Tech USA, taxes and the Cloud – US Expansion
Following the innovative game changers and global digital revolution of the last 20 years, tech companies around the world have unprecedented opportunities to reach new markets. The United States remains one of the most attractive markets for any tech company that wants to fuel their global growth, have access to investment capital and increase profits. The US is also a highly legalistic society with complex tax revenue codes and regulations that can be frustrating to translate into common knowledge when considering US expansion, especially where there are grey areas in tax laws that have not evolved to address new technologies and how consumers around the world access products and services today.
The advancement of technology has created markets without borders and tech companies, in particular, have the ability to use cloud-based platforms and apps to transact and engage with people anywhere in the world. Companies can quickly and easily mass distribute products and online services, transacted with only the tap of a touchscreen. Software as a service (SaaS), infrastructure as a service (IaaS) and platform as a service (PaaS) are some of the commonly offered cloud-based services. With cloud-based software platforms, the user usually does not have rights, possession or interest to the software. Instead, they pay to have access to the application itself or to products which can be downloaded and/or streamed from the platform. This poses a challenge in determining the character of income and whether a transaction results in the lease or provision of services.
Our International Corporate Tax Director, Bradley Albin, and Group Managing Director, Nora Rothrock, will be speaking on US expansion at tech conferences that focus on technology companies who are looking to US markets for customers, investments or expansion.
Here is what’s happening over the next few weeks:
SelectUSA Tech Seminar, Edinburgh
What you need to know about the legal, tax, accounting, insurance, visa/immigration and other issues related to the practical aspects of expanding to the United States, including information on accessing the US market, venture capital and debt financing, with case studies and expert advice on marketing to a US audience. There will be 1-2-1 sessions with experts from Fried Frank, Hoxton Ventures, La Playa Insurance, Laura Devine Solicitors, Silicon Valley Bank, SelectUSA and US Tax & Financial Services.
“Coming to America” Academy, London
Seedcamp, one of the biggest European tech accelerators will partner with the talented team of lawyers at Fried Frank for a ‘Coming to America’ day. The aim is to help their companies access the US markets for expansion and growth opportunities. Dan Glazer, Partner at Fried Frank, along with our own Bradley Albin, will be mentoring these sessions. Check out Fried Frank’s publications on Coming to America.
LDNY (London New York) Festival, London
The LDNY Festival is a new month-long event launched in September 2014 that brings New York to London and takes London to New York. The LDNY Festival is set to be an annual celebration of the energy and talent of the two most exciting cities in the world: leaders in creativity, culture, entrepreneurialism and originality. It will also launch the LDNY Foundation, enabling young people from both cities to develop their talents and dreams. The LDNY Festival is in conjunction with London & Partners and NYC & Company, both agencies are the London and New York Mayor’s official promotional organisations for each city.
Sitara Zafar has provided some ideas on the types of questions you may need answering:
- As a foreign Cloud Service Provider (CSP) without a fixed place of business, can I still have US Permanent Establishment?
- What are the activities that create Nexus (presence) in the state and local jurisdictions, such as New York and California?
- What are the revenue classifications that may apply to the sourcing rules for US jurisdiction on CSP income?
- What are the US tax implications if an international company with foreign-based servers has US customers?
- What are some issues that I may have with US-based customers?
- What are the pros and cons of setting up physical operations and/or headquarters in the US?
- What are the reporting requirements for US investors?
Contact Bradley Albin for help understanding your US tax responsibilities from the beginning, whether you currently have US customers or plan on setting up an office in the US. For legal questions or setting up an entity in America, please contact Dan Glazer at Wilson Sonsini Goodrich and Rosati. If you wish to know more about the above events or organisations, then please contact us.