Learn how to redomicile your company to the US to raise venture capital. Complete guide covering legal process, tax implications, and investor requirements.
Redomicile company to US means changing your company's legal home from a foreign country to America. Your Singapore Pte Ltd or UK Ltd becomes a Delaware C-corp. This isn't just paperwork - it's a fundamental corporate restructuring that affects ownership, governance, taxation, and operations. Most foreign founders consider redomiciliation when planning to raise venture capital from US investors.
The most common approach is a "flip" transaction. You create a new Delaware C-corp that becomes the parent company. Your foreign entity becomes a subsidiary. Existing shareholders in the foreign company exchange their shares for equivalent shares in the new US parent. The legal structure inverts - what was the parent becomes the child. This flip preserves ownership percentages while moving legal domicile to America at USCIS.
Alternative approaches include direct mergers where the foreign entity legally merges into a US corporation, or asset transfers where the US company buys all assets from the foreign entity. These alternatives work in specific situations but flips are most common because they're cleaner for company redomiciliation US purposes involving multiple shareholders and complex cap tables.
Considering redomiciling your company? Beyond Border evaluates whether redomiciliation makes sense for your specific situation.
American venture capitalists strongly prefer investing in US corporations. Their fund documents, limited partner agreements, and investment strategies are built around US corporate law. Raise capital US entity becomes exponentially easier than fundraising as a foreign company. When you pitch with a Cayman or Singapore entity, VCs immediately ask about redomiciliation plans. Many won't proceed without commitment to flip.
US corporate law provides investor protections VCs rely on. Delaware courts have centuries of case law on shareholder rights, fiduciary duties, and corporate governance. Investors know exactly how their preferred stock rights will be enforced. Foreign jurisdictions lack this established framework. Even sophisticated markets like UK or Singapore don't provide the predictability Delaware offers at USCIS.
Tax treatment matters significantly to institutional investors. US pension funds and endowments investing through VC funds face tax complications with foreign portfolio companies. Some investors are prohibited from foreign investments by their fund rules. Others face unfavorable tax treatment that reduces returns. Flip company to Delaware solves these problems, making your company accessible to the full pool of US venture capital.
Employee equity also works better in US corporations. Stock options, RSUs, and other equity instruments have established tax treatment in America. Foreign companies granting equity to US employees create tax complications for recipients. After redomiciliation, your US employees receive standard equity grants with predictable tax consequences everyone understands.
Foreign to US conversion follows several steps. First, incorporate your new Delaware C-corp. This becomes the holding company that will own your foreign entity. File articles of incorporation, adopt bylaws, issue initial shares to yourself, and obtain an EIN. This initial Delaware company might have minimal capitalization initially since the real value stays in the foreign company temporarily.
Second, obtain shareholder approval for the flip transaction. Your foreign company shareholders must approve exchanging their foreign shares for US shares. This requires shareholder meetings, voting, and documentation per your foreign jurisdiction's laws. If you have investors or multiple founders, negotiating the exchange ratio and getting everyone aligned takes time at USCIS.
Third, execute the flip transaction. The Delaware company issues shares to foreign company shareholders. Those shareholders transfer their foreign shares to the Delaware company. The Delaware company now owns the foreign entity which becomes a subsidiary. Document this restructuring with exchange agreements, stock certificates, and corporate resolutions in both jurisdictions for company redomiciliation US compliance.
Fourth, handle post-closing matters. Update your cap table to reflect US ownership. Notify your bank, investors, and key stakeholders. File any required regulatory notices in your foreign jurisdiction. Update contracts to reflect the new corporate structure. Convert employee equity grants to US company securities. This cleanup takes several weeks after the main transaction closes.
Overwhelmed by the redomiciliation process? Beyond Border coordinates legal counsel, manages timeline, and ensures nothing falls through the cracks.
Redomicile company to US creates tax consequences requiring careful planning. The flip transaction might trigger capital gains taxes in your foreign jurisdiction if authorities view it as a taxable sale of shares. Some countries have exit taxes when companies redomicile out. Your tax advisors need to structure the transaction to minimize or defer these taxes where possible.
For founders and employees, the share exchange might create taxable events. If you're exchanging shares worth more than your original investment, that gain might be taxable. Some jurisdictions treat the exchange as a non-taxable reorganization if structured properly. Others don't. International tax attorneys specializing in venture capital redomiciliation can navigate these issues jurisdiction by jurisdiction at USCIS.
US tax implications also matter. Your new Delaware company becomes a US taxpayer immediately. Any income the company earns will be subject to US corporate tax. If your business operates primarily outside America, you might face higher taxes after redomiciling. However, many startups operate at losses initially, so immediate tax impact is minimal. Long-term tax efficiency depends on your business model and where revenue originates.
Double taxation concerns arise when your US parent owns a foreign subsidiary. Profits in the foreign subsidiary might face foreign taxes, then US taxes when distributed as dividends. Tax treaties and foreign tax credits can mitigate this, but you'll need ongoing international tax planning to optimize your structure.
Don't redomicile without comprehensive tax planning. Beyond Border connects you with international tax advisors who model tax impact before you commit.
When should you flip company to Delaware? The ideal timing depends on several factors. Many founders flip just before Series A fundraising. You've proven product-market fit, have revenue traction, and are ready for institutional capital. Flipping before the funding round makes the investment cleaner since VCs are buying preferred stock in a Delaware C-corp from day one.
Flipping too early can be costly. If you flip while your company is worth very little, the tax consequences are minimal. But you'll pay US legal fees and incur ongoing US compliance costs before you have revenue to support them. You might also face tax complications if founders are in different countries with different tax treatments of the transaction at USCIS.
Flipping too late creates problems too. If you wait until Series B or C, your company valuation is much higher. The flip might trigger significant taxes on founders based on the increased value. Investors already on your cap table might have preferred stock rights that complicate the restructuring. Getting everyone aligned becomes harder as your shareholder base grows for raise capital US entity purposes.
A reasonable approach is flipping when you establish meaningful US operations - US employees, US customers, or US market focus. At this point, being a US company makes practical sense beyond just fundraising considerations. The flip feels like natural evolution rather than pure accommodation for investors.
Need help timing your redomiciliation? Beyond Border provides strategic advice on when to flip based on your specific situation.
