Inna Ganz
by Inna Ganz
Inna Ganz is a US Tax Director at USTAXFS. Based in Geneva, she is an international tax specialist and works with PE/VC firms and other alternative funds across a range of sectors including technology, pharmaceuticals, manufacturing, automotive and financial services. She oversees a team that provides US tax advice and planning, and compliance services for individuals, partnerships, corporations, trusts and estates around the world. Contact Inna.
Form 5472 for foreign-owned US LLCs
Since 2017, a US limited liability company (“LLC”) that is wholly owned by a non-US person, including a non-US corporation, is required to report transactions with its non-US owner and related parties to the Internal Revenue Service (the “IRS”) on Form 5472 (Information Return of a 25% Foreign-Owned US Corporation or a Foreign Corporation Engaged in a US Trade or Business).
Although a single-member US LLC is, by default, a disregarded entity for US tax purposes, when foreign-owned, it is treated as a corporation solely for the purposes of the Form 5472 filing obligation. Every LLC that is 25 percent or more owned by a non-US person, even indirectly owned under attribution rules, is required to file Form 5472, unless the LLC had no reportable transactions (as described below) during the taxable year. Note that the de minimis exceptions to filing normally available to corporations do not apply to foreign-owned US LLCs.
Reportable transactions that occur between a foreign-owned LLC and its non-US owner include the following (among others):
Amounts borrowed/loaned;
Interest received/paid;
Consideration received/paid in exchange for services; and
Interest received/paid.
Reportable transactions have also been expanded to include amounts paid or received in connection with the formation, dissolution, acquisition, and disposition of the LLC, including contributions and distributions from the LLC. In addition to transactions with the LLC’s non-US owner, the LLC must also report transactions with a related party (persons and entities).
A penalty of USD 25,000 is assessed for failure to file Form 5472 when due and in the manner prescribed.
New US corporate registry: Beneficial ownership information reporting
In September 2022, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule implementing the beneficial ownership information reporting requirements of the Corporate Transparency Act (“CTA”). The final rule details regulations going into effect on 01 January 2024. Certain types of corporations, LLCs, and other similar entities either created in or registered to do business in the United States will be required to report their beneficial ownership information. Existing US entities must register by 31 December 2024, while entities either created or registered within the United States after 01 January 2024 will have 30 days from the date of formation to register.
Beneficial owner information gathered by the new US corporate registry will not be open to the public, but the US government will share this information with other governments and law enforcement agencies.
It is important that you review your US corporate entities and the complex definitions of who is a beneficial owner to understand these reporting obligations prior to 01 January 2024.
For further information on this topic, please contact Inna Ganz.
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