Brighton, MA asked in Banking, Business Formation and Business Law for Massachusetts

Q: I am an equity partner in a company overseas and want to understand some details

If I am an equity partner in a company incorporated in EU, and that company wants to

1. wants to loan money to a company in US, is that possible/legal?

2. wants to open a bank account in US without incorporating in US, possible? How do I get a tax ID?

3. wants to pay me (owner) a distribution, possible?

2 Lawyer Answers
Jonathan R. Roth
Jonathan R. Roth
Answered
  • Business Law Lawyer
  • Salem, MA
  • Licensed in Massachusetts

A: A EU company depending upon the jurisdiction it is incorporated can loan money to a US corporation. The Amount of money that is required to be withheld will depend upon the tax treaty as well as the amount of tax it is required to pay to the US. The foreign entity will need to apply for and obtain a TIN. There are other ways of handling the matter including open a US subsidiary such as a LLC and use it as the nominee for such transactions. The EU company is I assume formed in a jurisdiction that has a tax treaty with the US. The foreign company can pay you a dividend or distribution but you will need to declare the income in the US and if there is a foreign tax on the distribution it should be withheld and you can use the tax withheld as credit against the income generated from the distribution. This is a complicated issue and would best be dealt with by discussion and more information is needed.

Ali Shahrestani, Esq.
Ali Shahrestani, Esq.
PREMIUM
Answered
  • Business Law Lawyer
  • San Francisco, CA
  • Licensed in Massachusetts

A: I see no problem with 1 and 3, and he should apply for a TIN via the IRS. Consult with a CPA re: tax issues. More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney such as myself. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website, www.AEesq.com. I practice law in CA, NY, MA, and DC in the following areas of law: Business & Contracts, Criminal Defense, Divorce & Child Custody, and Education Law. This answer does not constitute legal advice; make any predictions, guarantees, or warranties; or create any Attorney-Client relationship.

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