Businesses Can Easily Undermine Their Overseas Expansion With The Wrong Tax Filing Decision

August 8, 2013

Understanding the Implications of Making an Entity a Branch or Separate Corporation Can Mean the Difference Between a Successful Overseas Venture or a Financial Mess, Says Marks Paneth Video

NEW YORK, NY--( Marketwired - August 8, 2013)

A US business acquiring a company overseas, or a foreign company looking to do business in the US, can mess up a potentially great investment or strategy overseas by making the wrong decision about whether to classify the foreign operation as a branch or separate corporation.

A video from James Robbins, Principal in the Tax Group at Marks Paneth , explains the highly meaningful implications of the seemingly trivial decision whether to elect an operation as a branch or separate corporation.

If the foreign entity is a start-up – one with a lot of losses -- it might be worthwhile to classify it as a branch. As a branch, the entity’s losses would generally flow through to the main company and offset profits, which will result in less tax owed.

On the other hand, if a foreign entity earns a large profit, it might be beneficial to classify it as a separate – but owned – entity. As a separate “blocker” company, it can defer the income to a time when there is less tax liability.

By looking closely at a foreign entity’s profits and losses and properly classifying a foreign entity, companies can ensure that what’s happening abroad is coming back in a tax efficient manner. The bottom line is that what may seem like a minor decision can have a big impact on the overall success of an overseas venture.

The video can be viewed here.


For more information, or to speak with James Robbins, please contact Katarina Wenk-Bodenmiller of Sommerfield Communications, Inc. at (212) 255-8386 or

About Marks Paneth LLP

Marks Paneth LLP is an accounting firm with over 500 people, of whom nearly 65 are partners and principals. The firm provides public and private businesses with a full range of auditing, accounting, tax, consulting, bankruptcy and restructuring services as well as litigation and corporate financial advisory services to domestic and international clients. The firm also specializes in providing tax advisory and consulting for high-net-worth individuals and their families, as well as a wide range of services for international, real estate, media, entertainment, nonprofit, professional and financial services, and energy clients. The firm has a strong track record supporting emerging growth companies, entrepreneurs, business owners and investors as they navigate the business life cycle.

The firm's subsidiary, Tailored Technologies, LLC, provides information technology consulting services. In addition, its membership in Morison International, a leading international association for independent business advisers, financial consulting and accounting firms, facilitates service delivery to clients throughout the United States and around the world. Marks Paneth LLP, whose origins date back to 1907, is the 32nd largest accounting firm in the nation and the 16th largest in the New York area. In addition, readers of the New York Law Journal rank Marks Paneth as one of the area's top forensic accounting firms for the third year in a row.

Its headquarters are in Manhattan. Additional offices are in Westchester, Long Island and the Cayman Islands. For more information, please visit

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