Key Takeaways

  • A per se corporation is an entity the IRS automatically classifies as a corporation for U.S. tax purposes, without eligibility for “check-the-box” elections.
  • The per se corporation list identifies foreign entities by country and legal designation (e.g., S.A., N.V., A.G.) that are always treated as corporations.
  • The list is comprehensive and updated over time to reflect new entity types, such as the European Public Limited-Liability Company.
  • Entities not on the list may elect classification, but per se corporations cannot change status for tax purposes.
  • Understanding the list is essential for compliance, as ownership in per se corporations may trigger U.S. reporting (e.g., Form 5471).

A per se corporation is a business that is organized as a corporation or incorporated, under either a state or federal statute. The IRS keeps a list of these corporations. A per se foreign corporation is when the corporation is treated as a foreign entity regardless of the position of the taxpayer. Once a business is on the list of per se corporations, "check the box" rules will not apply.

A new addition was published in December 2005 adding a European public limited liability company to the list of per se companies. The IRS indicated that their intent is to make sure that every jurisdiction that a per se corporation can be registered should be included on the list.

Once it has been determined that a business is a foreign entity, you can check with the Treasury Regulation to determine if they qualify as a foreign corporation. A list of per se corporations is listed by country with designations such as S.A, N.V, P.I.C, and A.G.

As with any regulation, there are exceptions, complications, and inclusions. For instance, a corporation or company where the owners have unlimited liability under federal or provincial law would not be treated as a corporation. Another example would be "Sociedad Anonima" entities, which are considered a corporation by the IRS, regardless of their capital provisions.

Within the regulations there are also guides for defining terms such as "public limited company". In some locales, such as Cyprus, Hong Kong, and Jamaica, a public limited company is any limited company that is not defined as private. In most cases, a public limited company is any limited company that is also defined as a public company under the laws of the jurisdiction it is under. A limited company is a company limited by shares or limited by guarantee.

When a business is formed in such a way that it falls under the laws of more than one jurisdiction, it can cause complications. There are complex rules in place that will ultimately decide if that business should be considered a corporation for business income tax purposes. A business is domestic if it is established under US law, and foreign if it is not.

"Check the Box" Elections

  • This is a way to classify an entity that is found on IRS tax form 8832, Entity Classification Election.
  • All that is needed is to check the box, pick a date that it will go into effect, sign and submit the form.
  • Only entities that are eligible can make this selection. The regulations contain a list of non-eligible entities, also called "per se" corporations.
  • Even though it is an easy election to make and file, there can be heavy tax implications to doing this.
  • It is recommended to speak with a tax professional before making a decision like this for your business.

US Tax classifications for business entities include:

  • Corporation
  • Partnership
  • Disregarded entity

A corporation is responsible for paying its' taxes. With a partnership or disregarded entity, the owner or shareholder is responsible for the taxes.

For non per se corporations that do not make check-the-box elections, regulations provide rules for classification. An eligible entity in the US is treated as a partnership if it has more than one owner and a disregarded entity if is has only one owner. A disregarded entity is similar to a sole-proprietorship. A foreign entity will be treated as a corporation if all owners have limited liability, a partnership if at least one of the partners does not have limited liability, and a disregarded entity if the owner does not have limited liability. A foreign entity will almost always default to be treated as a corporation.

If a business changes classification to a partnership or a disregarded entity, there will typically be a taxable liquidation, and all owners or shareholders would share in the loss or gain. Changing a business classification has enormous tax consequences, and it is always recommended to speak with a tax expert before doing so.

When a business is first formed, it will have an "initial classification" either using the default regulations or a check the box election. If no election is made, the default election will be set based on classification. Check the box elections can be made up to 75 days retroactively.

The IRS Per Se Corporation List

The per se corporation list is maintained by the IRS in Treasury Regulation §301.7701-2(b)(8). It specifies foreign entities that are automatically treated as corporations for U.S. tax purposes. These entities cannot elect to be treated as partnerships or disregarded entities.

The list is organized by country and includes common corporate designations such as:

  • S.A. (Sociedad Anónima) – found in many Latin American and European countries.
  • N.V. (Naamloze Vennootschap) – common in the Netherlands and Belgium.
  • A.G. (Aktiengesellschaft) – used in Germany, Switzerland, and Austria.
  • P.L.C. (Public Limited Company) – common in the United Kingdom and other jurisdictions.

The IRS periodically updates this list to ensure it includes newer corporate forms. For example, in 2005, the European Public Limited-Liability Company was added to the per se corporation list.

Because the list is binding, taxpayers with ownership in these entities must report them as corporations for U.S. tax purposes, regardless of how the entity is treated locally.

Compliance and Reporting Obligations

Owning or controlling a per se corporation can create significant U.S. reporting obligations. For example:

  • U.S. shareholders of per se corporations often must file Form 5471 to disclose ownership and financial details.
  • Depending on ownership levels, U.S. taxpayers may also face obligations under Subpart F rules or the GILTI regime.
  • The classification impacts eligibility for tax treaties and the application of anti-deferral regimes.

Failure to properly classify and report ownership in a per se corporation may result in severe IRS penalties. Because of this, businesses and individuals with foreign holdings should confirm whether their entity appears on the per se corporation list before filing U.S. tax forms.

Exceptions and Special Considerations

While the per se corporation list is extensive, not all foreign entities qualify. For instance:

  • Entities where owners have unlimited liability under local law may not be treated as corporations, even if they resemble incorporated businesses.
  • Some hybrid entities may appear similar to per se corporations but fall outside the list, allowing for classification flexibility.
  • Certain terms, such as public limited company, vary by jurisdiction. In countries like Cyprus, Hong Kong, or Jamaica, this designation applies broadly, while in other jurisdictions it only applies to companies that meet specific shareholder or capital requirements.

Taxpayers must therefore carefully compare the foreign entity’s legal designation against the IRS list to avoid misclassification.

Frequently Asked Questions

  1. What is a per se corporation?
    A per se corporation is a foreign entity automatically classified as a corporation under IRS rules, without the ability to elect another tax status.
  2. Where can I find the IRS per se corporation list?
    The list is published in Treasury Regulation §301.7701-2(b)(8) and is organized by country and entity designation.
  3. Can a per se corporation choose partnership or disregarded entity status?
    No. Unlike other foreign entities, per se corporations cannot make “check-the-box” elections.
  4. Why is the per se corporation list important for U.S. taxpayers?
    It determines whether foreign ownership must be reported as corporate ownership, often triggering forms like IRS Form 5471 and potential Subpart F or GILTI tax implications.
  5. How often is the per se corporation list updated?
    The IRS updates it as needed to reflect new or evolving entity types. For example, the European Public Limited-Liability Company was added in 2005.

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