# Tax implications for American with startup company in Switzlerand



## tycash78 (7 mo ago)

hi,

what are the tax requirements for American citizens who found non-revenue generating startup companies in Europe? I co-founded a company in Switzerland and we subsequently set up a mirror company in Spain. These are non-revenue generating. What do I need to report to the IRS? 

thanks,
Tim


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## Bevdeforges (Nov 16, 2007)

It's hardly a "light read" but you may want to start here: 4.61.7 Controlled Foreign Corporations | Internal Revenue Service

If you are a US citizen and hold as little as 10% of a "foreign controlled corporation" (ill-defined at best) you may be subject to all sorts of reporting requirements, no matter what revenue the corporation generates.


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## 255 (Sep 8, 2018)

@tycash78 -- This is a big "can of worms." First you have choices. If you are a 10% or more owner, the company is a CFC, requiring the filing of IRS form 5471, with your tax return. https://www.irs.gov/pub/irs-pdf/f5471.pdf Instructions for Form 5471 (01/2022) | Internal Revenue Service If you go this route, you'll also have to deal with the GILTI tax. It depends on your ownership/control and the entity in question how to report GILTI. An alternative is to use IRS form 8832 to "check the box" to be considered a different entity, for U.S. tax purposes. Individual owners often use this form to "disregard" the foreign entity for tax purposes. In your case, you might want it taxed as a U.S. partnership (since you're a co-founder.) https://www.irs.gov/pub/irs-pdf/f8832.pdf https://www.irs.gov/pub/irs-pdf/f1065.pdf If There are other options too ( https://www.irs.gov/pub/irs-pdf/f1120.pdf .) Of course, if you are less than a 10% owner (say 9.9%,) and have no control, then there is not a reporting requirement. Cheers, 255


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