US Treasury Provides Guidance On Classification Of European Entities For Tax

by Mike Godfrey, Tax-News.com, Washington

11 October 2004

On Thursday, the US Treasury Department and the Internal Revenue Service issued guidance on the classification of certain European business entities for US tax purposes.

Generally under US rules, the status of a business entity for tax purposes – for example, as a corporation or as another type of entity such as a partnership – depends on its form of organization. Regulations provide that entities that take particular forms in their country of organization are always treated as corporations for US tax purposes.

The notice issued last week (2004-68) supplemented this list of "per se" corporations to reflect recent developments in Europe, stating that the Societas Europaea (SE), which is a new type of entity in the European Union, should be treated as a corporation for US tax purposes. This applies to SEs formed on or after October 8.

Additionally, the notice provided that public limited liability companies under the laws of Estonia, Latvia, Liechtenstein, Lithuania, and Slovenia should also generally be treated as corporations for US tax purposes, effective immediately.

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