Ways to Use a US Corporation

The US corporation can do a lot of interesting things, and this page takes a closer look at them.

As a general point, the regular taxation of the US corporation is no longer as prohibitively high as it used to be, which opens up further interesting structuring options. Above all, though, the US corporation is attractive even when tax is not the main concern. 

Here you will find an overview of the US C corporation from a corporate law perspective.

1Entering the American market with a US corporation

The obvious use of the C corporation is as a local company for doing business in the USA.

If you want to do business in the American market, you can form a corporation as a subsidiary of your European company. The US tax treaties with a number of countries mirror the EU Parent-Subsidiary Directive: with the right structure, the usual withholding tax falls away, and the profits are not taxed again in the parent company's home country.

The tax structure in this scenario needs careful thought, and it pays to use the legal options the tax code offers to keep your US tax burden as low as possible.

In practice, charges between group companies are allowed as long as they are at arm's length. One option is for the European company to sell the goods to the US company while keeping a margin on its side.

Related companies can also bill the US company for consulting and management services, provided it is structured correctly.

2The US corporation as a billing company for customers outside the USA

The US corporation is ideal for billing customers outside the USA. Fast formation and account opening, a high level of confidentiality and strong banking infrastructure are just some of its advantages.

On top of that, the USA has no VAT, so there are no tedious VAT returns and the company's administration stays fairly lean.

This use is also attractive from a tax angle, because profits not earned with US customers are taxed at only 14% corporate tax (FDII, or FDDEI since 2026; until the end of 2025: 13.125%).

For deliveries into the EU, a number of VAT rules apply, in particular the distance selling thresholds and the rules for selling digital goods to consumers. US companies are covered by these rules, even though in reality many US businesses sidestep them, knowingly or not.

In this context, you also need to pay close attention to where the US company is actually managed and controlled. If you live in one of the usual high-tax countries, for example, you cannot run the company yourself, because otherwise the corporation would become taxable in your country of residence.

We therefore recommend building up enough substance in the USA no later than 18 months after forming the US company.

3Raising capital with a US corporation

Learn more about the corporation for raising capital

As a stock company, the corporation is particularly well suited to raising capital from investors. And because raising capital alone generates no revenue and therefore no profit, tax considerations do not come into play at first.

Keep in mind that a capital raise may only be publicly advertised (for example on the company's website or through intermediaries) once the corresponding private placement filing has been made with the US SEC. Mount Bonnell Advisors will be glad to handle this for you.

Further approvals may also be needed wherever the capital raise is publicly advertised (for example in Europe), such as from the national financial regulator. If in doubt, please talk to an experienced lawyer, as we cannot give binding advice on this topic.

There are several ways to raise capital. Most often the company issues shares, sometimes in different classes, such as founder shares and non-voting shares.

The par value per share is often set low (for example $0.10 per share). The price the investor actually pays per share is then many times higher, for example $1.

Shareholders receive classic stock certificates and are entered in the stock ledger, so they share in the company's later success.

4The US corporation as sponsor for a green card or US visa

Learn more about the C corporation as a visa and green card sponsor.

The C corporation works well as a sponsor for an American green card or a US visa (such as L-1 or E-1/E-2). Here too, tax optimization is usually not the main reason for forming the company.

The advantage of the corporation here is that the visa beneficiary usually becomes President and/or CEO of the US corporation, so their duties are clearly defined by the corporate structure.

This division of roles also signals that the applicant plans to build a management team in the USA, which the immigration authorities explicitly require.

An entrepreneur who owns an LLC can of course set up a similar management structure. With the C corporation, however, it is more obvious to outsiders.

By forming a C corporation, the applicant makes clear that the goal in the USA is a viable business that creates jobs (and not just a "garage company").

5Investing in American real estate with a US corporation

Learn more about the American corporation as a real estate company

Admittedly, most US tax advisors will shake their heads at the idea of using a C corporation as a real estate company. They would never recommend it to their American clients and would suggest a partnership instead, because it is more tax-efficient.

That may well make sense for US citizens and green card holders (and those are the clients most US advisors deal with day in, day out).

If you don't live in the USA, though, and want to invest in US real estate, the C Corporation deserves a closer look. The reason is fairly simple: the tax treatment of interests in US partnerships in your country of residence can quickly get complicated, especially when the partnership is not clearly engaged in a trade or business. That can easily lead to double or even triple taxation of any profits.

Against this background, the C corporation is a refreshingly simple alternative that is reliable and offers legal certainty.

And choosing a legal form is not only about the lowest tax rate: in terms of confidentiality and the option of not having to distribute profits, the C corporation is clearly the better choice, especially for international clients.

And at a corporate tax rate of 21%, taxation is no trifle, but it is not so high that it kills your motivation either.

6The US corporation as a holding company

Learn more about the US corporation as a holding company

Until 2017, a US corporation was of limited use as a holding company. The 2017 US tax reform turned that around completely, and since the One Big Beautiful Bill Act of 2025 this is permanent: we can recommend the C corporation as a holding company.

Since 2018, subsidiary profits already taxed abroad have been tax-free when distributed to the C corporation (participation exemption under IRC § 245A, similar to the EU Parent-Subsidiary Directive). Gains from selling shareholdings are also tax-free in the US holding company.

6.1Subsidiaries in low-tax and zero-tax countries

If a US company has subsidiaries in low-tax countries that earn profits from customers outside the US, those profits are taxed at the US parent at a maximum of around 12.6% (GILTI, called Net CFC Tested Income since 2026), and 90% of the tax paid abroad can be credited (until the end of 2025: 80%).

Example: a US corporation has a subsidiary on the Isle of Man whose profits are completely tax-free there. In the USA, these profits are now taxed at around 12.6%.

Interestingly, the calculation is based on total foreign income. That can create welcome side effects when the corporation owns subsidiaries in both high-tax and low-tax countries.

Example: A US corporation has a subsidiary on the Isle of Man whose profits are completely tax-free there. The subsidiary generates €100.000 in profit.

The US corporation has another subsidiary in Germany that pays around 25% corporate and trade tax on its profits. It also makes €100.000 in profit and pays €25.000 in tax in Germany. Of that, 90% can be claimed in the corporation, so €22.500.

So on its total foreign income of €200.000, the US company owes very little additional US tax: 12.6% of €200.000 is €25.200; minus the €22.500 credit, that leaves €2.700.

7Monetizing intellectual property (IP) with a US corporation

Learn more about the C Corporation as an IP holding company

Quite a few countries have tried their hand at a so-called IP box or patent box in recent years: the UK, Ireland and Luxembourg are just a few examples. The idea is to tax income from exploiting intellectual property more lightly than the usual corporate tax rates.

For an IP box to be legal, the OECD has set fairly strict requirements for how it is designed. For example, the intellectual property must have been developed locally. Some countries also specify that only patented intellectual property qualifies for the IP box.

The new US IP box (the "Innovation Box"), which US corporations can benefit from, is far more flexible: the law sets a reduced corporate tax rate of 14% on foreign income from IP (FDII, or FDDEI since 2026; until the end of 2025: 13.125%). The IP does not have to be developed in the US, and it does not have to be patented.

Example: Mr. Michel lives in Europe and owns a C Corporation in Jackson, WY, that earns $100,000 in profit per year. The company sells an app on the Apple and Google platforms in Europe (but NOT in the US stores). The profit is now subject to 14%, or $14,000, in US corporate tax. That leaves a net profit of $86,000.

In fact, the term IP is defined very broadly and can mean branding, software, goodwill and intangible assets in general.

8The C Corporation as a temporary company

You can't always set up the company structure you consider ideal right away. Time and cost are factors that often get in the way, especially in the early stages.

This scenario reminds me of a specific client, a very talented software developer who had built a fintech app with a group of friends and without any outside capital.

Strictly speaking, the app should now have been placed into a "mature" company structure with outside investors on board. But that is exactly what the client wanted to avoid. He calculated that he could significantly increase the company's value by putting the app into operation first. That way he could convince investors that the app was actually up and running, with real customers using the service.

For this proof of concept, the client chose a C Corporation and started selling the app in the US App Store, with respectable success. From the day the company was formed, the client knew it would only be a temporary solution.

Sure, you could argue it's money down the drain, since you plan to close the C Corporation again in a few months or years. But who cares, if it helps you raise half a million more in investment?

For the client, by the way, it was a complete success. Around 18 months after formation, investors came on board and were impressed by how far the client and his partners had come with relatively modest means.

As planned, the C Corporation was closed and the app moved into its permanent legal structure.

9The C Corporation as the company named in your website imprint

A legal requirement to publish an imprint (legal notice) on your website exists in only a handful of countries and is a typically German phenomenon. Most European countries have no such requirement, and neither does the US.

So what can you do if you have good reasons not to appear in the imprint yourself? Perhaps you don't live in a country with an imprint requirement at all, but you run a German-language website aimed at German customers and so you'd rather not do without an imprint?

Or you work in an industry known for competitors harassing each other with cease-and-desist letters. What then?

To stay anonymous for these or other reasons (always in consultation with your lawyer, of course), it can make sense to set up a C Corporation and list it in the imprint. Your name then appears nowhere, neither in the company register nor in the imprint.

Admittedly, this may have downsides too. Will customers still buy from me if a US company appears in the imprint? Only you can answer that. It's entirely possible that a C Corporation is not a good solution.

A European company wouldn't work either. As you know, in Europe it's now almost impossible to set up a company that effectively shields its owners. The details of everyone involved, including the shareholders of a corporation or partnership, are published in the company register.

Beneficial ownership registers are also on the rise and already enshrined in law in countries such as the UK. There, even trust arrangements have to be disclosed in the company register, in full public view.

This is where US companies in general, and the C Corporation in particular, offer much more protection. Shareholders are not published in the company register, and only one member of management has to be listed (usually the US director of the C Corporation that we provide when we form it for you).

10The C Corporation when you need a company very quickly (with or without a business account)

Sometimes things have to move fast. A particular deal only happens if you can sign a contract within three days. Otherwise you can watch it slip away. And the first payment is due a week later.

What now? Where do you get a corporation within three days that can invoice immediately and accept payments within a week?

With European companies, you're used to the fact that formation can be very quick in some countries (4 hours in the UK). But that's when the fun starts. In England, opening a bank account takes at least two weeks. Then you still need a VAT number.

The solution (you guessed it) can be a US C Corporation, which can be formed almost as quickly as a UK Limited. But the account opening is fast and smooth: you don't need to be in the US. You leave the bank with your account number in hand and can receive your first payments the same day.

And as you know, there is no VAT in the US. You simply issue net invoices and don't need to worry about a VAT number.

11The C Corporation as a fallback company held by a trusted person to keep you operational in insolvency

Just to be clear: we would never advise you to move assets abroad when insolvency looms and thereby harm your creditors. That is a criminal offense. We have been supporting clients through EU insolvency proceedings in England and Ireland since 2007, and we can assure you it's not a good idea.

Instead, we suggest the C Corporation as a fallback company through which you can invoice entirely new revenue, often temporarily, and so stay operational.

Because you have to disclose all your assets in insolvency proceedings, you cannot be the owner or beneficiary of the C Corporation. You need a trusted person (brother, friend, son, uncle) who takes care of forming the C Corporation and is its shareholder. You must under no circumstances have a trust agreement with this person. The C Corporation must not belong to you. Period.

Once the C Corporation is formed, your customers can pay the company and your trusted person can manage its funds.

Why is the C Corporation such an interesting fallback company? Couldn't you just set up a local company at home? Yes, that's absolutely possible. And in many cases the C Corporation isn't the obvious solution.

But if, for example, you don't have a trusted person nearby, or that person can't be the director of a local company, you have to turn to an alternative.

And that's where the C Corporation comes in. A C Corporation with a US business account is quick to form and offers a high level of confidentiality (no information exchange under the OECD CRS, shareholders are not published). In the right circumstances, the C Corporation can be the ideal immediate measure in a very difficult time.

As we said, this is not always possible or advisable. You should always discuss the approach with your lawyer. But we have a number of clients who bridged a very difficult period by forming a temporary C Corporation and came out safely on the other side.

12The C Corporation for asset protection in separation and divorce

We are by no means suggesting that you should hide assets from the court in divorce proceedings to keep your ex-spouse from being paid out.

You know it yourself: you made your bed, now you have to lie in it. You entered into this marriage, so now you have to take responsibility, as you agreed, and share your assets with your ex-spouse. Acceptance is an important step in the healing process; we all understand that.

However, we regularly speak with clients in separation and divorce situations where the ex-spouse is so hateful and aggressive that it's no longer about getting the fair share of assets he or she is entitled to. No, some ex-spouses want to destroy their former partner.

If the angry ex finds out that you're starting a new business venture after the divorce, she may try to make your life difficult and use lawyers and the courts to force you to open your books, believing she is still owed something.

In situations like these, it can be extremely helpful to set up a new company operating abroad. And here, of course, we mean the US C Corporation. The C Corporation stands out for its high level of confidentiality (for example, your name does not appear in the company register).

As we said, even in extreme emotional situations it's important to act properly. You cannot move assets into the C Corporation to shield them from your ex-spouse. But you can build new wealth and avoid constant trouble with lawyers and the courts.

14Working around a non-compete with a C Corporation

If you leave a well-paid position or sell your company, you are often bound by a non-compete for a few years, designed to stop you from using your personal contacts and deep expertise to compete with your former employer or the buyer of your business.

Such non-competes do not always fit the reality of the "early retiree." Not everyone who leaves a stressful job or sells a company wants to spend the rest of their life cycling through Tuscany with their spouse or playing the world's golf courses.

You often get plenty of partnership offers that you cannot pursue because the non-compete is far too strict. Our early retiree may be convinced that the new venture does not compete with the former employer or company at all, but the legal department sees everything in black and white and has no time for nuance. Request denied. End of story.

So what can you do?

As you may have guessed, a US C Corporation can help. Your name appears nowhere in the public register. Nobody connects you with the company.

US companies in general, and the C Corporation in particular, offer a high level of confidentiality, far more than European companies. Shareholders are not published in the public register and only one member of management has to be listed there (usually the US director we provide for the C Corporation when we form it).

Through the C Corporation you can sign contracts, issue invoices and wait calmly until you are free of the non-compete.

15Forming a C Corporation to stay out of sight of competitors

Sometimes, as a business owner, you do not want competitors looking over your shoulder. Perhaps you want to experiment with a new product line or break into a new market. Or perhaps you want to leave your core business behind and build something new.

In Europe it is now almost impossible to form a company whose owners stay effectively private. The details of everyone involved and of all shareholders in a corporation or partnership are published in the company register.

Beneficial ownership registers are also on the rise and already enshrined in law in countries such as the UK. There, even trust arrangements have to be disclosed in the company register, in full public view.

This is where US companies in general, and the C Corporation in particular, offer much more protection. Shareholders are not published in the public register and only one member of management has to be listed there (usually the US director we provide for the C Corporation when we form it).

So as a business owner you can set up a new company calmly and discreetly, without worrying that competitors will dig through the register to find out who is behind it.

16Forming a C Corporation to stay out of sight of customers

We once had a client from the UK who ran a successful wholesale business for plumbing supplies and installation materials, including in the USA. The company's customers were around 10,000 plumbers.

The client now planned to go directly after consumers and DIYers in the USA and sell through Amazon and eBay as well, in some cases at lower prices than the plumbers offered their own customers.

To protect the existing business with the plumbers, it was vital not to alienate them or give the impression of competing with their own customers. So the direct business could not possibly run under the same flag as the main business.

The client therefore decided to form a US C Corporation with a completely different company name and a completely different business address, and to run the consumer business through it.

Thanks to the high confidentiality of a C Corporation, the people acting for and owning the C Corporation can be kept effectively private. Even if someone is especially curious and checks the online register, with a C Corporation they cannot see who is behind the company.

For more depth, see everything on taxation of the US corporation, taking profits out of the corporation and the overview of US company formation. Whether an LLC would suit you better than a corporation is covered in the quick check for the best US legal form; we describe the uses of the US LLC separately. For the tax-free US LLC without a US permanent establishment, our sister site zerotax.llc is the right place.

In short

• The obvious use is a US corporation as a subsidiary of your European company for the American market.
• As a stock corporation it is well suited to raising capital from investors and to sponsoring a visa or green card.
• As a holding company, dividends from foreign subsidiaries have been tax-free since 2018; income from customers outside the USA is taxed at 14 percent.
• Shareholders do not appear in the public register, which makes the corporation attractive if you want to stay out of sight of competitors or customers.
• Where the business is managed helps determine tax liability: the company needs substance in the USA.

How we help you

• Form a CorporationThe US corporation (Inc) for growth, investors and your visa.
• Delaware holdingThe holding above your US companies, with one consolidated tax return.
• Tax structureA clean structure between parent company and US subsidiary, or between you and your US company, coordinated with your accountant.
• Visa Roadmap for Company FormationFormation and visa in one plan, so the company carries the visa.
• US Bank Account OpeningYour own access to the American financial system, even without an SSN.
• Company formation consultationEntity type, state and tax consequences, before you commit.