Relocating employees to the U.S. can create unnecessary tax exposure for your foreign parent company if not done right. If you do not first form a U.S. entity you may be creating a permanent establishment for the parent company in the U.S. which can put all of the parent company’s income at risk of U.S. tax liability.
Furthermore, stock options granted in a foreign country can create unexpected consequences once the employee becomes a U.S. resident. For example, options issued in the home country with an exercise price below the fair market value of the shares may be subject to penalties in the U.S.
We can assist you with properly structuring the parent subsidiary relationship and reviewing your compensation plan. We can also conduct exit interviews with your employees to advise them of the anticipated U.S. tax obligations they will face upon relocation.