Banking for a US subsidiary of a foreign company
A US subsidiary owned by a foreign company opens a bank account like any US entity, but the bank looks through the parent to the people who own it. Intercompany payments need clean records.
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Foreign companies expanding to the US usually set up a subsidiary, often a Delaware corporation. The bank account is next, and the bank's questions go through the parent.
Documents
| From | Documents |
|---|---|
| US subsidiary | Formation documents, EIN, bylaws or operating agreement |
| Foreign parent | Registry extract, ownership chart, board resolution |
| Ultimate owners | IDs for individuals with 25% or more, and a controller |
Translations may be needed for documents not in English.
IRS filings
- 25% foreign-owned US corporations: Form 5472 with Form 1120.
- Foreign-owned single-member LLCs: Form 5472 with a pro forma 1120.
Intercompany money
| Flow | Record |
|---|---|
| Capital from parent | Share issue or loan agreement |
| Management fees | Service agreement, invoices |
| Royalties | Licence agreement |
| Cost recharges | Invoices with breakdowns |
Prices should be arm's length. Payments should be in the subsidiary's own name.
Currency
The parent may fund in euros, pounds or yen. A subsidiary that can receive in the parent's currency converts when it chooses.
Paying into the United States: the local rail
| What | Detail |
|---|---|
| Local rail | ACH for batch payments; RTP and FedNow for instant transfers |
| Run by | Nacha for ACH; The Clearing House for RTP; the Federal Reserve for FedNow |
| Settlement | Same-day ACH within the business day, standard ACH the next; RTP and FedNow in seconds, 24/7, where both banks take part |
Source: Nacha: Same Day ACH. Checked when this guide was last updated; the scheme's own page has the current figures.
Where Rivet fits
Rivet opens accounts for US subsidiaries of companies in supported countries, with USD details on Starter and EUR and GBP details on Growth, so funding from a European or UK parent can arrive in its own currency. Rivet is not a bank; regulated partner institutions hold the funds. See Form 5472 guide.
Questions people ask
Can a foreign company open a US bank account?
A US subsidiary can. A foreign company with no US entity has fewer options.
What does the bank need from the parent?
The parent's registry extract, ownership structure, IDs for ultimate beneficial owners, and a board resolution authorising signatories.
What is Form 5472?
An information return filed by 25% foreign-owned US corporations and foreign-owned disregarded entities, reporting transactions with related parties.
How should money move between parent and subsidiary?
Under written intercompany agreements, with invoices, at arm's-length prices, recorded on both sides.
Sources
Alexia compares the accounts, cards and payment tools companies weigh before they switch, and writes Rivet's market guides for founders in a specific country. Prices in Alexia's comparisons come from each provider's own pricing page on the date given in the article, rules come from the regulator or tax authority that sets them, and every source is listed at the end.
More from Alexia M. →This article is general information, not legal, tax or financial advice. Rules and fees change; check the sources above and the provider’s current terms before you act on them.
- us subsidiary of foreign company
- foreign parent
- form 5472
- intercompany payments
- transfer pricing
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