Check-the-box as a fine-tuning instrument when choosing the optimum form of taxation in the USA
In Germany, taxation is strictly governed by the legal form and the subdivision into corporation and income taxes. By contrast, in the USA, the classification of companies for tax purposes is basically carried out independently of their classification under company law. In the course of this, the “check-the-box (CTB)“ option is of great importance.
Based on the choice of legal structure and, possibly, CTB, in order to achieve an optimal overall tax burden and, at the same time, to avoid tax pitfalls there should be a thorough review, beforehand, of the choice of the US company structure and its specific arrangements as well as any CTB election.
Read more in PKF newsletter 07/2017.