Quick Question: when we say 'software engineers' > does the same also include other roles in a software company like product managers, UX teams, program managers?
another question: does this also impact salaries paid to immigrant works working and living in US in terms of salary paid amortization over 5 years?
Good post, thanks for sharing! Could this be dealt with by "outsourcing" the R&D (ie: Park your devs in a separate corporate structure and have them invoice the main business that handles PM, sales etc). The way I see it, for large companies that will want to avoid large tax bills, they will likely have to get closer to PE and Credit funds and hence, generate fees etc for another industry.
I'm late in replying, but the answer is no. Contracting R&D doesn't help; the client must still capitalize and amortize if the client is a US firm.
That said, a strategy that offshores R&D and pays the salaries of engineers through a revenue-generating foreign company that is headquartered overseas may be viable. For example, you could set up a European subsidiary that follows European tax law. They could fund their labor costs through their revenue and then license the IP they create back to the US firm.
thanks for writing this.
Quick Question: when we say 'software engineers' > does the same also include other roles in a software company like product managers, UX teams, program managers?
another question: does this also impact salaries paid to immigrant works working and living in US in terms of salary paid amortization over 5 years?
there's a little bit more leeway based on role.
On two, workers working domestically are considered domestic (and so 5 year amortisation) regardless of national origin.
Good post, thanks for sharing! Could this be dealt with by "outsourcing" the R&D (ie: Park your devs in a separate corporate structure and have them invoice the main business that handles PM, sales etc). The way I see it, for large companies that will want to avoid large tax bills, they will likely have to get closer to PE and Credit funds and hence, generate fees etc for another industry.
certain loopholes may be possible, but they're not easy at all.
I'm late in replying, but the answer is no. Contracting R&D doesn't help; the client must still capitalize and amortize if the client is a US firm.
That said, a strategy that offshores R&D and pays the salaries of engineers through a revenue-generating foreign company that is headquartered overseas may be viable. For example, you could set up a European subsidiary that follows European tax law. They could fund their labor costs through their revenue and then license the IP they create back to the US firm.