The records a holding structure needs from day one

What was broken

A deep-tech hardware startup was raising from overseas investors who wanted to invest into a holding company in a neutral jurisdiction rather than directly into the operating entity. The founders needed a compliant cross-border structure that respected local exchange-control rules, protected their IP, and did not jeopardise R&D incentives tied to the operating entity.

What we did

CapEasy worked with international counsel to design the holding structure and the operating-entity–holdco relationship — advising on cross-border investment considerations, inter-company and IP arrangements, and the shareholding flow. We coordinated the local regulatory filings and ensured the structure held together across both jurisdictions.

Where it landed

The startup established a compliant international holding structure that satisfied its overseas investors while keeping the operating entity and its R&D incentives intact. The structure was built to support subsequent rounds without re-engineering.

Choosing the structure is counsel and CPA territory — the records are ours

Whether a US company sits above, beside, or below a foreign operating entity is a legal and tax decision: entity choice, jurisdiction, and the IP and shareholding flow between them are questions for your attorney and your CPA, made with the R&D credits, treaty position and eventual exit in view. What decides whether that structure survives contact with a diligence team or an IRS information request is duller and entirely operational — do the two entities keep separate books, is every transaction between them on paper, and does the chart of accounts roll up cleanly when someone asks it to. That is the layer this engagement built, and it is the same layer a US holding structure needs from its first transaction.

Intercompany agreements: the paper a US parent needs on file

A US corporation that is 25%-or-more foreign-owned, or a foreign corporation running a US trade or business, has to report its transactions with related parties on Form 5472 every year the relationship exists — even in a year with no US tax due. The IRS instructions are explicit about the cost of skipping it: a $25,000 penalty for a return that is not timely filed or that misses required information, and another $25,000 for every 30-day period the failure continues once the IRS has given notice.

Underneath that form, the pricing on every one of those related-party transactions — management fees, cost-sharing for shared R&D, IP licensing, intercompany loans — has to hold up under IRC Section 482's arm's-length standard: the price a genuine unrelated party would have agreed to for the same transaction. Reporting corporations are required to keep permanent books and records that establish that transactions were priced correctly and support what went on the return, per Treasury Regulation 1.6038A-3. The document that carries that weight is the intercompany agreement itself, signed and dated before the money moves, not written up afterward to match a number that already appeared on the books.

Separate books per entity, one chart of accounts that consolidates

The mechanical failure mode in a holding structure is not the legal design — it is bookkeeping that treats the parent and the subsidiary as one set of transactions with an internal note explaining which entity each line "really" belongs to. That does not survive an audit, an investor data room, or a Form 5471 preparer trying to reconstruct a foreign subsidiary's financials for a US shareholder's information return. Each entity needs its own set of books, closed on its own schedule, with intercompany balances that a controller can pull and match against the other entity's books to zero — the eliminations a consolidation actually requires.

The chart of accounts is what makes that consolidation mechanical instead of a rebuild every time someone asks for it: parallel account structures across entities, a dedicated intercompany receivable/payable pair per counterparty, and revenue and expense accounts that map to the same consolidated line whether the transaction happened in the US parent or the operating subsidiary. Built once at formation, this is a template. Retrofitted after two years of commingled entries because a funding round or a Form 5471 filing suddenly needs a clean consolidated view, it is a project.

Who reads this file, and what CapEasy hands them

CapEasy keeps the separate books current per entity, maintains the intercompany schedule against its signed agreements, and builds the consolidation-ready chart of accounts so the roll-up ties out on request. The structure decision, the intercompany pricing policy, and anything filed with the IRS — Form 5471, Form 5472, the corporate return itself — run through your counsel and the partner CPA firms we work with across 15 US states. Their sign-off is what makes the filing binding; the file we hand them is what makes their work start from a reconciled base instead of a reconstruction.