Germany Relation between subsidiary and parent company regarding to taxes


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while filling out of W-8BEN-E there should be the beneficial owner and disregarded entity (if applicable) identified. Parent company is investing in real estates and is holding 94 %(voting and capital rights) of subsidiary entity, which is a building of apartments. Which one of them is beneficial owner, when we are filling out the form regarding to the subsidiary entity and is in this case subsidiary disregarded entity? Any help highly appreciated!
 
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Hi Anabana,

If the ownership structure is, for example, "Parent GmbH" owns 94% of "Subsidiary, Inc.," and Parent GmbH has not filed an election on Form 8832 to be disregarded, then the beneficial owner is Parent GmbH. There is no disregarded entity in this example.

But, the cross-border investment is subject to many different reporting requirements depending on the type of entities involved. (Failure follow these rules carries a minimum fine of $10,000 increasing to $50,000 depending on the level of noncompliance). Different rules apply if the U.S. entity is classified as a partnership for U.S. federal income tax purposes than if it is classified as a corporation.

Best,
Andrew
 

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