Cross-Border Business Without Tax Traps!

August 19, 2025•3 min read

The episode opens with host R. Kenner French introducing his guest, Deniz Kiral, an expert in international tax. Kenner sets the stage by acknowledging that tax topics are usually considered boring but assures listeners that Deniz will make them engaging and insightful. About 15 years ago, he branched out to build his own practice, focusing on planning, compliance, and transaction work for businesses with international tax needs. His clients range from small businesses expanding overseas to larger corporations requiring specialized expertise.

The conversation shifts to Deniz client profile. He explains that while his expertise is in U.S. international tax law, he often collaborates with local tax professionals from other countries (such as Canada) to give clients a comprehensive strategy. For example, if a Canadian entrepreneur operates a business in the U.S., He handles the U.S. tax side while coordinating with a Canadian tax advisor. Similarly, if a U.S. citizen is working abroad, Deniz manages the U.S. compliance and structuring, ensuring that clients don’t face unexpected tax burdens. This team-based approach helps clients navigate the complexities of cross-border taxation.

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Kenner then brings up a practical scenario involving a Canadian resident who owns property in the U.S. and forms an LLC. Deniz explains that this is a common situation where U.S.-based advice doesn’t always apply well to non-residents. For U.S. taxpayers, an LLC is typically favorable because of its pass-through taxation that avoids double taxation. However, for non-resident aliens (the U.S. tax term for foreign individuals), the same LLC structure does not yield the same benefits. Instead, it can expose them to higher taxation levels, making it less efficient compared to what U.S. citizens experience.

He stresses that in these situations, he often advises placing foreign investors directly into a C corporation structure rather than an LLC. While this does come with the double taxation that U.S. corporations face, it prevents more punitive outcomes such as withholding taxes on U.S.-sourced income and the branch profits tax (a dividend-equivalent tax imposed on foreign-owned businesses). This approach demonstrates the importance of tailoring the entity choice to the taxpayer’s residency and overall tax profile rather than applying domestic rules universally.

Toward the end, He also highlights another common scenario: foreign investors purchasing U.S. real estate. He notes that this requires special structuring and planning to avoid unnecessary tax traps, though the conversation is briefly cut off due to technical issues with his audio connection. Despite this interruption, the discussion provides valuable insight into how international tax law requires nuanced strategies, especially for non-residents engaging in U.S. business or property ownership. He positions himself as a specialist who bridges the knowledge gap where most domestic CPAs may not have expertise, ensuring clients avoid costly mistakes when navigating cross-border financial matters.

Takeaways

• He has over 15 years of experience in international tax.

• He focuses on smaller businesses with international tax needs.

• Understanding U.S. tax laws is crucial for non-residents.

• Non-resident aliens face different tax structures than U.S. citizens.

• LLCs may not be the best option for non-resident aliens.

• C corporations can help avoid double taxation for non-residents.

• Tax planning can get complicated, especially internationally.

• Collaboration with local advisors is essential for compliance.

• Branch profits tax is a key consideration for foreign investors.

• Effective tax strategies can save businesses significant amounts.

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