coming to america. legal issues for international startups
DESCRIPTION
Presentation provides overview of key legal problems for international startups relocating to the USA. Presentation delivered at JFE Accelerator in San Francisco on September 3, 2014.TRANSCRIPT
COMING TO AMERICA LEGAL ISSUES FOR INTERNATIONAL STARTUPS
Tytus Cytowski, Managing Partner
JFE ACCELARTOR
SAN FRANCISCO, CALIFORNIASEPTEMBER 3, 2014
2CYTOWSKI LLC
Disclaimers
Any US federal tax advice contained in this presentation is not intended to be used, and cannot be used, to avoid penalties under the Internal Revenue Code or to promote, market or recommend any transaction or matter addressed herein.
This material is for informational purposes only and do not constitute advertising, a solicitation, or legal advice and should not be construed as legal advice for any purpose whatsoever.
Information contained herein is not intended to create, and receipt thereof does not constitute formation of, an attorney-client relationship.
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TYTUS CYTOWSKI
Attorney at Law
EDUCATION
• HARVARD LAW SCHOOL (LLM)• WARSAW UNIVERSITY (Mag Iur)
EXPERIENCE
• STARTUPS• VENTURE FINANCING• FLIP TRANSACTIONS
ADVISOR
• STARTUP WISEGUYS (Estonia)• DEFY VENTURES (NYC)
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HELLOJFE ACCELATORSTARTUPS!
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BASICS:
• FLIP STRUCTURE• FUNDRAISING• SECURITIES LAW• TAX• IP• IMMIGRATION
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STRUCTURING A FLIPTRANSACTION
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Create Delaware C-Corp
Exchange/Transfer Shares
C-Corp owns Non-US Subsidiary
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DANKE!
WWW.CYTLAW.COM
FLIP PROBLEMS:
- CORPORATE GOVERNANCE
-FOUNDER RIGHTS
- US & FOREIGN TAX
- IP
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DANKE!
WWW.CYTLAW.COM
FLIP FIRST & THEN GET FINANCING
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NOTE VS. EQUITY
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DANKE!
WWW.CYTLAW.COM
SECURITIES LAW*
*Very Important
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REGULATION DREGULATION SRULE 4 - 1/2
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US TAX - FLIP §§ 351 & 368 of IRS
CODE
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US TAXCONTROLLED FOREIGN CORPORATION (CFC)
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FOREIGN TAX – FLIP
- EXIT TAX
- DEFERED TAX
- HOLDING PERIODS
- TAX CREDITS
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IP IN THE USA?
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DANKE!
WWW.CYTLAW.COMTRANSFER PRICING
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US TECH INC.
If the profits from the sale of a product stay in the United States, they would be subject to a federal tax of 35 percent. But if money is paid to an Irish subsidiary as royalties on patents the company owns, it can ultimately be taxed at far lower rates.
IRISH SUBSIDIARY
If the Irish subsidiary is controlled by managers elsewhere, like the Caribbean, then the profits can skip across the world tax-free.
MANUFACTORING SUBSIDIARY
CARRIBEAN SUBSIDIARY
NO TAX
OVERSEAS CONSUMER
Product is sold overseas, money from the sale is sent to a second Irish subsidiary
SECOND IRISH SUB
Irish tax treaties make some inter-European transfers tax-free, the company can avoid taxes by routing the profits through the Netherlands
Netherlands
Irish subsidiary sends the profits to the overseas tax haven
Source http://www.nytimes.com/interactive/2012/04/28/business/Double-Irish-With-A-Dutch-Sandwich.html?_r=2&
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DANKE!
WWW.CYTLAW.COMFOUNDER
IMMIGRATION
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DANKE!
WWW.CYTLAW.COMTRADER VISA
E-1
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DANKE!
WWW.CYTLAW.COMINVESTOR VISA
E-2
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DANKE!
WWW.CYTLAW.COMINTRACOMPANY
VISAL-1
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DANKE!
WWW.CYTLAW.COMTODA RABA!
WWW.CYTLAW.COM
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WANT SLIDES
FOLLOW ON @FACEBOOK
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