Taking and Receiving Profits from Your US Corporation

Once you have built a successful C Corporation in the USA, you need to know how to take the profits it has built up out of the company or distribute them. This page walks you through the options in detail.

You'll find all the key facts about the American C Corporation here.

If you haven't set up a US company yet, a trading US partnership may be worth considering, as its overall tax burden can be much lower than that of a corporation. In this context the LLC is not always the best choice, especially if you live in Europe. A Limited Partnership (LP) may be an option, though.

1Dividends paid to individuals

The US corporation can distribute its after-tax net profit to its shareholders as dividends.

Keep in mind that this usually triggers US withholding tax. The rate is 15% if your country of residence has a tax treaty with the US, otherwise 30%. Your country of residence will then normally charge tax on investment income as well.

The withholding tax paid in the USA is usually credited against your tax at home, so there is no double taxation.

If dividends are paid to a holding company, for example in the UK, the withholding tax can be reduced to 5% or eliminated entirely depending on the tax treaty; more on that in the next section.

2Dividends paid to foreign parent companies

The US corporation can also distribute its after-tax net profit as dividends to any parent companies abroad.

With key trading partners, the USA has an additional agreement that applies here and cuts US withholding tax on dividends to 0 or 5%. Countries where this applies include, for example, Germany and the United Kingdom.

The US tax burden then works out as follows: if a C Corporation makes a profit of $100,000, it first pays 21% corporate income tax, i.e. $21,000. If the net profit of $79,000 is paid out as a dividend, the company withholds 5% withholding tax on it, i.e. $3,950.

Another advantage: the foreign parent company does not need a US tax number (EIN) to receive dividends. The corporation in the USA is required to withhold the tax amount and report it on its annual tax return. The foreign company only needs a tax number if it files a refund claim, meaning the C Corporation mistakenly withheld too much and the excess is being reclaimed.

3A foreign company invoices the US company

You set up a foreign company in a low-tax US treaty country (such as Malta or Ireland).

That company invoices the US company, for example for:

• Head office functions (accounting, logistics, management, marketing, website development, etc.)

• Specialist work (you have a software developer you "lend" to the US company for, say, $2,000 a day)

• Renting out specialist machinery, tools and staff (the cameraman in our opening example rented the cameras owned by his British company to the US company).

• Purchasing company (so that part of the margin is earned in the foreign company).

• License fees (if you own licensable intellectual property)

4Loans from the foreign company

The foreign company can make loans to the US company, and the interest can be deducted as an expense in the US company.

Mezzanine capital currently carries interest of 10-15%, so there is real room to work with here.

5Business expenses & investments

Deducting travel and meal costs is not much fun in the USA either. Business meals are only 50% deductible. Hotel costs are fully deductible.

Other business expenses are treated fairly generously. Since you'll usually have a Visa or Mastercard linked to the company's US business account, you can use it to pay business expenses directly.

As of 2026, capital assets can be written off immediately, meaning they are deducted as business expenses. Assets acquired after January 19, 2025 qualify for 100% bonus depreciation, which the One Big Beautiful Bill Act of 2025 made permanent. The cap on immediate expensing under IRC § 179 for 2026 is $2,560,000, phasing out once purchases exceed $4,090,000 (Rev. Proc. 2025-32). Immediate expensing was introduced with the 2017 US tax reform.

6Loans to directors and shareholders

The US company can make loans to directors and shareholders. This is not unusual in the USA and is fine as long as the arrangement is at arm's length.

As always with arrangements like this, structure matters, above all the interest rate, the loan term and avoiding a disguised dividend.

More on borrowing from your own company under a commercial agreement in the USA.

7Company retirement plans

Only makes sense if you live in the USA. Profits put into a company retirement plan are, up to a certain limit, not taxed.

8Salary

Another very popular way to take money out of your company without paying high tax on dividends is to pay a salary to the director, which usually means yourself.

Bear in mind, of course, that this salary is subject to ordinary income tax. So here too, think carefully in advance about whether this step, which also involves some effort, is really worth it.

More on paying a salary instead of distributing company profits.

9Stock options

Only if you live in the USA: if you grant stock options to employees (and yourself), later dividends and sale proceeds from the exercised option may be taxed favorably for the employee.

In the end, the gain is taxed as capital gains rather than as income. Getting the structure right is what counts.

For the bigger picture, see our pages on taxation of the US corporation and tax-efficient withdrawals from your US company, plus our overview of US company formation. To see how withdrawals work for the sister entity type, read Taking profits out of a US LLC. And if your structure should work without any US permanent establishment, our sister site zerotax.llc is the right place to go.

In short

• The US corporation pays out its after-tax profit as dividends; US withholding tax usually applies: 15 percent if you live in a treaty country, otherwise 30 percent.
• You can also reduce profits through invoices and loans from a foreign company, business expenses and immediate expensing.
• Salary, shareholder loans, company retirement plans and stock options are further routes, though most of them only make sense if you live in the US or the arrangement holds up to an arm's length test.

How we help you

• Withholding taxW-8 forms, withholding and treaty benefits, done right.
• Tax structureA clean structure between parent company and US subsidiary, or between you and your US company, coordinated with your accountant.
• Corporation tax returnForm 1120 and Form 5472 for your US corporation.
• PayrollPayroll, payroll taxes and filings for your employees in the USA.
• US Tax ConsultationYour US tax question, answered by people who know both sides.