Companies in the US Archives

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Is SaaS subject to Sales Tax in the United States? The answer depends on the state, the type of software, the customer’s profile, and whether the company has established nexus. In 2026, technology companies need to monitor not only current rules but also changes already approved for 2027, particularly in California and Colorado. For a […]

/ By Marcos Ferreira

Is SaaS subject to Sales Tax in the United States? The answer depends on the state, the type of software, the customer’s profile, and whether the company has established nexus.

In 2026, technology companies need to monitor not only current rules but also changes already approved for 2027, particularly in California and Colorado.

For a foreign company selling subscription-based software to customers in the United States, the question is not simply, “Do I need to pay Sales Tax?”

The proper analysis involves at least four questions:

Is the SaaS taxable in the customer’s state?
Does the company have Sales Tax nexus in that state?
What rules apply based on the product, the customer, and how the software is delivered?
Is the company properly registered, collecting, filing, and remitting the tax?

Since the U.S. Supreme Court’s decision in South Dakota v. Wayfair in 2018, a company can establish economic nexus in a state even without an office, employees, or another form of physical presence there.

For SaaS companies, this is particularly relevant. A business may be headquartered in another country, have a small team in the United States, and still reach enough customers across multiple states to trigger Sales Tax obligations.

In 2026, the landscape is also changing rapidly. California and Colorado have already approved changes that will expand the taxation of software and SaaS beginning January 1, 2027.

What Is SaaS Sales Tax?

SaaS, or Software as a Service, is a model in which customers access software hosted by the provider, typically through a monthly or annual subscription.

Unlike traditional software installed locally on a customer’s device, the customer generally does not receive possession of a physical copy of the software.

Examples of SaaS include:

CRM platforms
Enterprise management systems
Marketing tools
Human resources platforms
Accounting software
Data analytics tools
Customer service platforms
Security software
Collaboration systems
Artificial intelligence tools

The tax issue arises because U.S. states do not have a uniform definition or tax treatment for these products.

One state may treat SaaS as a taxable service. Another may consider it nontaxable. A third may apply different rules depending on whether the software is used for business or personal purposes.

Therefore, there is no single federal Sales Tax rule for SaaS in the United States.

Why Is SaaS Sales Tax So Complex in the U.S.?

The United States does not have a national Sales Tax system equivalent to a federal VAT.

Consumption taxes are primarily imposed at the state and local levels.

This means a company may need to deal with:

State rules
Municipal rules
Counties
Special taxing districts
Different definitions of SaaS
Sourcing rules
Economic nexus
Physical nexus
Exemption certificates
Filing frequency
Specific B2B and B2C rules

In addition, tax rates can vary significantly depending on the customer’s location.

The Tax Foundation estimates that 45 states have a statewide Sales Tax and 38 allow local Sales Taxes, illustrating why the final tax rate depends on the specific jurisdiction.

Therefore, a company should not simply use the “state tax rate” to determine how much Sales Tax to charge a customer.

Is SaaS Taxable in Every State?

No.

The taxability of SaaS varies significantly from state to state.

Based on surveys and guidance updated for 2026, some states generally tax SaaS, some generally do not, and others apply conditional rules based on the type of customer, product, or method of delivery.

The table below provides a general overview for 2026.

Important: This table is intended as an initial reference. The tax treatment of a specific product should be analyzed based on the laws and guidance currently in effect in the applicable jurisdiction. Sales Tax rules can change, and certain local jurisdictions may have their own requirements.

SaaS Sales Tax: State-by-State Overview for 2026

Jurisdiction	SaaS in 2026	Key Consideration
Alabama	Taxable	Software is generally taxable.
Alaska	Depends on the locality	Alaska has no general statewide Sales Tax, but many local jurisdictions impose sales taxes.
Arizona	Taxable	SaaS may be subject to Transaction Privilege Tax.
Arkansas	Generally nontaxable	Treatment depends on the nature of the transaction and product.
California	Nontaxable through 12/31/2026	Beginning 01/01/2027, SaaS and prewritten software will fall within the scope of Sales and Use Tax under SB 122.
Colorado	Generally nontaxable in 2026	Legislation enacted in 2026 expands software taxation beginning 01/01/2027.
Connecticut	Taxable	SaaS used for business purposes may be subject to a reduced rate or different treatment.
Delaware	No statewide Sales Tax	Delaware does not have a general Sales Tax.
District of Columbia	Taxable	SaaS is subject to local tax rules.
Florida	Generally nontaxable	Hosted SaaS is generally not subject to Florida’s statewide Sales Tax.
Georgia	Generally nontaxable	SaaS is generally not treated as a taxable service.
Hawaii	Taxable	The General Excise Tax broadly applies to business activities.
Idaho	Generally nontaxable	Hosted SaaS is generally not taxed.
Illinois	Generally nontaxable at the state level	Certain local jurisdictions may have different rules.
Indiana	Generally nontaxable	Treatment depends on the nature of the transaction.
Iowa	Conditional	Treatment may vary depending on whether the software is used for business or personal purposes.
Kansas	Generally nontaxable	SaaS is generally not treated as a taxable service.
Kentucky	Taxable	Software and related services may be subject to tax.
Louisiana	Taxable	SaaS may be subject to state and local Sales Tax.
Maine	Generally nontaxable	SaaS is generally not taxed.
Maryland	Taxable	Treatment may vary between business and personal use.
Massachusetts	Taxable	SaaS and related software services may be subject to tax.
Michigan	Generally nontaxable	Tax may apply when there is a downloadable software component.
Minnesota	Generally nontaxable	Hosted SaaS is generally not subject to Sales Tax.
Mississippi	Taxable	The Department of Revenue considers revenue from software and related services taxable.
Missouri	Generally nontaxable	Treatment depends on the specific nature of the transaction.
Montana	No general statewide Sales Tax	Montana does not have a general statewide Sales Tax.
Nebraska	Generally nontaxable	Certain related products or services may receive different treatment.
Nevada	Generally nontaxable	Hosted SaaS is generally not taxed.
New Hampshire	No general statewide Sales Tax	New Hampshire does not have a general statewide Sales Tax.
New Jersey	Generally nontaxable	Hosted SaaS is generally not taxed.
New Mexico	Taxable	The transaction may be subject to Gross Receipts Tax.
New York	Taxable	SaaS is generally treated as a taxable service subject to Sales Tax.
North Carolina	Generally nontaxable	SaaS is generally not included among taxable services.
North Dakota	Generally nontaxable	Hosted SaaS is generally not taxed.
Ohio	Conditional	Treatment may vary depending on whether the software is used for business or personal purposes.
Oklahoma	Generally nontaxable	SaaS is generally not taxed as a service.
Oregon	No general statewide Sales Tax	Oregon does not have a general statewide Sales Tax.
Pennsylvania	Taxable	SaaS is generally subject to Sales Tax.
Rhode Island	Taxable	The tax authority confirms taxation of SaaS, IaaS, and PaaS in certain circumstances.
South Carolina	Taxable	SaaS may be subject to Sales Tax.
South Dakota	Taxable	SaaS is subject to applicable state tax rules.
Tennessee	Taxable	SaaS is generally taxable.
Texas	Taxable	SaaS is treated as a data processing service, with 80% of the charge subject to tax and 20% exempt.
Utah	Taxable	Prewritten software, including hosted software, is taxable.
Vermont	Taxable	SaaS is generally subject to Sales Tax.
Virginia	Generally nontaxable	SaaS is generally not taxed.
Washington	Taxable	SaaS is treated as a digital automated service and is subject to state tax rules.
West Virginia	Taxable	SaaS is generally taxable.
Wisconsin	Generally nontaxable	Hosted SaaS is generally not subject to Sales Tax.
Wyoming	Generally nontaxable	Hosted SaaS is generally not taxed.
Puerto Rico	Taxable	The jurisdiction has its own Sales and Use Tax rules.

The matrix above primarily uses TaxJar’s 2026 SaaS taxability survey, supplemented by official state sources and 2026 legislative updates.

Can a Foreign Company Have Sales Tax Nexus in the U.S.?

Yes.

This is one of the most important considerations for Brazilian companies expanding into the U.S. market.

Imagine a software company headquartered outside the United States that sells a $100-per-month subscription to hundreds of customers in the U.S.

The company has no U.S. office but has customers in:

Texas
New York
Florida
California
Washington

If sales exceed the applicable economic nexus thresholds, the company may need to:

Register for Sales Tax
Obtain a permit
Set up tax collection
File Sales Tax returns
Remit the tax to the states
Maintain compliance documentation

This can happen even if the company does not form an LLC or hire employees in the United States.

This is one of the reasons tax planning should keep pace with a company’s commercial growth.

What If the Customer Is a Business?

The fact that a sale is B2B does not automatically mean it is exempt from Sales Tax.

This is another particularly important consideration for SaaS companies.

Some states have specific rules for business use, while others tax SaaS regardless of whether the customer is an individual or a business.

In Texas, for example, SaaS is treated as a data processing service, and the law provides a 20% exemption for the charge for this service, making 80% taxable.

Connecticut and Maryland also have specific rules related to business use.

Therefore, a SaaS company needs to analyze not only who purchased the software, but also how the software will be used.

How Is Sales Tax Calculated?

Even when SaaS is taxable, another question remains:

What tax rate applies?

In the United States, the rate may consist of:

State Sales Tax
County tax
City tax
Special district tax

The Tax Foundation shows that combined rates can vary significantly between jurisdictions.

Therefore, a company selling SaaS to customers in different cities should not simply apply one tax rate across the entire state.

Simplified Example

A company has customers in:

Austin, Texas
Houston, Texas
Dallas, Texas

Although all three customers are located in the same state, the final applicable rate may vary depending on the specific location and sourcing rules.

The billing system needs to correctly identify the buyer’s jurisdiction and apply the corresponding tax rules.

What Are the Main Risks of Noncompliance?

A company that should have collected Sales Tax but failed to do so may face:

Retroactive tax assessments
Interest
Penalties
Audits
Defense costs
The need to correct prior periods
Due diligence issues
Impact on M&A transactions
Difficulties during fundraising

There is also a commercial issue.

If a company discovers that it should have been collecting Sales Tax for years, it may have to decide between:

absorbing the tax or trying to pass it on to the customer.

For a SaaS company with long-term contracts, this difference can have a significant impact on margins and cash flow.

What Should a SaaS Company Do Before Entering the U.S. Market?

For Brazilian and other foreign companies planning to sell SaaS in the U.S., a proactive approach can include the following steps:

1. Map Your Customer Locations

Create a reliable database containing customer locations and sales volume by state.

2. Determine the Taxability of the Product

Analyze exactly what is being sold.

SaaS, downloadable software, PaaS, IaaS, support, and consulting may receive different tax treatment.

3. Evaluate Physical Nexus

Review employees, offices, representatives, inventory, and other forms of physical presence.

4. Evaluate Economic Nexus

Compare sales against each state’s economic nexus thresholds.

5. Review B2B Rules

Do not assume that business customers are automatically exempt.

6. Review Contracts and Invoices

Determine whether software and services are properly segregated.

7. Register When Required

Once a tax obligation is identified, the company should evaluate Sales Tax registration before beginning to collect the tax.

8. Configure Billing

The system needs to correctly determine:

Customer location
Taxability
Tax rate
Exemption status
Tax amount

9. Establish a Compliance Process

Registration is not the end of the process.

The company must continue monitoring:

Filing frequency
Returns
Payments
Legislative changes
New states where the company establishes nexus

10. Monitor Future Changes

For 2027, California and Colorado should already be on the radar of any SaaS company selling to customers in those states.

Conclusion

SaaS Sales Tax in the United States is far from uniform.

In 2026, some jurisdictions directly tax SaaS, others do not, and some apply conditional rules based on the type of customer, product, or method of delivery.

At the same time, the landscape is evolving rapidly.

California will begin taxing certain software and SaaS products on January 1, 2027, while Colorado will also expand software taxation beginning on the same date.

Washington has already expanded its taxation of certain digital services, demonstrating a broader trend among states seeking to adapt their tax systems to the digital economy.

For international SaaS companies, the primary risk is not simply failing to identify the correct tax rate.

The challenge is determining when the company has established nexus, whether the product is taxable, where the sale should be taxed, and how to comply with registration, collection, filing, and remittance requirements.

Therefore, an effective U.S. expansion strategy should consider Sales Tax from the beginning, particularly when the company operates under a recurring revenue model and serves customers across multiple states.

How Can Drummond Advisors Help?

Expanding a technology company into the United States involves tax, accounting, and structural decisions that need to keep pace with the business as it grows.

Drummond Advisors helps international companies enter and operate in the U.S., including accounting, taxation, business structuring, and compliance services.

For a SaaS company, this means evaluating not only its corporate structure but also the tax obligations that may arise as the business acquires customers across different states.

Want to understand how Sales Tax rules may affect your company in the United States? Contact Drummond Advisors through the available chat or by email at info@drummondadvisors.com and speak with our specialists.

Written by Marcos Ferreira, Content Analyst at Drummond Advisors

Sources

TaxJar: SaaS Sales Tax by State
TaxJar: Economic Nexus by State
Tax Foundation: State and Local Sales Tax Rates 2026
Tax Foundation: 2026 State Tax Competitiveness Index
Streamlined Sales Tax: Remote Seller FAQs
Texas Comptroller: Taxable Services and Data Processing
California CDTFA: Software and Sales Tax Rules
PwC: California SB 122 and SaaS Taxation Beginning in 2027
Colorado General Assembly: HB26-1223
Washington Department of Revenue: Services Subject to Sales Tax
Washington Department of Revenue: Digital Products and SaaS
Mississippi Department of Revenue: Software and Software Services
Rhode Island Division of Taxation: SaaS, PaaS, and IaaS Ruling
Utah State Tax Commission: Computer Service Providers

9 MIN

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FinCEN has made permanent the exemption for companies formed in the United States from the requirement to report beneficial ownership information. However, foreign companies registered to do business in the U.S. remain subject to specific BOI rules. Understand what changed and what it means for international businesses. Introduction: An Important Change to U.S. Corporate Transparency Rules Companies doing business in the United States have experienced a series of changes to Beneficial Ownership Information (BOI) reporting requirements since the Corporate Transparency Act (CTA) took effect. Now, the landscape has changed again. On August 11, 2026, the Financial Crimes Enforcement Network (FinCEN), an agency of the U.S. Department of the Treasury, published a final rule permanently exempting companies formed in the United States from federal beneficial ownership information reporting requirements. The rule became effective on August 14, 2026. In practice, this means that an LLC, corporation, or other entity formed under the laws of a U.S. state no longer needs to file a BOI Report with FinCEN solely because it was formed in the United States. But there is a fundamental distinction for international companies: This exemption does not mean that all foreign companies doing business in the United States are free from BOI reporting requirements. Certain entities formed outside the United States and registered to do business in a U.S. state may continue to qualify as reporting companies and may have obligations to FinCEN. This distinction is particularly relevant for multinational companies, international founders, foreign holding companies, and businesses structuring their entry into the U.S. market. What Is a BOI Report? The Beneficial Ownership Information Report, commonly known as a BOI Report, was created under the Corporate Transparency Act to increase transparency regarding the ownership and control of certain business entities. The original objective was to allow FinCEN to access information about individuals who: The initiative was part of a broader U.S. government strategy to combat business structures used for money laundering, fraud, illicit financing, and other criminal activities. Since its implementation, however, the system has undergone regulatory changes, legal challenges, and significant changes to the scope of entities required to report. The final rule published in […]

/ By Marcos Ferreira

Introduction: An Important Change to U.S. Corporate Transparency Rules

Companies doing business in the United States have experienced a series of changes to Beneficial Ownership Information (BOI) reporting requirements since the Corporate Transparency Act (CTA) took effect.

Now, the landscape has changed again.

On August 11, 2026, the Financial Crimes Enforcement Network (FinCEN), an agency of the U.S. Department of the Treasury, published a final rule permanently exempting companies formed in the United States from federal beneficial ownership information reporting requirements.

The rule became effective on August 14, 2026.

In practice, this means that an LLC, corporation, or other entity formed under the laws of a U.S. state no longer needs to file a BOI Report with FinCEN solely because it was formed in the United States.

But there is a fundamental distinction for international companies:

This exemption does not mean that all foreign companies doing business in the United States are free from BOI reporting requirements.

Certain entities formed outside the United States and registered to do business in a U.S. state may continue to qualify as reporting companies and may have obligations to FinCEN.

This distinction is particularly relevant for multinational companies, international founders, foreign holding companies, and businesses structuring their entry into the U.S. market.

What Is a BOI Report?

The Beneficial Ownership Information Report, commonly known as a BOI Report, was created under the Corporate Transparency Act to increase transparency regarding the ownership and control of certain business entities.

The original objective was to allow FinCEN to access information about individuals who:

own a significant interest in a company;

exercise substantial control over the entity; or

in certain circumstances, participated in forming or registering the company as company applicants.

The initiative was part of a broader U.S. government strategy to combat business structures used for money laundering, fraud, illicit financing, and other criminal activities.

Since its implementation, however, the system has undergone regulatory changes, legal challenges, and significant changes to the scope of entities required to report.

The final rule published in August 2026 consolidates one of those changes.

What Changed With FinCEN’s 2026 Final Rule?

The main change is straightforward:

U.S. companies are exempt from BOI reporting

FinCEN confirmed that U.S. companies no longer need to file BOI Reports.

This includes entities formed in the United States, including business structures that were previously classified as domestic reporting companies.

As a result, the owners of these companies also do not need to provide their personal information to FinCEN for this purpose.

The final rule made permanent the exception that FinCEN had provisionally introduced in March 2025.

What About Companies That Previously Filed a BOI Report?

FinCEN also announced that it intends to remove from its system information previously submitted by domestic companies and U.S. individuals who are now outside the scope of the reporting requirement.

The agency stated that it intends to carry out this deletion process in a single operation and does not expect companies or individuals to need to request the removal of their information individually.

FinCEN also stated that it will publicly announce when the deletion process has been completed.

Therefore, a U.S. company that filed a BOI Report in the past should not assume that it needs to file a new report or manually request the removal of its information.

Foreign Companies Remain Subject to BOI Rules

This is where the change becomes particularly important for international businesses.

The final rule did not eliminate BOI reporting for all companies that have operations in the United States.

The current definition of reporting company focuses the requirement on certain entities formed under the laws of a foreign country that have registered to do business in a U.S. state or tribal jurisdiction through a filing with the Secretary of State or a similar office.

In other words:

Being a foreign company registered to do business in the United States is different from being a company formed in the United States.

This distinction needs to be considered when planning an international expansion.

A Practical Example

Imagine a company formed in Brazil that decides to expand its operations into the United States.

It may pursue different structures.

Structure 1: Forming a New U.S. LLC

The Brazilian company forms an LLC in Delaware, Florida, Texas, or another state.

In this case, the entity is a U.S. company and, under the current rule, is exempt from federal BOI reporting.

Structure 2: Registering the Foreign Company Directly in the U.S.

The Brazilian company maintains its Brazilian entity and registers that same company to do business in a particular U.S. state.

In this scenario, it may qualify as a foreign reporting company and remain subject to BOI rules, provided no other exemption applies.

The choice between these structures is therefore not simply a legal or operational decision. It can also change the compliance obligations applicable to the business.

What Information Do Foreign Companies Need to Report?

Another relevant change concerns U.S. individuals.

Under the final rule, a reporting company does not need to report information about U.S. persons who are beneficial owners or company applicants. Likewise, U.S. persons are exempt from providing their information to a reporting company in these circumstances.

This means that, for a foreign company that remains within the scope of BOI reporting, the analysis should focus on the individuals who remain subject to reporting.

Example

A foreign company has:

a Brazilian founder;

a U.S. shareholder;

a U.S. director;

foreign investors.

If the company qualifies as a reporting company, the current rule provides that information about U.S. persons should not be reported as BOI.

On the other hand, individuals who are not U.S. persons and who meet the applicable definition of a beneficial owner may remain subject to reporting.

Therefore, it is not enough to identify the nationality of the shareholders. Companies must simultaneously analyze:

where the entity was formed;

how it is registered in the United States;

whether an exemption applies;

who its beneficial owners are;

who exercises substantial control;

which individuals are U.S. persons; and

what information actually needs to be reported.

What Is the Deadline for Foreign Companies That Need to File BOI?

The final rule maintained the reporting deadlines previously established by FinCEN for foreign entities that remain within the definition of reporting company.

For a foreign entity that becomes a reporting company after March 26, 2025, the deadline for filing the initial report is generally 30 days from the date the entity receives actual notice that it has been registered to do business in the United States, or the date the relevant state authority first makes that information publicly available, whichever occurs first.

The final rule expressly maintained this 30-day deadline.

Therefore, foreign companies should not interpret the 2026 change as a general elimination of BOI reporting.

BOI Is Not the Only Compliance Requirement for a U.S. Company

This is one of the most important points for international companies to understand.

Eliminating BOI reporting for U.S. companies does not mean these companies no longer have regulatory or corporate compliance obligations.

A company formed in the United States may still need to address:

obtaining and maintaining an EIN;

federal tax filings;

state tax obligations;

franchise taxes;

state annual reports;

sales tax registrations;

payroll compliance;

employment requirements;

business licenses;

maintaining a registered agent;

accounting and bookkeeping;

obligations related to foreign investments;

FBAR and other applicable international reporting requirements for individuals or entities;

state-specific rules.

In other words, BOI is only one component of corporate compliance in the United States.

The change eliminates one specific federal requirement, but it does not replace the need for an integrated compliance structure.

What Does the Change Mean for Founders and Companies Entering the U.S.?

For international entrepreneurs, the new regulation may influence the analysis of their corporate structure.

A foreign founder evaluating entry into the United States may consider, for example:

Forming a New U.S. Entity

Under this model, a foreign company or its founders form a new U.S. entity.

Because the new entity is a U.S. company, it is currently outside the scope of federal BOI reporting.

Registering the Foreign Entity in the U.S.

Another option is to use the existing foreign company and register it to do business in a particular state.

In this case, the entity may remain subject to BOI reporting if it meets the requirements for a reporting company.

However, the decision should not be based solely on BOI requirements.

Tax considerations, governance, legal liability, intellectual property, investment, profit distributions, cross-border fund transfers, and state-level requirements must also be considered.

Conclusion: Less Bureaucracy, But Not Less Responsibility

FinCEN’s decision represents a significant change to the U.S. corporate regulatory environment.

As of August 14, 2026, companies formed in the United States are permanently exempt from filing BOI Reports with FinCEN, and U.S. persons are also exempt from providing their information for this purpose.

At the same time, certain foreign companies registered to do business in the United States remain subject to BOI reporting, particularly when they have beneficial owners who are not U.S. persons.

For international companies, therefore, the question is no longer simply:

“Does my company need to file a BOI Report?”

The correct analysis is broader:

“What is the legal structure of my U.S. operation, which obligations apply to that structure, and how can I keep my business compliant at the federal, state, and international levels?”

This assessment is particularly important for companies planning to enter the U.S. market, restructuring existing operations, or evaluating a U.S. holding company structure.

The FinCEN change may reduce costs and bureaucracy for millions of American companies. For international businesses, however, the key benefit lies in properly understanding the new regulatory environment and incorporating it into the corporate, tax, and compliance planning for their U.S. expansion.

How Can Drummond Advisors Help?

Expanding into the United States involves much more than forming a company. Corporate structure, accounting, taxation, compliance, and regulatory obligations need to be analyzed together.

Drummond Advisors supports international companies throughout their U.S. market entry and operations, providing assistance in areas such as accounting, taxation, business structuring, compliance, and outsourcing.

Want to understand which structure makes the most sense for your company? Contact Drummond Advisors and speak with our specialists.

Written by Marcos Ferreira, Content Analyst at Drummond Advisors

Official Sources

FinCEN, Beneficial Ownership Information Reporting.

FinCEN, Final Rule: Beneficial Ownership Information Reporting Requirement Revision, published August 14, 2026.

FinCEN, Permanently Ends Beneficial Ownership Reporting Requirements for Millions of Small Business Owners, August 11, 2026.

FinCEN, Beneficial Ownership Information Frequently Asked Questions.

FinCEN, Reference Materials.

4 MIN

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International careers are increasingly common today, as professionals may establish themselves and contribute for years to Brazil’s social security system before moving to another country and continuing their careers under a different social security system. International mobility, however, highlights an issue that is often considered only when retirement approaches: what happens to the contributions made […]

/ By Drummond Advisors

International mobility, however, highlights an issue that is often considered only when retirement approaches: what happens to the contributions made in each country?

The answer is not always straightforward, as contributing to social security systems in different countries does not automatically result in the conversion or combination of those contributions into a single benefit.

Each country has its own requirements for granting and calculating retirement benefits, and the way each contribution period interacts with the other depends, among other factors, on whether an International Social Security Agreement is in place.

These agreements serve as instruments for coordinating and integrating the social security systems of different countries. Within the established rules, they may allow contribution periods completed abroad to be used to meet the requirements for eligibility for certain benefits.

Even so, the existence of an international social security agreement does not mean that contribution periods completed in the signatory countries will be automatically credited or combined. The use of these periods depends on an analysis of the conditions established in the applicable agreement and the specific rules of each country’s social security legislation, which continue to apply on a complementary basis. Accordingly, each country determines whether the applicable requirements have been met and, when appropriate, grants and pays the benefit for which it is responsible, in accordance with the agreement and its domestic legislation.

The Social Security Agreement Between Brazil and the United States

As an example, the Social Security Agreement between Brazil and the United States may, subject to certain criteria, allow a professional who has worked in both countries to use periods completed under one system, in certain circumstances, to meet the eligibility requirements for retirement benefits under the other system, even though each country applies its own social security rules to determine the rights and benefits owed.

Therefore, the existence of the agreement does not, by itself, mean that all contribution periods will be used in the most advantageous manner. It is from this perspective that international social security planning becomes particularly important.

Likewise, the possibility of receiving social security benefits from more than one country is one of the most valuable aspects of an international professional career.

Depending on the individual’s contribution history and whether the requirements of each system are met, a professional may be entitled to separate retirement benefits, granted and paid independently by the respective countries. In this context, a strategic analysis can not only determine whether contribution periods may be used, but also evaluate the alternatives available under each system, helping ensure that social security rights built over the course of an international career are properly identified and utilized. This may even allow for the receipt of both Brazilian and U.S. retirement benefits.

From this perspective, rather than analyzing retirement only when the benefit is about to be claimed, planning makes it possible to assess the professional’s entire contribution history in advance and understand how the systems involved interact, allowing different scenarios to be compared and helping identify the most appropriate strategy.

For Brazilians living abroad, for example, one of the key questions is whether maintaining social security contributions in Brazil is necessary or advisable. There is no single answer to this question. The decision depends on several factors, including contribution history, the insured individual’s age, the country where they work, the existence of a social security agreement, and the requirements that remain to be met to qualify for benefits.

In certain situations, continuing to contribute in Brazil may be relevant to meeting eligibility requirements or obtaining more favorable retirement conditions. In others, however, making contributions without prior analysis may represent a cost that does not necessarily result in a corresponding social security advantage.

Planning also involves reviewing social security records. In Brazil, for example, the National Social Information Registry (Cadastro Nacional de Informações Sociais or CNIS) contains essential data regarding employment relationships, contributions, and earnings considered by the National Social Security Institute (INSS). Reviewing these records makes it possible to identify and correct missing information, inconsistencies, or outstanding issues, helping mitigate the risk that such problems could affect either recognition of eligibility or the calculation of benefits. Advance review and correction are particularly important for professionals with international career histories.

Ultimately, international social security planning is not limited to determining when an individual will be able to retire. It involves understanding how contributions made in different countries, international agreements, and future contribution decisions can be strategically organized according to each professional’s circumstances and objectives.

In this context, conducting this analysis in advance creates greater opportunities to correct inconsistencies, evaluate alternatives, and direct future contributions efficiently for professionals who have built or intend to build an international career, providing greater predictability and security in retirement planning.

Written by Daniel Rangel and Juliana Lins

2 MIN

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Brazilians who worked and contributed to Brazil’s social security system (INSS) before moving to the United States often have questions about whether those contribution periods can be considered when applying for retirement benefits. Since 2018, the Brazil–U.S. Social Security Agreement has allowed, under certain circumstances, periods of coverage in both countries to be considered when […]

/ By Drummond Advisors

Since 2018, the Brazil–U.S. Social Security Agreement has allowed, under certain circumstances, periods of coverage in both countries to be considered when determining eligibility for social security benefits.

How Does It Work?

The agreement can help individuals who have not independently met the minimum eligibility requirements in Brazil or the United States.

However, it does not transfer contributions from one country to the other or combine the amounts paid to create a single retirement benefit. Each country:

reviews the claim according to its own laws;
calculates the benefit for which it is responsible; and
pays the corresponding amount.

Depending on an individual’s contribution history, they may be eligible for benefits paid by both Brazil and the United States. This does not, however, automatically mean they will receive two full retirement benefits.

Should I Continue Contributing to the INSS?

The answer depends on each individual’s circumstances.

Before continuing or resuming contributions in Brazil, it is important to assess:

how much time has already been contributed in each country;
whether the records in the CNIS are accurate;
which social security rules may apply;
whether it will be necessary to totalize contribution periods;
which contribution category is appropriate; and
whether making additional contributions could actually improve the benefit.

Contributing without proper planning may result in payments that do not produce the expected benefit.

Brazil–U.S. Social Security Planning

An integrated review of an individual’s INSS and Social Security history can help identify the applicable requirements, correct inconsistencies, and organize the necessary documentation.

The Drummond Advisors team is available to assist clients who worked in Brazil and currently live or work in the United States.

For more information about Brazil–U.S. Social Security Planning, contact our team.

Written by Daniel Rangel, Head of Labor Law at Drummond Advisors

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Filing a tax return accurately is one of the most effective ways to stay compliant with the Internal Revenue Service (IRS). Although the word “audit” often causes concern, being selected for an IRS examination does not necessarily mean that a taxpayer has done something wrong. In many cases, the agency simply needs additional information to […]

/ By Paola Atzingen

Understanding how IRS audits work and adopting good tax compliance practices can help individuals and businesses reduce the likelihood of facing unnecessary scrutiny.

What Is an IRS Audit?

An IRS audit, officially referred to as an examination, is a review of an individual’s or business’s financial records to determine whether the information reported on a tax return is accurate and complies with federal tax laws. Depending on the circumstances, the IRS may request documentation to verify income, deductions, credits, or other reported items.

In most cases, the IRS begins the audit process by sending an official notice through the U.S. mail. While an IRS representative may contact a taxpayer later in the process, the agency does not initiate audits through phone calls, emails, text messages, or social media.

What Can Trigger an IRS Audit?

Although some tax returns are selected randomly, most audits result from inconsistencies or reporting patterns that require further review. Common factors include unreported income, mathematical errors, deductions or tax credits that appear disproportionate to a taxpayer’s income, and discrepancies between the information reported on a return and records received by the IRS from employers, financial institutions, or other third parties.

Taxpayers with foreign financial reporting obligations who fail to disclose required accounts or assets may also attract additional scrutiny. Likewise, individuals and businesses with higher levels of income are statistically more likely to be audited than the average taxpayer.

The IRS generally conducts three types of audits. A Correspondence Audit is handled by mail and usually involves requests for specific documents. An Office Audit requires the taxpayer to meet with an IRS representative at a local office, while a Field Audit is the most comprehensive, taking place at the taxpayer’s home, business, or accountant’s office.

Best Practices to Reduce Your Risk

While no strategy can completely eliminate the possibility of an audit, maintaining organized financial records and preparing tax returns carefully can significantly reduce the risk.

Keeping receipts, invoices, bank statements, and other supporting documentation makes it easier to substantiate the information reported on a return. Reviewing tax forms before filing helps identify calculation mistakes and inconsistencies, while reporting all sources of income ensures that IRS records match the taxpayer’s return.

It’s equally important to claim only deductions and tax credits that are properly documented and supported by applicable tax rules. If the IRS requests additional information, responding promptly and accurately can help resolve the matter more efficiently.

For companies and investors operating across borders, another critical factor is having the right international structure in place from the beginning. A well-designed cross-border structure helps ensure compliance with U.S. reporting obligations while minimizing reporting gaps and inconsistencies that may attract IRS scrutiny.

International operations involving foreign corporations, partnerships, trusts, financial accounts, or related-party transactions often trigger specific reporting requirements, including Forms 5471, 5472, 8865, 8938, 3520, as well as the FBAR (FinCEN Form 114). Failing to identify and meet these obligations—even unintentionally—can lead to significant penalties and increase the likelihood of an IRS examination.

Proper planning goes beyond tax efficiency. When an international structure is established with clear entity classifications, ownership mapping, and well-documented intercompany transactions, businesses are better positioned to meet their reporting obligations, maintain consistent documentation, and respond confidently to IRS inquiries. In this sense, sound international structuring serves as a key compliance strategy, helping reduce audit risks while supporting long-term cross-border operations.

For businesses, foreign investors, and individuals with more complex tax situations, working with experienced tax professionals provides an additional layer of confidence. Professional guidance helps ensure compliance with current regulations, minimizes reporting errors, and prepares taxpayers to respond effectively if questions arise.

An IRS audit is not necessarily an indication of wrongdoing, but rather a process designed to verify the accuracy of tax filings. By maintaining complete records, reporting information consistently, and seeking professional tax guidance when needed, taxpayers can significantly reduce the likelihood of an examination and navigate the U.S. tax system with greater confidence.

Avoid costly tax mistakes before they happen. Whether you’re an individual taxpayer, a foreign investor, or a company with international operations, Drummond Advisors helps clients navigate U.S. tax obligations, strengthen compliance, and build the right international structure to minimize audit risks. Contact our team to learn how we can support your business.

Written by Paola Von Atzingen and Maikon Luiz

5 MIN

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U.S. tariff policy remains at the center of international trade discussions in 2026. After the U.S. Supreme Court ruled that part of the tariffs imposed by President Donald Trump’s administration under the International Emergency Economic Powers Act (IEEPA) were unlawful, the U.S. government has already refunded approximately $81 billion to companies that had paid surtaxes […]

/ By Marcos Ferreira

U.S. tariff policy remains at the center of international trade discussions in 2026. After the U.S. Supreme Court ruled that part of the tariffs imposed by President Donald Trump’s administration under the International Emergency Economic Powers Act (IEEPA) were unlawful, the U.S. government has already refunded approximately $81 billion to companies that had paid surtaxes on imported goods.

In addition to representing one of the largest tax refunds in recent U.S. history, the case creates new challenges for companies that import, export, or maintain international operations. For organizations with a presence in the U.S. market, the current environment requires close attention to regulatory changes, tax implications, and strategic planning opportunities.

What Led to the Tariff Refunds?

In April 2025, the U.S. government announced a broad package of tariffs on imports from several trading partners, justifying the measure under the International Emergency Economic Powers Act (IEEPA), a law enacted in 1977 that grants the President emergency powers during national emergencies.

However, in February 2026, the U.S. Supreme Court concluded that the IEEPA did not provide the authority to establish this tariff regime. As a result, the federal government was required to begin reimbursing importers for the tariffs that had been unlawfully collected.

According to the U.S. Department of the Treasury, between the beginning of fiscal year 2026 (October 2025) and July 2026, approximately $81 billion had already been refunded to eligible companies, with the largest payments occurring between May and June.

The Impact on U.S. Public Finances

The refunds had an immediate effect on federal finances.

In June 2026 alone:

The U.S. government collected approximately $23.6 billion in tariff revenue;
Refunded approximately $49.2 billion to importers;
Recorded a net outflow of $25.6 billion related to tariffs.

This contributed to a monthly federal budget deficit of approximately $120 billion, while the cumulative fiscal year deficit reached roughly $1.367 trillion. Beyond the refunds themselves, rising interest payments on the national debt also continued to pressure the federal budget.

Is the Matter Settled? Not Yet.

Although the Supreme Court invalidated tariffs imposed under the IEEPA, this does not mark the end of U.S. tariff policy.

Following the Court’s decision, the administration began relying on other legal authorities available under U.S. trade law, including Section 122 of the Trade Act of 1974, to temporarily maintain certain tariffs while developing new trade strategies. At the same time, the administration continues to conduct investigations that may lead to additional tariffs targeting specific countries and industries.

In practice, this means the regulatory environment remains highly dynamic, requiring companies engaged in international business to continuously monitor developments.

Which Companies May Be Affected?

The issue extends well beyond U.S. importers.

Foreign companies with subsidiaries, distribution centers, or commercial operations in the United States may also face significant impacts, particularly if they:

Import goods directly into the U.S. market;
Rely on global supply chains;
Operate under international supply agreements;
Maintain tax structures involving multiple jurisdictions.

In many cases, businesses may need to reassess contracts, logistics costs, pricing strategies, and tax planning to reflect the evolving regulatory landscape.

Opportunities for International Businesses

Despite the legal uncertainty created by frequent policy changes, the current environment also presents valuable opportunities.

Tax Structure Review

Companies can reassess their corporate and tax structures to identify efficiencies under the new regulatory framework.

Recovery of Previously Paid Tariffs

Organizations that paid tariffs later deemed unlawful should determine whether they qualify for refunds and identify the administrative procedures required to recover those amounts.

Import Planning

With the possibility of future tariff changes, businesses should carefully evaluate product sourcing, applicable trade agreements, and tariff classifications.

Regulatory Risk Management

The case underscores the importance of continuously monitoring legislative developments, judicial decisions, and U.S. trade policy changes.

What Should Companies Do Now?

Regardless of industry, companies with international operations should consider taking the following proactive measures:

Review their import and export supply chains;
Confirm whether they paid tariffs that were subsequently ruled unlawful;
Evaluate opportunities to recover overpaid amounts;
Update financial forecasts to account for potential tariff changes;
Review international contracts to address future regulatory developments;
Strengthen tax and customs compliance programs.

An integrated approach involving legal, tax, accounting, and international trade professionals can significantly reduce risk while improving an organization’s ability to adapt to an increasingly dynamic regulatory environment.

What to Expect in the Coming Months

Experts estimate that total tariff refunds could eventually exceed $175 billion if all eligible claims are processed. At the same time, the U.S. administration continues to pursue alternative legal mechanisms to preserve trade protection measures, suggesting that additional regulatory and judicial disputes may still emerge.

For global companies, this means U.S. trade policy will remain a strategic risk management issue requiring continuous monitoring and long-term planning.

Conclusion

The refund of $81 billion in tariffs represents a landmark moment in U.S. trade policy and demonstrates how judicial decisions can dramatically reshape the business environment.

For companies operating internationally, this case reinforces the importance of maintaining corporate and tax structures capable of responding quickly to regulatory changes, reducing risk while taking advantage of opportunities to recover credits and improve operational efficiency.

Drummond Advisors closely monitors legislative, tax, and trade developments in the United States, helping global companies structure operations, review tax strategies, maintain international compliance, and expand successfully into the U.S. market.

Do you believe your company may be eligible for a tariff refund? Contact our team through the chat available on our website or email us at info@drummondadvisors.com.

Written by Marcos Ferreira, Content Analyst at Drummond Advisors.

Sources

Reuters – Tariff refunds push US June budget deficit to $120 billion
Thomson Reuters Institute – Supreme Court’s tariff decision: What’s next for businesses and how to plan
Penn Wharton Budget Model (estimate cited by Reuters)
U.S. Department of the Treasury – Monthly Treasury Statement
Globo – Após derrota na Suprema Corte, governo Trump já devolveu US$ 81 bilhões em tarifas

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Intercompany loan transactions are common within multinational corporate groups. However, determining the appropriate interest rate is one of the most sensitive aspects of Transfer Pricing and has become an increasing focus of tax authorities. An interest rate that lacks adequate economic support may result in tax adjustments, limitations on interest deductibility, and penalties. Conversely, a […]

/ By Drummond Advisors

An interest rate that lacks adequate economic support may result in tax adjustments, limitations on interest deductibility, and penalties. Conversely, a well-documented pricing policy strengthens the taxpayer’s position, reduces audit risks, and provides greater certainty for cross-border financing transactions.

Although both Brazil and the United States follow the arm’s length principle, the methods used to demonstrate that an interest rate reflects market conditions differ significantly.

United States: The AFR as a Reference, But Not Necessarily a Market Rate

In the United States, the Internal Revenue Service (IRS) publishes the Applicable Federal Rate (AFR) each month. The AFR serves as a minimum benchmark for certain related-party transactions, particularly under the rules established by Section 7872 of the Internal Revenue Code.

In addition, Section 482 provides standards that, under certain circumstances, reduce the likelihood of IRS challenges when the interest rate falls within a range associated with the AFR.

However, the AFR does not always reflect the rate that unrelated parties would negotiate. In transactions involving higher credit risk, unsecured financing, or bullet-payment structures, an independent lender would generally require a higher return.

In these cases, preparing a benchmark study in accordance with Treasury Regulation §1.482-2(a) becomes essential to demonstrate, based on market data, that the interest rate satisfies the arm’s length principle.

Brazil: New Rules Require Documentation Based on Comparable Transactions

With the enactment of Law No. 14,596/2023, Brazil adopted the OECD Transfer Pricing Guidelines, replacing its former system based on predetermined statutory parameters.

Normative Instruction RFB No. 2,161/2023 regulates financial transactions between related parties, including intercompany loans, cash pooling arrangements, and guarantees, without establishing any interest rate that is automatically accepted by the Brazilian Federal Revenue Service.

In practice, determining an arm’s length interest rate requires consideration of several factors, including:

The borrower’s credit risk profile, generally assessed on a standalone basis, with a specific evaluation of any implicit group support;
The characteristics of the transaction, including maturity, currency, collateral, and repayment terms; and
Comparable transactions identified through recognized financial databases such as Bloomberg or Capital IQ.

Under this new framework, documentation supported by comparable market data is no longer simply a tool for justifying higher interest rates. It has become a fundamental component of Transfer Pricing compliance.

Key Differences Between Brazil and the United States

Aspect	United States	Brazil
Minimum Reference	AFR for certain situations	No predefined acceptable interest rate
Demonstrating an Arm’s Length Rate	Benchmark study when supporting a rate different from the AFR	Benchmark study required to demonstrate compliance with the arm’s length principle
Credit Analysis	May consider implicit group support	Primarily standalone analysis, with specific consideration of potential implicit group support
Legal Framework	Internal Revenue Code Sections 482 and 7872	Law No. 14,596/2023 and Normative Instruction RFB No. 2,161/2023

Considerations for Multinational Groups

Companies conducting intercompany financing transactions between Brazil and the United States should evaluate each loan agreement under the applicable rules of both jurisdictions.

Although both countries apply the arm’s length principle, the requirements for demonstrating that an interest rate is consistent with market conditions are not identical. A benchmark study prepared solely to satisfy IRS requirements may not fully comply with Brazilian regulations, just as documentation prepared for Brazil may not satisfy all U.S. requirements.

A comprehensive analysis involves more than selecting an interest rate. It should also assess the borrower’s creditworthiness, the transaction’s terms, the existence of collateral, the financing period, and the economic evidence supporting the agreed-upon pricing.

How Drummond Can Help

Drummond’s Transfer Pricing team advises multinational groups on structuring and documenting intercompany financial transactions, including:

Establishing interest rates that comply with the arm’s length principle;
Preparing benchmark studies for financial transactions;
Reviewing intercompany loan agreements, cash pooling arrangements, and guarantees;
Preparing Transfer Pricing documentation to comply with both Brazilian and U.S. regulations; and
Providing support during audits, tax examinations, and reviews of related-party transactions.

If your company engages in intercompany financing or is considering reviewing its Transfer Pricing policy for financial transactions, our team is available to evaluate your current structure and develop a solution aligned with the requirements of each jurisdiction.

Written by Adriana Lemos, Transfer Pricing & Cross-Border Strategy.

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The United States can be a natural market for Brazilian entrepreneurs seeking scale, access to capital, suppliers, and new customers. However, for those planning to relocate to launch, acquire, or operate a business in the U.S., immigration strategy must go hand in hand with business strategy. When available, the E-2 Treaty Investor Visa can be […]

/ By Marcos Ferreira

In simple terms, the E-2 Visa allows a national of a treaty country to enter the United States to develop and direct a business in which they have invested—or are actively investing—a substantial amount of capital. It is not a green card, but rather a practical option for founders, operators, franchise buyers, and business owners who want to actively manage a U.S. operation.

The First Step: Confirm Eligibility Through Nationality

For Brazilian nationals, the first consideration is nationality. Brazil is not an E-2 treaty country, meaning that a Brazilian passport alone is generally not sufficient. However, many Brazilians hold dual citizenship with treaty countries such as Italy, Portugal, Paraguay, or Argentina. In these cases, an E-2 strategy may be viable, provided the rest of the structure is properly established.

Dual citizenship must be clearly documented. Having ancestry, living abroad, or having a citizenship application in progress is not enough. The applicant must already be a national of a treaty country and hold a valid passport, along with any supporting civil documents when required. For Portuguese nationals, eligibility for the E-1 and E-2 visa categories was introduced relatively recently and became available to qualified applicants beginning on April 23, 2024.

Next: Structure the Business Correctly

Once nationality has been established, attention turns to the ownership structure. The U.S. company must also possess the nationality of the treaty country. In practice, at least 50% of the business must be owned by nationals of that treaty country. This requires careful planning from the outset, particularly when there are co-founders, investors, or future fundraising rounds.

Ownership dilution should be addressed before raising capital—not afterward. A founder who initially owns 80% or 90% of the company may appear well positioned for an E-2 Visa, but an investment round that reduces ownership below 50% could significantly complicate eligibility. Shareholder agreements, voting rights, board control, veto rights, and governance provisions should all be designed with the immigration strategy in mind.

Additional care is required when founders hold passports from different treaty countries. The company’s nationality, the principal applicant, and any future E-2 employee strategy should all be evaluated together before equity is issued.

What the Consulate Wants to See

Once nationality and ownership have been addressed, the focus shifts to the business itself. The consular officer will evaluate whether the investment is credible, whether the business is real, whether it has the potential to create jobs, and whether there is a realistic likelihood of success. Simply transferring money to the United States is not enough. The investment must be substantial, irrevocably committed, placed at risk, and tied to a legitimate commercial enterprise.

The investment amount should tell a business story—not simply represent a number. An investment of $100,000 may be substantial for a service-based business but insufficient for manufacturing, hospitality, logistics, or retail operations. The objective is to demonstrate that the investment is proportional to the business plan, has already been committed, and will fund tangible business needs such as equipment, inventory, lease payments, licenses, payroll, technology, marketing, or the acquisition of an existing business.

Job creation also plays an important role. Unlike the EB-5 Immigrant Investor Program, the E-2 Visa does not require a fixed number of jobs. However, the business cannot exist solely to support the investor and their family. Hiring plans, payroll records, job descriptions, organizational charts, and evidence of current employees help demonstrate that the enterprise is more than a marginal business.

The third pillar is commercial viability. A strong case presents a genuine, operating business supported by customer contracts, letters of intent, purchase orders, invoices, bank statements, lease agreements, supplier relationships, evidence of market demand, a well-developed business plan, and financial projections grounded in reality. The more operational traction the business can demonstrate, the stronger the application tends to be.

For this reason, early-stage startups require additional preparation. A pre-revenue company may still qualify, but it has more to prove. Before the visa interview, founders should ideally have already formed the U.S. company, opened a business bank account, validated customers and business partners, secured operating premises when necessary, established supplier relationships, and documented a realistic hiring plan.

Startups Require Additional Preparation

All preparatory business activities must comply with the founder’s immigration status. Permissible temporary business activities may include attending meetings, negotiating contracts, participating in conferences, and conducting market research. However, founders should not actively work in the United States or directly manage the business before obtaining the appropriate work authorization.

Another Option: Acquiring an Existing Business

For some investors, purchasing an existing business may present a stronger E-2 strategy than launching a new venture from scratch. An acquisition may provide immediate access to customers, revenue, employees, contracts, equipment, licenses, operating history, and market reputation—all of which help demonstrate from day one that the enterprise is legitimate.

This evidentiary advantage is significant. Established businesses typically have tax returns, financial statements, payroll records, W-2s, 1099s, profit and loss statements, and other documentation demonstrating ongoing operations. Rather than relying solely on projections, investors can present historical performance while explaining how their management will expand the business.

An acquisition also strengthens the employment narrative. If the business already has employees, the investor can demonstrate both job preservation and future hiring plans. This can be particularly advantageous for restaurants, franchises, distribution companies, medical practices, service businesses, manufacturing companies, and other operations with an existing workforce.

Managing the Closing Process

The primary challenge in acquisition cases is timing. Sellers want certainty, while buyers may be reluctant to release the full purchase price before visa approval. In these situations, an escrow arrangement can be an effective solution, allowing funds to remain committed while being released once the E-2 condition has been satisfied.

The escrow agreement must be carefully structured. Generally, the relevant condition should be E-2 approval to avoid making the investment appear overly contingent. The purchase agreement, escrow agreement, source of funds documentation, closing conditions, and visa application should all present a consistent narrative.

The purchase agreement itself should also support the immigration strategy. It should address what happens if the E-2 Visa is denied, how long the seller will wait before terminating the transaction, which documents will be provided for the visa application, whether employees will remain after closing, and how operational transition will occur. Due diligence should extend well beyond the purchase price to include revenue, employees, leases, licenses, franchise agreements, liabilities, litigation, customer concentration, tax issues, and the business’s ability to support the overall E-2 narrative.

What If the Goal Is to Expand an Existing Brazilian Business?

When the strategy involves expanding an existing Brazilian company into the United States, the E-2 application should clearly demonstrate that the U.S. operation represents a genuine expansion rather than a shell company. The application should explain the company’s history in Brazil, the U.S. market opportunity, the relationship between the Brazilian and U.S. operations, the planned U.S. investment, the founder’s role, and projected revenue and hiring. Existing customers, channel partners, and tangible business progress should all be prominently documented.

Conclusion: Plan Before You Apply

The strongest E-2 cases are built well before the application is submitted. With proper planning, founders can structure the company correctly, preserve treaty-country nationality, avoid ownership dilution issues, document the lawful source of investment funds, validate U.S. customers, prepare a realistic hiring plan, and determine whether a startup, franchise, or acquisition best supports their long-term objectives.

The E-2 Visa can be an exceptionally powerful option for Brazilian entrepreneurs who hold citizenship in an eligible treaty country such as Italy, Portugal, Paraguay, or Argentina. However, approval is not based solely on possessing the appropriate nationality or transferring money into the United States. A successful application must clearly and convincingly demonstrate treaty nationality, ownership and control, a substantial and committed investment, a real and non-marginal enterprise, and the applicant’s ability to develop and direct the business.

For Brazilian founders, the most effective E-2 strategy combines immigration planning with sound business planning. The case should reflect the same fundamentals that make any company attractive to investors: capital, customers, talent, execution, and growth. When these elements are aligned before filing, the E-2 Visa can become an effective bridge for bringing a Brazilian business into the U.S. market.

Written by Chris Costa, Senior Immigration Attorney at Drummond Advisors

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MIAMI, Fla. — Drummond Advisors is pleased to welcome BlueMax and its clients as part of its continued commitment to supporting businesses operating between Latin America and the United States. The move expands the firm’s ability to deliver accounting, tax, financial, and back-office solutions through a broader network of expertise, technology-enabled services, and operational support. […]

/ By Marcos Ferreira

MIAMI, Fla. — Drummond Advisors is pleased to welcome BlueMax and its clients as part of its continued commitment to supporting businesses operating between Latin America and the United States.

The move expands the firm’s ability to deliver accounting, tax, financial, and back-office solutions through a broader network of expertise, technology-enabled services, and operational support. Clients will benefit from enhanced capabilities while continuing to receive the personalized service and trusted guidance that have long defined both organizations.

As companies expand across borders, managing financial operations, regulatory compliance, reporting requirements, and administrative functions becomes increasingly complex. To address these challenges, the firm continues to invest in specialized talent, operational infrastructure, and innovative technologies designed to simplify operations and support sustainable growth.

Together, the organizations further strengthen their ability to support entrepreneurs, growing businesses, and international companies seeking efficient, scalable solutions to establish, operate, and expand in the U.S. market.

“For years, our focus has been on helping businesses navigate growth opportunities with practical, high-quality solutions,” said Martin Dell’Oca, Co-Founder of BlueMax. “We are excited about the opportunities this next chapter creates for clients, who will now benefit from expanded resources, broader expertise, and a stronger support structure for their U.S. operations.”

Federico Fanlo Quintar, Co-Founder of BlueMax, added: “Businesses today need partners who understand both the strategic and operational aspects of growth. By combining experience, technology, and a client-centered approach, we are creating an even stronger foundation to support companies as they expand internationally.”

The expanded platform enhances the client experience through multidisciplinary expertise, streamlined processes, and a broader portfolio of services designed to help organizations navigate increasingly complex business environments.

“As businesses grow across borders, they need more than individual service providers—they need a connected ecosystem capable of supporting every stage of their journey,” said Bruno Drummond, CEO of Drummond Advisors. “Welcoming BlueMax and its clients strengthens our ability to deliver integrated solutions that combine expertise, technology, and operational excellence, helping businesses grow with confidence, efficiency, and long-term success.”

The initiative also reinforces the organization’s growing presence throughout Latin America, a region that continues to play a critical role in its long-term strategy of supporting companies entering, operating, and expanding within the United States.

The addition of BlueMax marks another step in the firm’s ongoing commitment to expanding its capabilities across the Americas and delivering integrated solutions that help businesses navigate growth in an increasingly complex global environment.

About Drummond Advisors

Drummond Advisors is a U.S.-based professional services firm providing legal, tax, accounting, immigration, advisory, and back-office solutions to companies and individuals operating across international markets.

Combining multidisciplinary expertise with technology-enabled solutions, the company helps entrepreneurs, businesses, and investors navigate complex regulatory environments, streamline operations, and support sustainable growth across the United States and international markets.

With a strong presence across the Americas, the firm delivers integrated services designed to support clients throughout every stage of their business journey, from market entry and expansion to ongoing operations and long-term growth.

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Expanding to the United States is a strategic move for startups, technology companies, traditional businesses, and international groups seeking access to the world’s largest consumer market, as well as investors, business partners, and global growth opportunities. However, one of the first decisions an international entrepreneur must make is: which business structure should they choose? Among […]

/ By Marcos Ferreira

However, one of the first decisions an international entrepreneur must make is: which business structure should they choose?

Among the most popular options are the Limited Liability Company (LLC) and the C-Corporation (C-Corp). While both offer liability protection and allow businesses to operate legally in the United States, they differ significantly in terms of taxation, governance, fundraising, and international planning.

In this article, we explain the key characteristics of each structure and the factors global founders should consider before expanding their operations into the U.S.

Why Is Choosing the Right Business Structure So Important?

The entity you choose directly impacts:

• How the company is taxed
• Compliance and governance requirements
• Investor participation
• Fundraising opportunities
• Profit distribution
• International tax planning
• Future mergers, acquisitions, and investment rounds

Choosing the wrong structure can create unnecessary costs, regulatory challenges, and even limit future growth opportunities.

What Is an LLC?

A Limited Liability Company (LLC) is one of the most commonly used business structures in the United States, particularly among small businesses, consulting firms, holding companies, and independent entrepreneurs.

Its main characteristic is that it combines the liability protection of a corporation with the operational flexibility of a partnership.

Key Advantages of an LLC

Tax Flexibility

An LLC may elect different tax treatments depending on the company’s strategy and the tax residency of its members.

In many cases, taxation flows directly to the members (owners), avoiding taxation at the corporate level.

Reduced Administrative Formalities

Compared to a corporation, an LLC typically requires fewer formal meetings, fewer corporate records, and less administrative bureaucracy.

Liability Protection

LLC members are generally not personally liable for the company’s debts and obligations.

Lower Startup and Maintenance Costs

Forming and maintaining an LLC is often simpler and more cost-effective.

What Are the Limitations of an LLC for International Founders?

Despite its advantages, an LLC is not always the best choice for businesses with global ambitions.

Some common challenges include:

• Less familiarity among institutional investors
• Potential tax complexities for foreign owners
• Limitations in certain Venture Capital structures
• Reduced attractiveness for large-scale fundraising rounds

Companies planning to raise capital from U.S. investment funds often find themselves converting to a corporate structure later.

What Is a C-Corporation?

A C-Corporation (C-Corp) is a legal entity separate from its shareholders.

It has its own legal identity, pays corporate income taxes, and is widely used by high-growth startups, technology companies, and businesses seeking outside investment.

Most Venture Capital-backed startups in the United States are structured as C-Corps, particularly in the state of Delaware.

Key Advantages of a C-Corporation

Easier Access to Investment Capital

Venture Capital funds, angel investors, and private equity firms generally prefer investing in C-Corporations.

This preference is driven by:

• Standardized corporate governance
• Simplified share issuance
• Easier implementation of stock option plans
• Well-established corporate law frameworks

Scalability

The C-Corp structure was designed for rapid growth.

It facilitates:

• Investment rounds
• Admission of new shareholders
• Mergers and acquisitions
• International expansion

Stronger Market Perception

Many multinational companies, investors, and business partners are more familiar with the traditional U.S. corporate structure.

LLC or C-Corp: Which Structure Makes More Sense for Global Founders?

The answer depends on your business objectives.

An LLC May Be More Appropriate When:

• The focus is operational efficiency rather than fundraising
• There are only a few owners
• The goal is to maintain a simple structure
• Tax flexibility is a priority

A C-Corp May Be More Appropriate When:

• The company plans to raise Venture Capital
• Rapid growth is a priority
• There is potential for future M&A transactions or an IPO
• The business wants to build a scalable structure from the beginning

International Tax Considerations That Cannot Be Ignored

Foreign businesses must evaluate not only U.S. tax laws but also the consequences in their home jurisdictions.

Important issues include:

• Controlled Foreign Corporation (CFC) rules
• International tax treaties
• Dividend taxation
• Double taxation mitigation
• Transfer pricing regulations
• International holding company structures

These factors should be analyzed before forming a U.S. entity.

A structure that is efficient from a U.S. perspective may create unexpected tax consequences elsewhere if not properly planned.

Common Mistakes Made by International Founders

Some of the most frequent mistakes include:

• Choosing an LLC simply because it is less expensive
• Forming a company without evaluating global tax implications
• Ignoring state and federal compliance requirements
• Failing to align the corporate structure with fundraising goals
• Delaying international tax planning until after expansion

Correcting these decisions later is often significantly more expensive and complex.

How to Make the Right Decision

The choice between an LLC and a C-Corp should take into account:

• Business model
• Growth strategy
• Need for external investment
• Shareholders’ country of residence
• International tax planning considerations
• Long-term business objectives

There is no universally superior structure. There is only the structure that best fits a company’s specific stage and strategic goals.

Conclusion

Expanding into the United States opens the door to growth, capital access, and global opportunities. However, selecting the right business structure is one of the most important decisions in that process.

While an LLC offers flexibility and operational simplicity, a C-Corporation is generally the preferred option for companies seeking investment capital and accelerated growth.

Before forming a U.S. entity, it is essential to evaluate the legal, tax, and strategic implications of the decision.

Drummond Advisors assists founders, startups, and international companies with the structuring of U.S. operations, providing integrated support in corporate, tax, accounting, and compliance matters to ensure a secure expansion aligned with global business objectives.

Need assistance? Contact us through our online chat or by email at info@drummondadvisors.com.

Written by Marcos Ferreira, Content Analyst at Drummond Advisors