Delaware compliance for foreign owners

foreign

persons who own or control Delaware entities must comply with a mix of Delaware state filing/tax rules and U.S. federal reporting, withholding, and anti‑money‑laundering reporting rules. Key items to track: Delaware franchise/alternative entity tax and annual report deadlines; registered agent requirement; foreign qualification when ‘doing business’ in Delaware; federal information returns (especially Form 5472 and pro‑forma Form 1120 for foreign‑owned disregarded entities); EIN/ITIN requirements; federal withholding and FATCA/KYC documentation for payments to foreign persons; FIRPTA rules for U.S. real property; and Beneficial Ownership Information (BOI) filings under the Corporate Transparency Act (FinCEN).

Below are the actionable points, deadlines, penalties and a practical checklist. State (Delaware) compliance — essentials - Registered agent: Every Delaware entity must maintain a Delaware registered agent for service of process and official communications. (See Delaware Division of Corporations general filing pages.) - Corporations (domestic): File an Annual Report and pay Franchise Tax to Delaware Division of Corporations.

Annual report and franchise tax for domestic corporations are due on or before March 1 each year. Failure to file/pay: $200 penalty plus interest (1.5% per month) and loss of good standing. (Delaware Division of Corporations) - Foreign corporations: If a corporation formed outside Delaware is doing business in Delaware, it must file a Foreign Qualification (Certificate of Authority) and — per the Division guidance — foreign corporations must file an Annual Report on or before June 30 (note fee and penalty shown on the Division’s page). (Delaware Division of Corporations; FirstSteps Delaware) - LLCs / LPs / GPs (domestic and foreign registered in Delaware): Pay the flat annual alternative entity tax of $300.00, due on or before June 1 each year.

No annual report is required for typical Delaware LLCs, LPs or GPs (but limited liability partnerships may have report filing requirements). Late payment: $200 penalty plus 1.5% interest per month; failure to pay results in loss of good standing.

Series LLC series also have separate $75 series tax obligations. (Delaware Division of Corporations alt-entity tax page) - Foreign qualification: Entities formed outside Delaware that are “doing business” in Delaware must register (Foreign Qualification/Certificate of Authority).

Fee example provided by Delaware: typically around $245 to file a qualification certificate (confirm current fee on official site). (FirstSteps: foreign qualification) Federal compliance — essentials for foreign owners - Form 5472 & pro‑forma Form 1120 (foreign‑owned U.S. disregarded entities): A U.S. domestic entity that is wholly owned by a foreign person and is disregarded for U.S. tax purposes (a foreign‑owned U.S.

DE) is treated as a “reporting corporation” for Form 5472 purposes. Such DEs must file Form 5472 with the IRS for reportable transactions and must attach a pro‑forma Form 1120 (only limited items required on Form 1120) by the due date (including extensions) of the pro‑forma Form 1120.

A failure to timely file Form 5472 or maintain required records can trigger penalties of $25,000 per failure and an additional $25,000 if the failure continues after IRS notification. Electronic filing is not available for foreign‑owned DEs; special mailing/fax instructions apply.

File by the tax return due date; extensions via Form 7004 are available with special filing instructions for DEs. (IRS Instructions for Form 5472; Form 5472) - EIN and ITIN: Entities and persons need U.S. taxpayer ID numbers for many filings: EIN (Form SS‑4) for entities; ITIN (Form W‑7) for individuals not eligible for an SSN.

International applicants may apply for an EIN by phone (the IRS international EIN phone service) or by filing SS‑4 via mail/fax per IRS instructions. ITIN applications (Form W‑7) are generally filed with a U.S. tax return unless an exception applies — see W‑7 instructions. (IRS SS‑4 and EIN pages; Form W‑7 instructions) - Withholding rules & documentation: Withholding on payments to foreign persons is governed by chapters 3 and 4 (e.g., backup withholding, chapter 3 withholding on FDAP, and chapter 4 FATCA withholding) and rules on effectively connected taxable income and partnership withholding (section 1446 and related).

Publication 515 (Withholding of Tax on Nonresident Aliens and Foreign Entities) is the authoritative IRS guidance for determining withholding obligations, documentation (W‑8 series forms), and presumption rules.

Partnerships with effectively connected ECTI allocable to foreign partners must withhold under section 1446; PTP distributions and transfers may involve additional withholding rules. (IRS Pub. 515) - FIRPTA (U.S. real property): Transactions involving U.S. real property interests can trigger FIRPTA withholding (buyer withholding from nonresident sellers).

If your Delaware entity holds U.S. real property or transfers interests in entities owning U.S. real property, FIRPTA rules may apply — consult the IRS FIRPTA guidance for rates, exceptions and withholding certificates. (IRS FIRPTA guidance) FinCEN BOI (Corporate Transparency Act) — what foreign owners need to know - Scope update and timing (important): FinCEN has issued guidance and, on March 26, 2025, published an interim final rule that revised the definition of “reporting company” such that the BOI reporting requirement focuses on entities formed under the law of a foreign country that have registered to do business in the U.S. (i.e., foreign reporting companies).

FinCEN’s site confirms the change and new deadlines for foreign reporting companies: reporting companies registered to do business in the U.S. before March 26, 2025, had to file BOI reports by April 25, 2025; reporting companies registered on/after March 26, 2025, have 30 calendar days after their registration is effective to file an initial BOI report.

The guidance and rule text should be reviewed for exemptions and updates. (FinCEN BOI page and FinCEN news release; Federal Register interim final rule) - What to report: Reporting companies (as defined) must report identifying information about the company itself and its beneficial owners (name, date of birth, address, and identifying number/passport or U.S.

TIN). Foreign reporting companies that do not have a U.S.

TIN must provide a foreign jurisdiction tax ID and the name of that jurisdiction. (FinCEN BOI FAQ and toolkit) - Exemptions: FinCEN lists 23 statutory exemptions (large operating companies, many regulated entities, SEC issuers, certain tax-exempt orgs, etc.).

Carefully check the FinCEN FAQ and small entity compliance guide to see whether an exemption applies. (FinCEN BOI FAQ/toolkit) Practical penalties and other consequences - Delaware state penalties: Failure to pay LLC/LP/GP annual tax (due June 1) triggers $200 penalty plus 1.5% monthly interest and loss of good standing; corporations that miss March 1 franchise tax/annual report face $200 penalty plus interest and loss of good standing. (Delaware Division of Corporations pages) - IRS Form 5472 penalties: $25,000 penalty for failure to file Form 5472 when due and in the required manner; an additional $25,000 if failure continues more than 90 days after IRS notice.

Filing an incomplete Form 5472 can be treated as a failure to file. (IRS Instructions for Form 5472) - FinCEN/CTA penalties: FinCEN/CTA enforcement may include civil and criminal penalties for willful failure to report required BOI (see FinCEN and Federal Register guidance and statutory provisions).

Check FinCEN materials and federal statute for specific penalty amounts and enforcement posture. (FinCEN BOI pages and Federal Register IFR) Practical compliance checklist for foreign entrepreneurs (quick action steps)

Overview: foreign persons who own or control Delaware entities must comply with a mix of Delaware state filing/tax rules and U.S. federal reporting, withholding, and anti‑money‑laundering reporting rules.

Key items to track: Delaware franchise/alternative entity tax and annual report deadlines; registered agent requirement; foreign qualification when ‘doing business’ in Delaware; federal information returns (especially Form 5472 and pro‑forma Form 1120 for foreign‑owned disregarded entities); EIN/ITIN requirements; federal withholding and FATCA/KYC documentation for payments to foreign persons; FIRPTA rules for U.S. real property; and Beneficial Ownership Information (BOI) filings under the Corporate Transparency Act (FinCEN).

Below are the actionable points, deadlines, penalties and a practical checklist. State (Delaware) compliance — essentials

- Corporations (domestic): File an Annual Report and pay Franchise Tax to Delaware Division of Corporations. Annual report and franchise tax for domestic corporations are due on or before March 1 each year.

Failure to file/pay: $200 penalty plus interest (1.5% per month) and loss of good standing. (Delaware Division of Corporations) - Foreign corporations: If a corporation formed outside Delaware is doing business in Delaware, it must file a Foreign Qualification (Certificate of Authority) and — per the Division guidance — foreign corporations must file an Annual Report on or before June 30 (note fee and penalty shown on the Division’s page). (Delaware Division of Corporations; FirstSteps Delaware) - LLCs / LPs / GPs (domestic and foreign registered in Delaware): Pay the flat annual alternative entity tax of $300.00, due on or before June 1 each year.

No annual report is required for typical Delaware LLCs, LPs or GPs (but limited liability partnerships may have report filing requirements). Late payment: $200 penalty plus 1.5% interest per month; failure to pay results in loss of good standing.

Series LLC series also have separate $75 series tax obligations. (Delaware Division of Corporations alt-entity tax page) - Foreign qualification: Entities formed outside Delaware that are “doing business” in Delaware must register (Foreign Qualification/Certificate of Authority).

Fee example provided by Delaware: typically around $245 to file a qualification certificate (confirm current fee on official site). (FirstSteps: foreign qualification) Federal compliance — essentials for foreign owners - Form 5472 & pro‑forma Form 1120 (foreign‑owned U.S. disregarded entities): A U.S. domestic entity that is wholly owned by a foreign person and is disregarded for U.S. tax purposes (a foreign‑owned U.S.

DE) is treated as a “reporting corporation” for Form 5472 purposes. Such DEs must file Form 5472 with the IRS for reportable transactions and must attach a pro‑forma Form 1120 (only limited items required on Form 1120) by the due date (including extensions) of the pro‑forma Form 1120.

A failure to timely file Form 5472 or maintain required records can trigger penalties of $25,000 per failure and an additional $25,000 if the failure continues after IRS notification. Electronic filing is not available for foreign‑owned DEs; special mailing/fax instructions apply.

File by the tax return due date; extensions via Form 7004 are available with special filing instructions for DEs. (IRS Instructions for Form 5472; Form 5472) - EIN and ITIN: Entities and persons need U.S. taxpayer ID numbers for many filings: EIN (Form SS‑4) for entities; ITIN (Form W‑7) for individuals not eligible for an SSN.

International applicants may apply for an EIN by phone (the IRS international EIN phone service) or by filing SS‑4 via mail/fax per IRS instructions. ITIN applications (Form W‑7) are generally filed with a U.S. tax return unless an exception applies — see W‑7 instructions. (IRS SS‑4 and EIN pages; Form W‑7 instructions) - Withholding rules & documentation: Withholding on payments to foreign persons is governed by chapters 3 and 4 (e.g., backup withholding, chapter 3 withholding on FDAP, and chapter 4 FATCA withholding) and rules on effectively connected taxable income and partnership withholding (section 1446 and related).

Publication 515 (Withholding of Tax on Nonresident Aliens and Foreign Entities) is the authoritative IRS guidance for determining withholding obligations, documentation (W‑8 series forms), and presumption rules.

Partnerships with effectively connected ECTI allocable to foreign partners must withhold under section 1446; PTP distributions and transfers may involve additional withholding rules. (IRS Pub. 515)

- Scope update and timing (important): FinCEN has issued guidance and, on March 26, 2025, published an interim final rule that revised the definition of “reporting company” such that the BOI reporting requirement focuses on entities formed under the law of a foreign country that have registered to do business in the U.S. (i.e., foreign reporting companies).

FinCEN’s site confirms the change and new deadlines for foreign reporting companies: reporting companies registered to do business in the U.S. before March 26, 2025, had to file BOI reports by April 25, 2025; reporting companies registered on/after March 26, 2025, have 30 calendar days after their registration is effective to file an initial BOI report.

The guidance and rule text should be reviewed for exemptions and updates. (FinCEN BOI page and FinCEN news release; Federal Register interim final rule)

- Exemptions: FinCEN lists 23 statutory exemptions (large operating companies, many regulated entities, SEC issuers, certain tax-exempt orgs, etc.). Carefully check the FinCEN FAQ and small entity compliance guide to see whether an exemption applies. (FinCEN BOI FAQ/toolkit) Practical penalties and other consequences

1) triggers $200 penalty plus 1.5% monthly interest and loss of good standing; corporations that miss March 1 franchise tax/annual report face $200 penalty plus interest and loss of good standing. (Delaware Division of Corporations pages) - IRS Form 5472 penalties: $25,000 penalty for failure to file Form 5472 when due and in the required manner; an additional $25,000 if failure continues more than 90 days after IRS notice.

Filing an incomplete Form 5472 can be treated as a failure to file. (IRS Instructions for Form 5472)

• Registered agent: Every Delaware entity must maintain a Delaware registered agent for service of process and official communications. (See Delaware Division of Corporations general filing pages.)
• FIRPTA (U.S. real property): Transactions involving U.S. real property interests can trigger FIRPTA withholding (buyer withholding from nonresident sellers). If your Delaware entity holds U.S. real property or transfers interests in entities owning U.S. real property, FIRPTA rules may apply — consult the IRS FIRPTA guidance for rates, exceptions and withholding certificates. (IRS FIRPTA guidance) FinCEN BOI (Corporate Transparency Act) — what foreign owners need to know
• What to report: Reporting companies (as defined) must report identifying information about the company itself and its beneficial owners (name, date of birth, address, and identifying number/passport or U.S. TIN). Foreign reporting companies that do not have a U.S. TIN must provide a foreign jurisdiction tax ID and the name of that jurisdiction. (FinCEN BOI FAQ and toolkit)
• Delaware state penalties: Failure to pay LLC/LP/GP annual tax (due June
• FinCEN/CTA penalties: FinCEN/CTA enforcement may include civil and criminal penalties for willful failure to report required BOI (see FinCEN and Federal Register guidance and statutory provisions). Check FinCEN materials and federal statute for specific penalty amounts and enforcement posture. (FinCEN BOI pages and Federal Register IFR) Practical compliance checklist for foreign entrepreneurs (quick action steps)

Decide entity structure (Delaware C‑Corp, S‑Corp (if eligible), LLC, LP) and determine whether you are forming in Delaware or forming abroad and registering in Delaware.

Registered agent

Appoint/maintain a Delaware registered agent immediately (required).

Foreign qualification

If entity is formed outside Delaware and you’re “doing business” in Delaware, file Certificate of Authority/Foreign Qualification and pay required fees (e.g., ~ $245; confirm current fee). 4) State tax/calendar reminders: Mark calendar: corporations — March 1 (annual report + franchise tax); LLC/LP/GP — June 1 ($300 alternative entity tax). Foreign corporations’ Delaware annual report (per Division page) deadline: June 30 (confirm for your entity type). 5) Get your EIN early: Apply for an EIN (Form SS‑4) — international applicants can apply by phone, fax, or mail per IRS guidance; many banks require an EIN to open an account. 6) Beneficial ownership/FinCEN BOI: Confirm whether the entity must file a BOI report with FinCEN under the current rule (foreign reporting companies focus). If required, file within FinCEN’s deadline (e.g., reporting companies registered before March 26, 2025 — file by April 25, 2025; companies registered on/after March 26, 2025 — 30 days after registration). Gather beneficial owner details (name, DOB, address, TIN or foreign tax ID) and make the BOI filing in FinCEN’s BOI e‑file system. 7) Form 5472 (if applicable): If the U.S. entity is foreign‑owned and has reportable transactions with related parties (or is a foreign‑owned DE), prepare to file Form 5472 with pro‑forma Form 1120 by the due date of the 1120 (including extension). For a foreign owner with a calendar year taxpayer: typically due by April 15 (or April 15 if owner has that filing date) — obtain professional tax advice to determine the exact due date and related extension mechanics. 8) Withholding & documentation: For payments to foreign persons/owners (dividends, interest, royalties, certain partnership allocations, sale proceeds of US real property), gather documentation (W‑8BEN/W‑8BEN‑E, W‑9 where appropriate), determine withholding requirements under Pub. 515 and chapters 3/4, and consult on FIRPTA if real property involved.

Banking & KYC

Banks typically require formation documents (certificate of formation/incorporation), operating agreement/bylaws, EIN, certified formation documents, a resolution identifying authorized signers, a copy of passport or national ID and proof of address for beneficial owners and signers, and may request beneficial ownership declarations under the bank’s CDD obligations. Start the EIN and document collection early to avoid bank onboarding delays.

Maintain recordkeeping and calendar

keep corporate records, maintain good standing by timely paying taxes and filing required returns and reports, and update BOI report within the required FinCEN update window if ownership or company applicant information changes.