Understanding corporate tax penalties for global startups

At Fondo, we've helped 1,000+ founders with their corporate taxes over the years, frequently encountering those managing a Delaware C Corp Parent Company with an overseas subsidiary.

This setup brings several tax compliance implications, making it important to consult a tax professional to ensure all requirements are met.
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Here are some important things to keep in mind 👇

📝 Additional Forms Need to be Filed

There are additional forms required to be filed alongside your tax return to ensure compliance. These forms are particularly important, as the penalties for failing to file them can be significant.  

📄 Form 5472:

You must file a form disclosing any non-U.S. shareholders who own more than a 25% stake in the company.

🚫 $25,000 Late/Failure to File Penalty

📄 Form 114/FBAR:

You are required to file forms for any company-related bank accounts that hold more than $10,000 at any point during the year.

🚫 $10,000 Late/Failure to File Penalty

📄 Form 5471:

You must disclose all the financial activity of your subsidiary as well as all the ownership.

🚫 $10,000 Late/Failure to File Penalty

Penalty Calculation:

_{The penalties are based on a "per infraction" basis, so if you have multiple subsidiaries, shareholders, or bank accounts, the fines can really add up.}

🎉 Good News! 🎉

_{These penalties can be avoided by either filing on time or submitting an extension request.}


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