FLIP, or Foreign Limited Partnership, is a crucial strategy for companies seeking global expansion. But what exactly is FLIP—and what are its advantages for startups?
Imagine the following scenario: an entrepreneur owns a Brazilian company, with operations and shareholders based in Brazil. Executing a FLIP means transferring the company’s structure to the United States or an offshore jurisdiction, above the Brazilian operation. In this new structure, the shareholders are also integrated into the entity created outside the company’s country of origin.
Advantages of FLIP for Startups
Access to international investors:
FLIP simplifies the fundraising process for startups. With the company’s structure established in the U.S., for example, it becomes much easier to attract investors from a mature ecosystem like that of the United States.
Global market access:
By adopting FLIP, a company gains global positioning, expanding its reach and sales power beyond national borders.
Access to skilled labor:
Especially in the technology sector, the U.S. offers a vast talent pool, making it easier to recruit qualified professionals.
When Should You Consider FLIP?
The earlier, the better. Starting the FLIP process early reduces costs and simplifies implementation. Many companies recognize the importance of internationalizing their operations and corporate structures to remain globally competitive.
Geraldo Thomaz, Co-CEO and founder of VTEX, shares his experience:
“We started considering FLIP in 2016, after realizing that a software company without global ambition is starting off on the wrong foot. It took over two years to execute, due to the challenge of finding the ideal structure.”
It’s essential for companies to assess the tax and legal implications before carrying out a FLIP. At Drummond Advisors, our team supports hundreds of corporate tax planning projects each year, helping companies make this transition efficiently and effectively.
For startups looking to attract foreign investment and expand globally, FLIP is a key strategy.
Written by Marcos Ferreira, Content Analyst at Drummond Advisors