A business formed in the United States that is at least 25% owned by a foreign individual, company, or other entity.
What is a Foreign-Owned U.S. Entity?
A Foreign-Owned U.S. Entity is a legal business structure—such as an LLC, corporation, or partnership—established under U.S. state laws but partially or wholly owned by non-U.S. persons or entities. The “foreign-owned” designation typically applies when 25% or more of the ownership interest is held by individuals or companies that are not U.S. citizens, residents, or domestic businesses.
Foreign-owned U.S. entities can operate in the U.S., engage in e-commerce, hold assets, or serve as subsidiaries of overseas companies. They are subject to U.S. federal and state laws, including business registration, annual reporting, and taxation requirements. Special rules often apply to them—such as IRS Form 5472 filing for single-member LLCs owned by foreign persons, additional record-keeping obligations, and potential withholding tax on certain U.S.-source payments to foreign owners.
These entities can benefit from U.S. market access, legal protections, and credibility with customers and suppliers, but owners should understand the extra compliance requirements that come with foreign ownership, especially around tax filings and information disclosure.
