C Corp Foreign Ownership & Foreign Shareholder C Corp Guide

Are you a non-U.S. citizen looking to set up a corporation in Florida? We have good news for you: There are no restrictions on C corp foreign ownership of U.S. companies. 

You can form and operate a corporation in Florida from anywhere in the world – there is no requirement to be a U.S. citizen or resident, have a green card, or as much as set foot in the United States.

However, the rules differ depending on your immigration and residency status, and you should know what they are before registering your company. Let us explore these in more depth.

Is C Corp Foreign Ownership Allowed in Florida?

C corp foreign ownership is allowed in Florida. Non-resident aliens can form C corporations in much the same way as U.S. nationals and residents. There is no requirement to be a U.S. citizen, hold a green card, or meet a substantial presence test.

Incorporating a C Corporation as a Foreigner

Can a foreigner register a company in the U.S.A.? Some minimal differences aside, the rules on how to incorporate in Florida for a C corporation are largely the same for U.S. citizens, residents, and non-resident aliens.

To register your business, you should take the following steps:

• 
  

  Choose a name: Your corporation must have a unique name. To ensure that your chosen name is available, search the official records of the Florida Department of State Division of Corporations.

  
  
• 
  

  Hire a registered agent: If you are not a U.S. resident, you may not have a physical address in Florida. In that case, you will need a registered agent with a physical address in the state.

  
  
• 
  

  File the required paperwork: Next, you need to file a document known as Articles of Incorporation. You can do this online, via mail, or in person.

  
  
• 
  

  Get a Taxpayer Identification Number: Regardless of your immigration status, you need a Taxpayer Identification Number to form a company in Florida. You will need this when filing tax returns.

  
  
• 
  

  Get an EIN: A Federal Employer Identification Number or EIN is a unique, nine-digit number issued for tax purposes. You also need it to open a corporate bank account. It is the equivalent of a Social Security Number (SSN) for companies. To get an EIN as a non-citizen, you must submit Form SS-4 online, via mail, or by phone. With this number, you will be able to pay taxes in the U.S.

  
  

After you form your corporation, you need to draft its bylaws. For more details, read our Florida corporation bylaws article.

Working in a C Corporation as a Foreign Owner

While you can be an owner, a shareholder, or a director of a C corporation in the U.S. without a visa, you can only work for the business as a foreign officer if you have the proper documentation. Working for your corporation in the U.S. without a valid work visa is punishable with fines and, in some cases, deportation.

The visa you need depends on the nature of your work and various personal circumstances. Possible options include:

• 
  

  E-1 Treaty Trader Visa: An E-1 visa only enables you to carry out the functions you were approved for when the visa was issued. You are required to generate significant value for the business regarding the trade of goods, services, or banking. To qualify, you must be a citizen of a country that has signed a treaty of commerce and navigation with the U.S. An E-1 visa is valid for two years (extensions are possible) and covers your spouse and unmarried children under 21. 

  
  
• 
  

  E-2 Treaty Investor Visa: An E-2 visa allows you to work in a business that is your primary investment vehicle. You must come to the U.S. with the specific intention of developing the business and have control over the money used for the investment. You can bring your relatives, spouse, and children under 21 but must generate more income than is required to sustain yourself and your family. E-2 visas are valid for five years and can be renewed with two-year extensions.

  
  
• 
  

  EB-5 Job Creation Visa: To get an EB-5 Job Creation or Permanent Residency Visa, you must invest a minimum of $1,800,000 in a U.S. business and create 10 jobs for U.S. workers over two years. The amount can be lowered to $900,000 if you invest in a targeted employment area (TEA) with high unemployment. You, your spouse, and your unmarried children under 21 are eligible for a green card and may apply for citizenship 90 days before your five-year visa anniversary.

  
  
• 
  

  L-1 Multinational Transfer Visa: This visa allows foreign companies to transfer highly specialized employees like managers and executives to a U.S. branch, affiliate, or subsidiary. 

  
  
• 
  

  H-1B Visa: An H-1B visa enables U.S. companies to hire workers from specialized fields such as finance, legal, accounting, IT, engineering, medicine, etc. You must have a bachelor’s or master’s degree, a foreign equivalent, or 12 years of specialized work experience. The employer must also show a lack of qualified U.S. applicants. H-1B visas are valid for three years and can be extended up to six or 10 years, depending on your work experience.

  
  

One way to get around the visa requirements is to act as a consultant to the corporation. You can perform all consulting work from your home country and charge the corporation for your services under a written consultant’s agreement. Using this strategy, you may even be able to eliminate or at least reduce your profits and taxes payable in the U.S.

When & Why Should You Be Interested in a Foreign Shareholder C Corp?

There are many benefits to incorporating a C corporation instead of a limited liability company (LLC) or an S corporation. 

That said, the best business entity for you depends on various factors, including the size and nature of your business, your profits, the number of employees, your immigration status, and more.

You should also keep in mind that corporations are high-maintenance business structures. You need to elect a board of directors, hold shareholder meetings, maintain meeting minutes, issue stock, file annual reports, and more.

Non-Resident Aliens Can Be Direct Shareholders

There are no restrictions on non-resident aliens becoming direct shareholders and owners of C corporations. In contrast, S corp foreign shareholders may only hold indirect ownership by becoming trustees of a legal entity called Electing Small Business Trust (ESBT).

No U.S. Personal Tax Returns

The owners of a foreign-owned company with LLC status must file U.S. personal income tax returns. Quarterly income is taxed at the maximum graduate rate of 39.6% for individuals and 35% for corporations when distributing profit to foreign shareholders. 

In contrast, a foreign-owned corporation with C corp status does not need to file U.S. personal income tax returns. Double taxation is a non-issue as well if the owner’s tax-resident country complies with U.S. dividends rules.

For a deeper dive into this topic, read our article on the difference between Inc and LLC.

Rules for C Corporation Foreign Ownership

Here are some of the most important rules for C corp foreign ownership of U.S. companies you should know:

C Corp Foreign Ownership Tax Rates

As per the 2017 Tax Cuts and Jobs Act, foreign-owned corporations are subject to state income taxes and a 21% federal corporate tax rate on their global taxable income. The Florida corporate income tax rate is currently 5.5%.

Payment of C Corp Dividends to Foreign Shareholders 

Non-U.S. citizens who own stock in U.S. corporations may be eligible to receive corporate profits in the form of dividend distributions. Such distributions are considered U.S. source income. This includes dividends from both C corporations and LLCs that have elected to be treated as C corporations for tax purposes. 

Dividends paid to non-resident shareholders are subject to a 30% withholding tax of the gross amount. For instance, if your company owes you $1,000 in dividends, it will withhold $300 and pay it to the IRS. You must declare both the withholding taxes and dividend amount on Form 1042-S and Form 1042 at year-end.  

You may benefit from a lower withholding tax rate if the U.S. has signed a tax treaty with your country. U.K. residents, for example, enjoy a 15% withholding tax rate. Note that you must claim this tax benefit on a Form W-8BEN and submit the withholding certificate to the company.

C Corp Foreign Ownership: Key Takeaways

The rules on C corp foreign ownership are complex. A single mistake can have serious legal and financial consequences for both you and your business. Before forming a C corporation as a non-U.S. citizen, it is essential to do thorough research and talk to a U.S. tax and corporate attorney.

Need Help with C Corporation Foreign Shareholder Law?

We can help. Our attorneys have many years of experience advising foreign residents on tax law, business formation, and doing business in the U.S.

Contact the Cueto Law Group today. We will advise you on the best legal entity for your business.

Foreign-Owned Corporation FAQs