How your home country taxes the US company you own

Owning a US company from Europe raises three questions: can your home country tax its profits before they are paid out, what happens when a dividend arrives at home, and how much does the United States withhold on the way. The answers differ country by country, and the details decide whether a US subsidiary is a clean investment or a tax trap. Below, each country's rules are set out in turn, followed by a side-by-side table.

Norway: NOKUS, fritaksmetoden and a flat 15% US withholding

Norway reaches a US company you own through two sets of rules: the NOKUS regime for controlled companies in low-tax countries, and the participation exemption (fritaksmetoden) for a Norwegian company that receives dividends. The tax treaty between Norway and the United States was signed in Oslo on 3 December 1971 and entered into force on 29 November 1972. It was amended by a Protocol signed in Oslo on 19 September 1980, in force from 15 December 1981.

NOKUS (CFC rules). Under skatteloven §§ 10-60 to 10-68, participants are taxed on their share of the profit of a Norwegian-controlled company resident in a low-tax country, whether or not the profit is distributed. Norwegian control exists where Norwegian taxpayers directly or indirectly own or control at least half of the shares or capital at both the beginning and the end of the income year. A country is low-tax where the ordinary income tax on the company's total profit is less than two thirds of the tax it would have paid as a Norwegian resident. The Norwegian company rate on ordinary income for 2026 is 22.0%, so the comparison is with a notional tax of about 14.67% of a profit computed under Norwegian rules.

For a US corporation the rate comparison is often beside the point. NOKUS does not apply where the company is covered by a Norwegian tax treaty and its income is not mainly passive (§ 10-64 a). A US corporation is a US resident under Article 3(1)(b)(i) of the treaty, so an operating US C corporation is outside NOKUS whatever the rate comparison shows. Only a US company with mainly passive income can be caught. The separate carve-out in § 10-64 b for companies genuinely established with real economic activity in an EEA state does not cover the United States.

Dividends at home. Under § 2-38 a Norwegian company is exempt on gains and on lawfully distributed dividends from shares in corresponding foreign companies, and cannot deduct losses on them. For a company resident outside the EEA, such as a US subsidiary, the conditions are stricter:

• Dividends: the Norwegian company must own at least 10% of the capital and hold at least 10% of the votes continuously for a two-year period that includes the date of the dividend.
• Gains: the Norwegian company must have owned at least 10% of the capital and votes continuously for the two years up to the sale.
• Low-tax exclusion: the exemption never covers income on shares in a company resident in a low-tax country outside the EEA as defined in § 10-63. Unlike NOKUS, this exclusion has no treaty carve-out, so a US subsidiary taxed at less than two thirds of the Norwegian level falls outside the exemption.

An exempt dividend is not entirely tax-free: 3% of it is taxable income for the Norwegian company, an effective 0.66% at 22%. The statute lifts the three-percent rule for dividends within a group meeting the § 10-4 ownership condition and extends that exception expressly to companies resident in the EEA; it does not name companies outside the EEA.

Where Norway does tax a dividend from a US corporation in which a Norwegian corporation owns at least 10%, Article 23(2)(c) of the treaty gives an indirect credit for the US corporate tax on the underlying profits, provided the credit is grossed up as income.

US withholding. Article 8(2), as amended in 1980, caps US tax on dividends paid to a Norwegian resident at 15% of the gross amount, with no lower rate for corporate shareholders. The original 1971 text allowed 10% for a corporation owning at least 10% of the voting stock; the 1980 Protocol deleted that paragraph and replaced it with the single 15% cap, so the treaty has no 5% or 0% dividend rate. The treaty has no modern limitation-on-benefits article. Instead, Article 20 denies the dividend, interest, royalty and capital gains articles to a corporation that enjoys special measures making its home tax substantially lower than the general corporate tax and that is at least 25% owned by persons other than individual residents of its state.

Sweden: the United States is on the CFC white list

The Sweden-United States convention was signed in Stockholm on 1 September 1994 and entered into force on 26 October 1995. Sweden applies it to income derived on or after 1 January 1996. A Protocol signed in Washington on 30 September 2005 entered into force on 31 August 2006, and Swedish law (Lag 1994:1617) gives the convention force of law in the wording resulting from that Protocol.

US LLCs. For income derived through an entity that is fiscally transparent under the law of either state, such as a US LLC that has not elected corporate treatment, Article 1(6) treats the item as derived by a resident only to the extent that state's tax law treats it as income of a resident.

CFC rules. Chapter 39 a of the Income Tax Act applies to a delägare holding, alone or with related persons, at least 25% of the foreign legal person's capital or votes at the end of the holder's tax year. Income is low-taxed if it is untaxed or taxed more lightly than Swedish tax on 55% of it as business income of a Swedish limited company. With the state income tax for legal persons at 20.6%, the threshold works out at about 11.3% of a Swedish-computed profit.

A US corporation does not have to pass that test. Even where the 55% test is failed, income is not low-taxed if the foreign legal person is resident and liable to tax in an area listed in annex 39 a and not covered by an exception listed there. The annex lists the United States in the America group without any income exception, so a US corporation resident and liable to tax in the United States is outside the Swedish CFC rules. The separate carve-out for genuine establishments with commercially motivated activity in an EEA state does not cover the United States, but the white list makes it unnecessary.

Dividends at home. Dividends on a näringsbetingad andel are not taxable. A share qualifies when it is owned by, among others, a Swedish limited company that is not an investment company, is held as a capital asset and meets one of three conditions:

• it is unlisted;
• it represents 10% or more of the votes; or
• it is held for the business of the owner or a closely connected company.

Unlisted shares qualify with no minimum holding and no holding period. Two exceptions matter for a US subsidiary:

• a dividend from a company resident in another state is taxable to the extent the paying company can deduct it as interest or similar;
• for listed shares, the dividend becomes taxable if the share is sold or stops being näringsbetingad within one year.

The treaty supports the same result. Article 23(2)(c) exempts dividends paid by a US-resident company to a Swedish-resident company to the extent they would be exempt if both companies were Swedish, provided the profits were subject to the normal US corporate tax.

US withholding. Article 10(2) caps US tax on dividends at 5% where the beneficial owner is a company owning shares with at least 10% of the voting power of the payer, and at 15% in all other cases. Dividends are exempt at source where the beneficial owner is a Swedish company that has owned shares with 80% or more of the voting power for the 12 months ending on the date entitlement is determined and that meets one of these limitation-on-benefits tests of Article 17:

• it is publicly traded, or at least 50% owned by publicly traded companies (Article 17(2)(c));
• it meets the ownership and base erosion test of Article 17(2)(e) together with the active business condition of Article 17(4);
• it qualifies for derivative benefits under Article 17(3); or
• it obtains a competent authority determination under Article 17(6).

Dividends beneficially owned by a Swedish pension fund are also exempt, provided they do not derive from a trade or business of the fund and the fund does not sell the holding within two months of acquiring it. Every benefit is subject to Article 17: a resident is entitled to treaty benefits only to the extent that article provides.

Denmark: a transparent LLC and an income-based CFC test

The Denmark-United States convention was signed on 19 August 1999 and entered into force on 31 March 2000, with effect for withholding taxes from 1 May 2000 and for other taxes from 1 January 2001. The amending protocol signed on 2 May 2006 entered into force on 28 December 2007; Skattestyrelsen records its effect from 1 February 2008 for withholding taxes and from 1 January 2008 for other taxes.

US LLCs. Skattestyrelsen's treaty guidance cites the binding ruling SKM2013.361.SR, in which the Tax Council confirmed that a US LLC is a fiscally transparent entity under Danish rules. The ruling turns on its facts, and classification follows Danish entity criteria. Under Article 4(1)(d) of the treaty, income derived through an entity that is fiscally transparent under either state's law is treated as derived by a resident to the extent that state taxes it as a resident's income.

CFC rules. Under selskabsskatteloven § 32, a Danish company is a parent if, alone or with related persons, it directly or indirectly controls more than 50% of the votes, owns more than 50% of the capital or is entitled to more than 50% of the profit. CFC taxation applies only if the subsidiary's CFC income exceeds one third of its total taxable income in the income year. CFC income is the sum of listed passive items: interest, gains on claims and financial contracts, income from intangibles (with a substance carve-out), taxable dividends, share gains, financial leasing, insurance, banking and other financial income, and income of invoicing companies.

None of the conditions refers to the subsidiary's tax rate, so a US corporation's 21% federal rate does not by itself keep it outside the rule. What keeps an operating business out is its income mix: a US C corporation with mainly operating income, where CFC income is one third or less, is outside § 32. Where CFC income is included, the parent gets a reduction for the subsidiary's Danish and foreign taxes under ligningsloven § 33.

Dividends at home. Dividends received by a Danish company from a company resident abroad are excluded from taxable income when the recipient is the beneficial owner (selskabsskatteloven § 13). The exemption applies only to dividends on subsidiary shares and group shares, and not to the extent the paying company deducts the distribution. For a US subsidiary the conditions are:

• the Danish company holds at least 10% of the subsidiary's share capital (subsidiary shares, aktieavancebeskatningsloven § 4 A);
• the subsidiary is liable to corporate tax without exemption in its state of residence;
• that state's competent authority must exchange information with Denmark under a tax treaty or other agreement. Article 26 of the US-Denmark convention obliges the competent authorities to exchange information relevant to the convention and to domestic tax law, which meets this limb.

Where a dividend is taxed in Denmark, Article 23(3) gives a credit for the US income tax paid, capped at the Danish tax attributable to that income.

US withholding. Article 10(2), as replaced by the 2006 protocol, caps US tax on dividends at 5% where the beneficial owner is a company holding directly at least 10% of the paying company's share capital, and at 15% in all other cases. Skattestyrelsen notes that the 5% rate carries no minimum holding period before the dividend is paid. Dividends are exempt at source where the beneficial owner is a Danish company that has owned 80% or more of the voting power for the 12 months ending on the date entitlement is determined and that also meets one of the Article 22 limitation-on-benefits tests named there: the listed-company tests, the ownership and base-erosion test combined with the active trade or business test, the derivative-benefits test, or a competent authority determination. Dividends beneficially owned by a Danish pension fund as described in Article 22(2)(e) are also exempt, unless derived from a business carried on by the fund or through an associated enterprise.

Finland: the treaty exempts dividends that domestic law would tax

The Finland-United States convention was signed at Helsinki on 21 September 1989 and entered into force on 30 December 1990, with general effect from 1 January 1991. The amending protocol signed at Helsinki on 31 May 2006 has been in force since 28 December 2007.

US LLCs. Under Article 1(6), added by the protocol, income derived through an entity that is fiscally transparent under the law of either state is treated as derived by a resident to the extent that state taxes it as a resident's income.

CFC rules. The CFC Act (1217/1994) applies to a foreign entity in which the Finnish taxpayer, alone or with related parties, holds directly or indirectly at least 25% of the votes, capital or profit entitlement. The second condition is low taxation: the entity's effective tax level in its jurisdiction must be below 3/5 of the tax level of a company resident in Finland. With the Finnish corporate rate at 20%, the threshold is an effective rate of 12%. A US C corporation whose effective tax level is at or above that is not a CFC under this test; the US federal rate alone is 21%.

There is a further carve-out. An entity genuinely established and actually carrying on economic activity in an EEA state is never a CFC, and the same applies to an entity outside the EEA if its jurisdiction was not on the EU list of non-cooperative jurisdictions, exchanges tax information with Finland adequately and in practice, and the entity's income comes mainly from industrial production, comparable production or services, shipping, or sales and marketing serving them. Where CFC income is taxed, the foreign income taxes the CFC paid on the same income are credited, up to the Finnish tax on that income.

Dividends at home. Under the Business Income Tax Act (EVL 6 a §), dividends a Finnish company receives from companies other than Finnish companies, EU Parent-Subsidiary Directive companies and qualifying EEA companies are taxable income, which covers dividends from a US company. The treaty overrides this: under Article 23(1)(b), dividends paid by a US company to a Finnish company that directly owns at least 10% of its voting stock are exempt from Finnish tax. Where Finland does tax US income, Article 23(1)(a) gives a credit for the US tax, capped at the Finnish tax attributable to that income.

US withholding. Article 10(2), as replaced by the protocol, caps US tax on dividends at 5% where the beneficial owner is a company owning directly at least 10% of the voting stock, and at 15% in all other cases. Dividends are exempt at source where the beneficial owner is a Finnish company that has owned 80% or more of the voting power for the 12 months ending on the date entitlement is determined and that meets one of the Article 16 limitation-on-benefits tests named there: the listed-company tests, ownership and base-erosion plus active business, derivative benefits, or a competent authority determination. Dividends beneficially owned by a Finnish pension fund as defined in Article 16(7)(j) are also exempt, unless derived from a business carried on by the fund or through an associated enterprise.

The United Kingdom: an opaque LLC and an excluded territory

The US-UK convention was signed in London on 24 July 2001, amended by a protocol signed on 19 July 2002, and entered into force on 31 March 2003.

US LLCs. HMRC's list of foreign entity classifications treats a US Limited Liability Company, including a New York LLC, as opaque. HMRC says the list gives only a general view and that its view of a specific entity may vary.

CFC rules. The United States is listed in Part 1 of the Schedule to the Controlled Foreign Companies (Excluded Territories) Regulations 2012 (SI 2012/3024), which makes it an excluded territory for the CFC excluded territories exemption. For a CFC resident in the United States, as for Australia, Canada, France, Germany and Japan, the income threshold and IP conditions of section 371KB(1)(b) and (c) do not have to be met, subject to requirements A and B. The modified exemption still requires that:

• at no time in the accounting period does the CFC carry on business through a permanent establishment outside its territory of residence; and
• the CFC is not, at any time in the accounting period, involved in an arrangement whose main purpose, or one of whose main purposes, is to obtain a tax advantage.

Separately, under the tax exemption in section 371NB, a CFC is exempt if the tax paid in its territory on its local profits is at least 75% of the corresponding UK corporation tax. The UK main rate of corporation tax is 25% for profits above GBP 250,000, and the US federal corporate income tax is 21% of taxable income.

Dividends at home. The UK distinguishes small companies from the rest:

• Small company: a dividend is exempt if the payer is resident only in the UK or a qualifying territory, it is not a non-dividend distribution of a listed kind, no foreign deduction is allowed for it, and it is not part of a tax advantage scheme. A qualifying territory is one with double taxation relief arrangements in effect that contain a non-discrimination provision, and the US-UK convention contains one in Article 25(1).
• Other companies: a dividend is exempt if it falls into an exempt class, is not a listed non-dividend distribution and is not deductible abroad. Distributions from a company the recipient controls are an exempt class.

US withholding. Article 10(2) caps US tax on dividends at 5% where the beneficial owner is a company holding directly or indirectly at least 10% of the voting power of the payer, and at 15% in all other cases. Dividends are exempt at source where the beneficial owner is a UK company that has owned shares representing 80% or more of the voting power for a 12-month period ending on the date the dividend is declared, and that also:

• held the 80% before 1 October 1998;
• is a qualified person under the listed-company test of Article 23(2)(c), meaning its principal class of shares is listed on a recognised stock exchange and regularly traded, or at least 50% of its voting power and value is owned by five or fewer such listed companies;
• is entitled to the dividend benefits under the derivative benefits rule of Article 23(3); or
• has a competent authority determination under Article 23(6).

Dividends beneficially owned by a UK pension scheme are also exempt, unless derived from a business carried on by the scheme.

Ireland: ATAD CFC rules and a participation exemption from 2025

The Ireland-US convention, with protocol and exchanges of letters, was signed at Dublin on 28 July 1997 and entered into force on 17 December 1997. An amending convention signed at Washington on 24 September 1999 entered into force on 13 July 2000.

US LLCs. Revenue's classification factors for foreign entities are not a conclusive list; each entity is considered on its own characteristics. Under section 1009A TCA (Finance Act 2025), a foreign body corporate that is substantially similar to an Irish partnership is taxed, with its members, in the same way as a partnership and its partners.

CFC rules. Part 35B TCA 1997 implements the ATAD CFC rules and applies from 1 January 2019. It attributes to the Irish controlling company the undistributed income of a CFC arising from non-genuine arrangements put in place for the essential purpose of avoiding tax, where significant people functions are carried out in Ireland. Control broadly means direct or indirect ownership of, or entitlement to, more than 50% of the CFC's share capital, voting power or distribution amount. No charge arises where Irish transfer pricing has applied, where the arrangements are at arm's length, or where an exemption applies. The exemptions include:

• Low accounting profit: accounting profits under EUR 750,000 with non-trading income under EUR 75,000, or accounting profits under EUR 75,000.
• Low profit margin: accounting profits of less than 10% of relevant operating costs.
• Effective tax rate: profits may come within the charge only where the CFC's tax, including any foreign QDTT, is less than half the tax it would have paid as an Irish resident. The US federal corporate income tax is 21% of taxable income.

Dividends at home. The participation exemption exempts from corporation tax a relevant distribution made by a relevant subsidiary to a parent company on or after 1 January 2025, where the parent holds a qualifying participation:

• at least 5% of the subsidiary's ordinary share capital, held continuously for at least 12 months including the distribution date;
• the subsidiary is in a relevant territory: an EU or EEA country or a country with which Ireland has a double tax treaty, excluding countries on the EU list of non-cooperative jurisdictions;
• for distributions from 1 January 2026, the subsidiary must have been Irish resident, or resident in a relevant territory and not generally exempt from foreign tax, throughout the preceding three years.

The exemption is an alternative to a double tax credit. Once claimed, it applies to all relevant distributions from all relevant subsidiaries for that accounting period.

US withholding. Article 10(2) caps US tax on dividends at 5% where the beneficial owner is a company owning at least 10% of the voting stock of the payer, and at 15% in all other cases; Article 10 provides no lower rate. Treaty benefits are available only to a resident that is a qualified person under the limitation on benefits article.

The Netherlands: the United States is not a designated low-tax state

The Dutch Ministry of Finance lists the US treaty as in force: signed on 18 December 1992 and in force from 31 December 1993, with protocols signed on 13 October 1993 (in force 30 December 1993) and 8 March 2004 (in force 28 December 2004).

CFC rules. Under article 13ab of the Corporate Income Tax Act 1969, the profit of a Dutch taxpayer includes the tainted income of a controlled entity, pro rata to its interest. Tainted income comprises interest, royalties, dividends and share disposal gains, financial leasing, insurance, banking and other financial income, and low-value invoicing income. The inclusion applies only to the extent the year's tainted income is positive and has not been distributed before the end of that year.

A controlled entity is one in which the taxpayer, with related parties, holds more than 50%, provided it is established in a state designated by ministerial regulation because it levies no profit tax or a rate below 9%, or appears on the EU list of non-cooperative jurisdictions. The designated low-tax states are Anguilla, Bahamas, Bahrain, Bermuda, British Virgin Islands, Guernsey, Isle of Man, Jersey, Cayman Islands, Turkmenistan, Turks and Caicos Islands and Vanuatu. The states designated as EU non-cooperative jurisdictions are the US Virgin Islands, American Samoa, Anguilla, Fiji, Guam, Palau, Panama, the Russian Federation, Samoa, Trinidad and Tobago and Vanuatu. The United States itself is on neither list, and its 21% federal corporate rate is above the 9% threshold, so a US corporation is not a controlled entity. Two further exits apply in any case: there is no controlled entity where its income mainly consists of income other than tainted income, and the inclusion does not apply if the entity carries on a substantial economic activity.

Dividends at home. Under the participation exemption in article 13, benefits from a participation, and the costs of acquiring or disposing of it, are left out of taxable profit. A participation exists where the taxpayer holds at least 5% of the nominal paid-up capital of a company whose capital is divided into shares. The exemption does not apply to a participation held as an investment unless it is a qualifying investment participation, and an investment participation qualifies if the entity is subject to a profit tax resulting in a realistic levy by Dutch standards.

US withholding. Under Article 10(2) as substituted by the 2004 protocol, US tax on dividends is capped at 5% where the beneficial owner is a company holding directly at least 10% of the voting power of the payer, and at 15% in all other cases. Dividends are exempt at source where the beneficial owner is a Dutch company that has owned directly 80% or more of the voting power for a 12-month period ending on the declaration date, and that:

• held the 80% before 1 October 1998;
• is a listed-company qualified person under Article 26(2)(c), meaning its principal class of shares is listed on a recognised stock exchange and regularly traded, unless it has no substantial presence in its state of residence;
• is entitled under Article 26(3); or
• has a competent authority determination under Article 26(7).

Dividend and interest income of an exempt Dutch pension trust is also exempt at source under Article 35(1), except income from a trade or business or from a related person.

Switzerland: the participation reduction and 5% at source

The Switzerland-US convention was concluded on 2 October 1996 and entered into force on 19 December 1997, when the instruments of ratification were exchanged. A protocol signed in Washington on 23 September 2009 has been in force since 20 September 2019.

US LLCs. Under the treaty, a partnership, estate or trust, for example a US LLC taxed as a partnership, is a resident only to the extent its income is taxed in that state like the income of a resident, either at entity level or in the hands of its members or beneficiaries.

Dividends at home. Switzerland does not exempt participation income outright; it reduces the profit tax on it. For the federal profit tax, which is 8.5% of net profit, a company qualifies for the reduction if it holds:

• at least 10% of the capital of the other company;
• at least 10% of its profits and reserves; or
• participations with a market value of at least CHF 1 million.

The profit tax is then reduced in proportion to net participation income, meaning the income less related financing costs and a 5% flat contribution for administration costs. Capital gains on participations count only if the participation sold was at least 10% and held for at least one year. The cantonal harmonisation law imposes the same reduction on cantonal and communal profit tax, so cantons apply the same test.

US withholding. The treaty caps US tax on dividends at 5% where the beneficial owner is a company holding directly at least 10% of the voting rights, which covers dividends from a US subsidiary to its Swiss parent, and at 15% in all other cases. Article 10 has no 0% rate for parent companies. Article 10(3), as amended in 2009, exempts dividends where the beneficial owner is a pension fund, similar institution or individual retirement plan established in Switzerland and owned by a Swiss resident, subject to competent-authority recognition and not where it controls the payer.

Side by side: eight countries and a US company

The table condenses the rules above for a home-country company owning a US corporation. The 15% rate in the portfolio row is the cap for all other shareholders, including individuals.

Tell Mount Bonnell Advisors where you live and how you hold your US company, and the firm will work through these tests with you before the first dividend crosses the Atlantic.