Desired End Result
- The
structure will be classified as a Non-Controlled Foreign Corporation (Non-CFC). This means profit can say offshore and US-taxes will be deferred until money is repatriated. This is accomplished in the following way:
- By being a non-CFC, US tax payers do not have to fill out Form 5471.
- By being a non-CFC, Subpart F does not apply which says income from CFCs is still taxable even if it is not repatriated.
- The
structure will be classified as a Non–Passive Foreign Investment Company (Non-PFIC). As a result, any income distributed to U.S. shareholders will be treated as a “qualified dividend,” meaning it will be taxed at the more favorable capital gains rate rather than as ordinary income.
- The
structure will benefit from a favorable tax rate by selecting Cyprus as the jurisdiction.
- Deloitte is conducting a transfer pricing study to determine the “embedded royalty” under the IP box regime which means “qualifying” income is taxed at 2.5% and the “non-qualifying” income is taxed at 12.5%.
AUDIO-2024-06-20-16-54-37.m4a
Deep Dives
Cyprus as Jurisdiction
Non–Controlled Foreign Corporation (Non-CFC)
Non–Passive Foreign Investment Company (Non-PFIC)