Pozdrav from Croatia! If you are a business owner here in Croatia looking to expand your operations to the USA, it’s important to understand the compliance, legal, and beneficial ownership reporting requirements that come with operating in a foreign country. Navigating the complexities of international business can be daunting, but with the right knowledge and guidance, you can ensure that your business is operating in accordance with all necessary regulations and laws.

From understanding the differences in tax laws between Croatia and the USA to ensuring that your beneficial ownership information is accurately reported, staying compliant is crucial for the success of your business. In this blog, we will explore the key requirements and regulations that you need to be aware of as a Croatian business owner operating in the USA, helping you to navigate the challenges of international business with confidence and ease.

Registration Requirements

The United States consists of 50 states and 5 territories, each with its own set of business regulations. To operate legally, businesses must adhere to both state-specific rules and federal laws.

State-Level Registration:

When establishing a business presence in the United States, businesses from Croatia must complete state-level registration in any state where significant business activities occur. This requirement typically applies if your company:

• Has a physical presence in the state
• Frequently meets with clients in the state
• Derives a significant portion of revenue from the state
• Has employees working in the state

Incorporating your Croatian Company in the US

Even if none of the specific criteria apply, a Croatian company must still choose a home state for registration when conducting business in the US. This involves forming a U.S. entity, such as a corporation, LLC, or other business structure, in that state. This registration ensures that the company is officially recognized and compliant with US regulations, regardless of its level of business activity in any individual state.

The newly formed U.S. entity will operate as a subsidiary of the foreign company. This means that while the U.S. entity is legally independent, it remains under the ownership and control of the parent company based in Croatia. This structure allows the company to conduct business in the US while maintaining its international headquarters.

We recommend using Northwest Registered Agent if your foreign company needs to incorporate. They offer expert guidance and can serve as a reliable registered agent for your business, ensuring compliance and smooth operations.

Federal Requirements

In addition to state requirements, Croatian companies must also comply with federal regulations:

• Federal Tax ID: Obtain an Employer Identification Number (EIN) from the IRS. This number is essential for tax reporting and opening U.S. bank accounts.
• Industry Regulations: Companies may need to follow specific federal regulations depending on the industry. For example:
• Import/Export Laws: If the company is involved in importing or exporting goods, it must meet U.S. customs regulations. This includes adhering to rules for tariffs, duties, and necessary documentation.

Beneficial Ownership Information Reporting Requirements

For Croatian businesses conducting operations in the U.S., adhering to Beneficial Ownership Information Reporting (BOIR) requirements is crucial. The Corporate Transparency Act mandates that companies disclose the individuals who own or control them. This applies to most entities, including those that are incorporated or registered in any U.S. state. The goal is to enhance transparency and combat illicit activities such as money laundering and terrorism financing.

A beneficial owner is an individual who controls the company or owns 25% or more of its shares, either directly or indirectly. For compliance with BOIR requirements, businesses must report information about these individuals, including their names, addresses, and identification details. Failure to file this report can result in significant penalties and legal consequences. Therefore, companies from Croatia need to ensure they meet these reporting obligations promptly and accurately.

For your convenience, you can file your Beneficial Ownership Information Report directly on our website. Click here to complete the process in just a few minutes and ensure your business complies with U.S. regulations.

Additional Considerations for Croatian Businesses:

Tax Treaties

As a Croatian business operating in the United States, it’s crucial to be aware that there is no tax treaty between Croatia and the USA. This absence means you may face potential double taxation on your income earned in the US, as both countries could claim the right to tax the same income. Without a treaty in place, you might be required to pay taxes on your US-sourced income to both the US government and the Croatian tax authorities. It’s essential to consult with tax professionals familiar with international tax laws to navigate this complex situation and explore potential strategies to minimize your tax burden.

Trade Considerations

When conducting business with the USA, Croatian companies should be aware of the Generalized System of Preferences (GSP) program, which provides duty-free treatment for certain products from designated beneficiary countries, including Croatia. Additionally, they should familiarize themselves with the US-EU Trade and Technology Council (TTC), which aims to strengthen economic ties between the EU and the USA. While there is no specific bilateral trade agreement between Croatia and the USA, Croatian businesses must comply with US import regulations, including product safety standards, labeling requirements, and customs procedures. It’s crucial for Croatian companies to research industry-specific regulations that may apply to their particular products or services, as these can vary widely depending on the sector. Consulting with trade experts or legal professionals specializing in US-EU trade relations can help ensure compliance with all relevant regulations and maximize opportunities in the US market.

Your Path to Compliance: Key Takeaways for Croatian Businesses in the U.S.

Operating a Croatian business within the USA requires careful attention to legal obligations, from establishing your home state to incorporating and filing a beneficial ownership report. Meeting these requirements is essential for ensuring compliance and securing your business’s success in the American market. By understanding and adhering to these steps, you can confidently navigate the complexities of doing business in the U.S. and focus on growing your enterprise.

Ready to get started? Click here to file your BOIR in just a few short minutes. We make the process easy, fast, and secure so you can focus on what matters—your business.