Foreign Investment into the U.S. – Part I: Overview of Taxes
With the strength and stability of the U.S. economy, strong rule of law, and new favorable tax laws, foreign investment into the U.S. is continuing to grow. Although the tax law changes have been favorable for inbound investment, U.S. tax law remains aggressive and sometimes harsh. The good news is that with very detailed laws the outcomes are predictable making tax planning possible.
The two most important taxes investors and businesses need to consider are estate and gift taxes, also known as the transfer tax, and income taxes. Income tax is the more common and straightforward tax on U.S. source income, while estate and gift taxes are a transfer tax that generally comes into play when transferring wealth within a family. Both are very important, and both have their own set of laws that can be very different, including having different definitions of what makes someone a U.S. person.
In the following set of posts, we will go through some of the basics of when these taxes apply, how the tax is calculated, common issues, planning techniques and current trends.