Jeffrey Moss, Alfredo Casab and John Mucha of the law firm participated in several events with the delegation, giving presentations regarding business formation, contract drafting and pitfalls, and other aspects of doing business in the United States.

Our broad range of expertise allows us to routinely provide legal counsel and assist start-up companies, including foreign companies wishing to establish a presence in Michigan.

The post Dawda Sponsors Delegation of French Start-up Companies appeared first on Dawda PLC.

Americans who travel and even live for significant time periods abroad are often under some serious illusions about their eventual deaths. One of the most significant illusions is that American law follows them and protects them wherever they go. Although American citizenship does bring with it certain rights and privileges, the disposition of foreign property after death is not one area where Uncle Sam holds sway.

Some foreign countries have no local estate tax exemption for spouses. So, when foreign assets (particularly a piece of property or what are called “immoveable assets”) are in play, the surviving spouse can be stuck with a pretty hefty inheritance tax.

Other foreign countries have established inheritance policies that are quite different than American ones. There have been numerous cases in Frances where local succession laws overrode written wills.

Even the issue of what we call domicile varies by location. Different domiciles can include domicile of origin (where you were born), domicile of choice (where you choose to live, and presumably where you intend to die), deemed domicile (where you have lived for the last several years, the time frame can vary), and domicile of dependency (where you live as a dependent, either because of youth or incapacity).

Some individuals have included heirs on titles and deeds as well as created inheritance documents, already translated, in order to clarify their wishes.

By the way, the notion of spouse can also be a complicated one. Just as different states and the federal government diverge in their treatment of common law spouses and same sex partners, there is a wide variety of who can be considered a spouse internationally. No assumptions should be made regarding spousal inheritance, as the definition of families evolves world-wide.

One should always consult with an estate tax attorney before making decisions about all inheritance issues.

The post When that Flat in London Nearly Deflated Us: Inheritance Issues on Foreign Assets appeared first on Dawda PLC.

Dawda has structured joint ventures and technology development agreements for its clients on three continents in a host of industries ranging from software, automotive, consulting, sales, and “green” emissions monitoring technologies. Follow these golden rules we’ve learned from our travels and that joint venture may just morph into the business opportunity of your dreams:

RULE #1: Call the company’s tax advisors and lawyers long before you agree to anything. Tax exposure and legal liability will be two of the biggest driving forces behind how any JV is structured. Depending on the size of the transactions involved, there can be millions of dollars at stake in structuring a joint venture properly, so tax and legal professional advice should be sought very early in the process, long before approaching the potential JV partner with any proposal.

RULE #2: Follow the K.I.S.S. principle. Keeping it simple when structuring a joint venture is hard work. Joint venture partners often have different business philosophies and systems. Those differences are magnified even further when your JV partners are from different countries and have different cultural expectations. However, joint ventures work best when the parties have clearly defined roles and it is easy to allocate costs, revenues and ownership. Leaner, simpler structures almost always lead to better, more profitable results. Consider having a trial period where the parties work together on a small project to determine where there may be efficiencies and pitfalls before diving into a long term arrangement.

RULE #3: Have a written Joint Venture Agreement and take your time preparing it. A joint venture is not the time to have the deal terms sketched out on a cocktail napkin or strung together in a bunch of emails between sales people. There are two broad categories of joint ventures: the contractual joint venture where your company and the JV partner enter into a contract between the two of you or a “new-entity” JV where the companies form a new company under joint ownership and control. Both types have their strengths, but there are significant differences in the level of risk exposure and potential liability your company may be facing. If not documented correctly, your company can easily find itself liable for the actions of its joint venture partner even when it had no knowledge or input into what caused the liability in the first place.  (See Rules #1 and #2!)

RULE #4: No joint ownership of newly developed technology. The Joint Venture Agreement should be very clear that each party owns the intellectual property it brings to the relationship and it should spell out what limited rights, if any, the parties have to use the intellectual property and knowhow of the other party. But what happens if the parties or the new joint venture entity develop some new technology together? Who owns it? Who has the right to exploit it? Who pays the costs to maintain it? Do proceeds have to be shared if one party exploits or improves the new technology, but the other party does nothing? There are so many pitfalls inherent with the joint ownership of intellectual property that there is generally only one good piece of advice: Don’t do it. It is often sufficient for one party to own all of the new intellectual property while the other joint venture partner receives a broad and well drafted license to use the technology which gives them everything they need. Ownership of intellectual property is a complex issue that should be discussed with legal counselors and potential partners early in the formation process.

RULE #5: Know where the exit is and how to use it. A clearly defined exit strategy is an essential element of any Joint Venture Agreement, so the company can limit its exposure and protect its property and relationships if the joint venture sours. Work with your counselors to determine under what circumstances the company will want to be able terminate the agreement and what the rights and responsibilities of the partners are when that happens. Are there non-compete obligations that survive termination? Are payments due? What are access and use rights to proprietary data? Who “owns” the customer relationships and the intellectual property?

Joint venture relationships are complex, especially across borders, but following the rules above vastly increases the chances that your company will form strategic partnerships that stand the test of time and increase the bottom line.

By Scot C. Storrie

The post Making Joint Ventures Work appeared first on Dawda PLC.

So, now we have FATCA. Passed four years ago, it finally is “official” as of July of 2014.

Surprise, surprise…the era of FATCA brings with it incredible complications involving money, questions of citizenship, diplomacy and even Vladimir Putin.

So, what is FATCA, what does it do and what are the intended and unintended consequences?

FATCA is designed to tax every American person’s earnings, regardless of where they have earned that money, whether in downtown Detroit or downtown Dubai. Notice that the previous sentence said “American person” and not “American citizen”. FATCA is applicable for citizens or for those who are holding a green card.

The teeth in FATCA is that the United States is now using international banks and financial institutions to be the agents of compliance in this revenue producing scheme. Foreign banks and financial institutions are now required by American law to report assets held by Americans and to act as agents of the IRS, withholding the taxes owed. If the financial institutions do not comply, their US accounts would be subject to stiff penalties. So far, many of the world’s financial players are agreeing to these rules.

Complying with FATCA is reportedly onerous for foreign institutions in terms of the amount of paperwork required. There are between 6 and 7 million Americans who live abroad and anecdotal evidence indicates that it is getting harder for them to get loans or even for new Americans to be hired because of the FATCA paperwork hurdle. Some non-anecdotal evidence: the number of Americans who are renouncing their citizenship has increased four-fold since FATCA was announced.

The diplomacy issues that FATCA has brought about are significant. Several of our allies have pretty serious banking privacy laws (think Switzerland) and these nations’ desires to be good allies with the US are at odds with their own nations’ long traditions of banking secrecy.

Our Canadian allies are also quite concerned with the implications of FATCA. “FATCA has raised a number of concerns in Canada — among both dual Canada-U.S. citizens and Canadian financial institutions. One key concern was that the reporting obligations in respect of accounts in Canada would compel Canadian financial institutions to report information on account holders who are U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada) directly to the IRS, thus potentially violating Canadian privacy laws,” said a representative of the Canadian federal government.

The diplomatic situation in Russia is even more complicated. Russia really had no mechanism to assess and withhold taxes from Americans living there. Negotiations were underway between Russia and the US to create cooperation at the governmental level, but the negotiations stalled with Russia’s annexation of Crimea in March.

Legislation was approved by the Duma (the Russian Parliament) in July, but President Vladimir Putin waited until the eleventh hour to sign it, seemingly holding the legislation hostage during the crisis in Ukraine.  The legislation ultimately gave permission for Russian banks to provide information to foreign tax authorities but only if the taxpayer gives explicit permission. As you can guess, Russian banks aren’t so keen on retaining their American clients and have begun to drop them, phasing out business and personal banking agreements.

The post FATCA: Unintended Consequences appeared first on Dawda PLC.

Sometimes, understanding the cultural issues of clients and negotiation partners can be crucial to the successful conclusion of a deal. Critical issues that often are not the same internationally include sensitivity to time. Americans often view time as money, but other cultures may see the importance of relationship-building as more significant ultimately than signing an agreement. Certain cultures have a more or less formal business milieu, including dress, terms of address and general communication. There is also disparity among international companies as to how decisions are made, from authoritarian companies to those that rely on consensus-building.

The team at Dawda has assisted numerous clients in establishing and maintaining operations in the USA.  We speak the language of business.

by Alfredo Casab, Member, Dawda, Mann, Mulcahy & Sadler, PLC

The post Coming To America … foreign businesses establishing business operations in the USA appeared first on Dawda PLC.