treaties with the US, your place of residency does not determine your US tax liabilities. Your home and host country tax profiles need to be individually reviewed, and coordinated with any foreign tax advisers you have.

Here's why you need to consider individual income tax treaties. Tax laws continuously change, including bilateral agreements. We can clarify the regulations and prepare your tax filings.

Estate Tax & Probate

You need to consider your estate and whether your Will is enforceable in whole or part in the country of your residency. In some countries where you have joint spousal accounts, upon the demise of one spouse, bank accounts could be frozen if the bank accounts have not been set-up the right way.

The surviving spouse might otherwise have to wait until the estate goes through probate because parts of the estate could go to surviving children even if that's not your intention. You must make sure that all agreements comply with local and international laws, especially if you own assets in more than one country.

If you live outside of the US, you need to prepare your estate carefully. You need to know what foreign taxes (inheritance or transfer taxes) your heirs may be responsible for paying. In foreign countries, a failure to do a Will or Trust could cause your foreign assets to be distributed under that country's laws for those who do not have local Wills. This could lead to others inheriting your estate rather than the people you prefer.

You need to create a  US Will and / or Revocable Living Trust and make sure that is appropriate for your country of residency. This will ensure how your assets are distributed. A Living Trust not only avoids probate but allows your assets to be distributed to your named heirs, pays your outstanding obligations and taxes, etc.

Did you know that the US imposes estate taxes on your worldwide assets? The US will allow a credit in most situations for any foreign inheritance tax you paid on assets located overseas. There are US states that also impose estate or inheritance taxes, which could be an add-on to your Federal estate tax obligations.


Are you considering renouncing your US citizenship or Green Card? We can advise on this area and can also assist in the preparation of required filings, working closely with your overseas immigration counsel if needed.

US Corporate Compliance

US based companies conducting international business, face tax compliance challenges. Though they are subject to the local taxing authorities in the host jurisdictions, these entities must still comply with US tax laws.

US State & Local Tax

Our team has a broad base of clients with varying state and local tax expertise, including income, sales and use tax, property, franchise, business license, transfer and recording, and excise taxes.

Business Sales and Use Tax

Transactions between entities can become complicated without the proper oversight and structure. Calculating sales and use tax liability requires expert knowledge and an understanding of state transactional laws. We offer training, oversight, procedural audits and accounting audits in Sales and Use tax.

If you would like to speak with us call our US office at (305) 600-5924 or send us your contact information and we will call you back.

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