Hello there, fellow entrepreneur based in Iceland! If you’re running a business that operates in the USA, you may already be familiar with the unique challenges that come with navigating compliance, legal, and beneficial ownership reporting requirements in a foreign country. As a business owner myself, I understand the importance of staying up-to-date with the regulations and laws that govern our operations, both locally and internationally. In this blog, we will explore how to effectively manage these requirements while ensuring the success and growth of your business, no matter where it operates. So grab a cup of kaffi and let’s dive into the world of compliance and legal obligations for Icelandic businesses in the USA.

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 Iceland 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 Icelandic Company in the US

Even if none of the specific criteria apply, a Icelandic 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 Iceland. 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, Icelandic 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 Icelandic 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 Iceland 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 Icelandic Businesses:

Tax Treaties

The tax treaty between the United States and Iceland offers significant advantages for Icelandic businesses operating in the USA. This agreement helps prevent double taxation and provides clarity on tax obligations for companies engaged in cross-border activities. By establishing clear guidelines for income taxation, the treaty promotes smoother business operations and reduces potential tax-related complications. For more detailed information about the specific provisions and benefits of this tax treaty, click here to access the official IRS documents.

Trade Considerations

As an Icelandic business looking to engage in trade with the United States, it’s crucial to be aware of the existing trade agreements and regulations. Iceland is not currently part of any specific free trade agreement with the USA, but it is a member of the European Free Trade Association (EFTA), which has some trade arrangements with the US. However, it’s essential to research and understand any industry-specific regulations that may apply to your particular business. Different sectors, such as agriculture, manufacturing, or technology, may have unique requirements or restrictions when importing to or exporting from the United States. Be sure to consult with trade experts or legal advisors familiar with both Icelandic and US trade laws to ensure compliance with all relevant regulations, tariffs, and customs procedures. Additionally, stay informed about any ongoing trade negotiations or potential future agreements between Iceland and the USA that could impact your business operations.

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

Operating a Icelandic 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.