Five Business Models that Romanian Companies should Consider before Entering the U.S. Market
1) Romanian company exports products from Romania to customers in the U.S.
a. Sales are conducted remotely (e.g., online)
b. Consider U.S. custom duties
c. Assess potential U.S. sales tax liability
d. Does not require the formation of a U.S. legal entity or capital expenditures
2) Romanian company licenses its technology to U.S. customers
a. Licensing activities are conducted remotely (e.g., online)
i. Applicable especially to Romanian technology companies
b. Analyze potential withholding taxes on royalty payments
c. Consider registering the intellectual property in the U.S.
d. Assess applicability of U.S. sales taxes
e. Does not require the formation of a U.S. legal entity or capital expenditures
3) Romanian company enters into a “Joint Venture“ with a U.S. company
a. May require the creation of an investment vehicle in the U.S. in conjunction with the U.S. company
b. Negotiations should determine investment level of the Romanian company
c. Understand operational expenses, estimated funding requirements and future losses / profits projections
d. Consider U.S. federal and state income tax liability at the level of the U.S. JV
e. Prepare a repatriation of profits strategy and assess impact of withholding taxes
4) Romanian company’s activities in the U.S. create an U.S. branch
a. Does not require the formation of a U.S. legal entity
b. Romanian company has a presence or employees in the U.S. (e.g., sales people)
c. May require some capital outlays by the Romanian company
d. Project operational expenses and funding
e. Consider U.S. withholding, federal and state income tax liability
f. Understand U.S. tax reporting requirements
5) Romanian company forms a subsidiary in the U.S.
a. Consider formation costs (legal)
b. Project operational expenses and anticipated capital expenditures
c. Determine funding levels of the U.S. operations and debt/equity requirements
d. Consider U.S. federal and state income tax liability
e. Understand U.S. tax reporting requirements
f. Prepare a repatriation of profits strategy and assess impact of withholding taxes
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