Worldwide List of Per Se Corporations

What Is a Per Se Corporation?

A per se corporation is a foreign corporation that, under the U.S. entity classification regulations, is automatically deemed to be a corporation and is ineligible to elect U.S. federal income tax treatment as anything else on IRS Form 8332; also known as the check-the-box option.

Introduction

A U.S. Corporation is a corporation created or organized in or under the law of the United States or any State. IRC § 7701(a)(3)-(4); Treas. Reg. § 301.7701-2(b). A U.S. Corporation is also any entity that makes an election to be taxed as a Corporation in accordance with the Entity Classification Regulations; also known as the "check-the-box" regulations since you make the election by checking a box on IRS Form 8832. Treas. Reg. § 301.7701-3.

A Foreign Corporation is any business entity formed or created under foreign law. Entities specifically listed by country in Regulations are known as Per Se Corporations. Treas. Reg. § 301.7701-2(b)(8)(i).

In the world of international tax planning, a per se corporation is a company that is organized under the laws of a foreign country and, because of distinctive corporate features, is mandatorily taxed as a C Corporation with no eligibility to elect otherwise in accordance with the Entity Classification Regulations.

Before we review this list of per se corporations, it is important to note our firm's position on the default classification of foreign entities for U.S. tax purposes. It is our firm's position that the foreign equivalent of LLCs are actually flow-through disregarded entities by default: read here.

This legal position is extremely beneficial to someone with either Section 965 exposure (we can lawfully avoid exposure) or someone receiving income from a foreign entity in a non-treaty jurisdiction (we can covert the income into effectively tax-free income by claiming a credit for taxes paid by the company).

List of All Per Se Corporations

Here is a list of all per se corporations in the world as listed under Treas Reg. § 301.7701-2(b)(8)(i):

American Samoa, Corporation
Argentina, Sociedad Anonima
Australia, Public Limited Company
Austria, Aktiengesellschaft
Barbados, Limited Company
Belgium, Societe Anonyme
Belize, Public Limited Company
Bolivia, Sociedad Anonima
Brazil, Sociedade Anonima
Bulgaria, Aktsionerno Druzhestvo.
Canada, Corporation and Company
Chile, Sociedad Anonima
People's Republic of China, Gufen Youxian Gongsi
Republic of China (Taiwan), Ku-fen Yu-hsien Kung-szu
Colombia, Sociedad Anonima
Costa Rica, Sociedad Anonima
Cyprus, Public Limited Company
Czech Republic, Akciova Spolecnost
Denmark, Aktieselskab
Ecuador, Sociedad Anonima or Compania Anonima
Egypt, Sharikat Al-Mossahamah
El Salvador, Sociedad Anonima
Estonia, Aktsiaselts
European Economic Area/European Union, Societas Europaea
Finland, Julkinen Osakeyhtio/Publikt Aktiebolag
France, Societe Anonyme
Germany, Aktiengesellschaft
Greece, Anonymos Etairia
Guam, Corporation
Guatemala, Sociedad Anonima
Guyana, Public Limited Company
Honduras, Sociedad Anonima
Hong Kong, Public Limited Company
Hungary, Reszvenytarsasag
Iceland, Hlutafelag
India, Public Limited Company
Indonesia, Perseroan Terbuka
Ireland, Public Limited Company
Israel, Public Limited Company
Italy, Societa per Azioni
Jamaica, Public Limited Company
Japan, Kabushiki Kaisha
Kazakstan, Ashyk Aktsionerlik Kogham
Republic of Korea, Chusik Hoesa
Latvia, Akciju Sabiedriba
Liberia, Corporation
Liechtenstein, Aktiengesellschaft
Lithuania, Akcine Bendroves
Luxembourg, Societe Anonyme
Malaysia, Berhad
Malta, Public Limited Company
Mexico, Sociedad Anonima
Morocco, Societe Anonyme
Netherlands, Naamloze Vennootschap
New Zealand, Limited Company
Nicaragua, Compania Anonima
Nigeria, Public Limited Company
Northern Mariana Islands, Corporation
Norway, Allment Aksjeselskap
Pakistan, Public Limited Company
Panama, Sociedad Anonima
Paraguay, Sociedad Anonima
Peru, Sociedad Anonima
Philippines, Stock Corporation
Poland, Spolka Akcyjna
Portugal, Sociedade Anonima
Puerto Rico, Corporation
Romania, Societate pe Actiuni
Russia, Otkrytoye Aktsionernoy Obshchestvo
Saudi Arabia, Sharikat Al-Mossahamah
Singapore, Public Limited Company
Slovak Republic, Akciova Spolocnost
Slovenia, Delniska Druzba
South Africa, Public Limited Company
Spain, Sociedad Anonima
Surinam, Naamloze Vennootschap
Sweden, Publika Aktiebolag
Switzerland, Aktiengesellschaft
Thailand, Borisat Chamkad (Mahachon)
Trinidad and Tobago, Limited Company
Tunisia, Societe Anonyme
Turkey, Anonim Sirket
Ukraine, Aktsionerne Tovaristvo Vidkritogo Tipu
United Kingdom, Public Limited Company
United States Virgin Islands, Corporation
Uruguay, Sociedad Anonima
Venezuela, Sociedad Anonima or Compania Anonima

It's important to note that the IRS has allowed for the use of a Type F Tax-Free Corporate Reorganization to purge the per se corporate entity type, which will then permit “check-the-box” planning. PLR 201152015.

Validity of the Per Se Corporation Regulations

In 1935, the U.S. Supreme Court created a 5-factor approach for determining whether a non-corporate entity would be taxed as a corporation. See Morrissey v. C.I.R., 296 U.S. 344 (1935). This 5-factor test, known as the Resemblance Test, classified entities as corporations if they possessed more of these factors than not. Nevertheless, Treasury promulgated the per se corporations regulation as well as the check-the-box regulations permitting taxpayers to make an election with regard to how their entity would be taxed. In essence, Treasury’s regulations purport to overrule the U.S. Supreme Court’s holding in Morrissey. See Gregg D. Polsky, Can Treasury Overrule the Supreme Court?, 84 B.U. L. Rev. 185, 186 (2004). In 2007, the U.S. Court of Appeals for the Sixth Circuit, in a case that pre-dated the U.S. Supreme Court’s decision in Home Concrete, upheld the validity of the check-the-box regulations as a valid exercise of Treasury’s mandate to provide clarity where there is ambiguity. See Littriello v. U.S., No. CIV.A.3:04CV-143-H (W.D. Ky. 2005), aff'd, 484 F.3d 372 (6th Cir. 2007). However, Littriello did not resolve the particular concern that Congress did not permit Treasury to classify all foreign entities by default as a corporation without considering either the legal structure or actual characteristics; the Morrissey standard. In 2008, the U.S. Court of Appeals for the Federal Circuit held that Treasury regulations are invalid as a matter of law to the extent they are inconsistent with a statute's or treaty's purpose and intent. See Nat’l Westminster Bank, PLC v. U.S., 512 F.3d 1347 (Fed. Cir. 2008). In 2011, the U.S. Court of Appeals for the Fifth Circuit held that a finding of statutory ambiguity was a prerequisite to Treasury’s exercise of its gap-filling regulation promulgating power. See Burks v. U.S., 633 F.3d 347 (5th Cir. 2011). In 2012, the U.S. Court of Appeals for the Federal Circuit held that Treasury regulations are invalid as a matter of law to the extent they exceed Congressional intent. See Dominion Res., Inc. v. U.S., 681 F.3d 1313 (Fed. Cir. 2012). That same year, the U.S. Supreme Court held that regulations are invalid if the conflict with the plain meaning of any terms in the statute. See U.S. v. Home Concrete & Supply, LLC, 132 S. Ct. 1836 (2012).

The time has come for a legal challenge to the validity of these regulations. These regulations are invalid as a matter of established case law.

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Bluebook Citation: Worldwide List of Per Se Corporations, Int’l Tax Online Law Journal (Mar. 6, 2018) url.