What is an alien corporation?
For a company to be considered an alien corporation, it needs to be registered or incorporated in a country other than the United States, and it must do business in at least one US state.
United States territories, including Puerto Rico and the US Virgin Islands, may or may not be considered foreign countries depending on the business’ total income and stocks.
“Doing business” in a certain state or country means at least one of the following:
- Possessing a physical presence in that area
- Hiring employees that live in that area
- Revenue comes from that area
- In-person meetings with clients or customers occur in that area
The term alien corporation is unique to the United States. Other countries use the term foreign corporation; however, the US uses foreign corporation to identify companies that function in a different state than the one in which they’re registered.
To keep up with the economic and administrative details surrounding an alien corporation, many businesses use corporate tax software to ensure nothing gets missed, especially if they need to register and file in multiple states. Corporate tax software can keep a record of all important documentation and revenue for alien corporations.
Requirements for alien corporations in the United States
There are five requirements businesses must comply with in order to run alien corporations in the United States:
- Registration: Businesses must register with each of the states they will operate in, or the United States government as a whole.
- Tax form 20-F: If a business wants to trade shares within United States exchanges, it must file Form 20-F with the Securities and Exchange Commission (SEC).
- Tax form 6-K: This form is required by any alien corporation in order to file with regulators in the company’s home country.
- Tax form F-1: If a business wants to register securities with the SEC, it must file tax form F-1.
- Tax form 1120-F: This form is required by the IRS in the United States so alien corporations can file taxes and report income each year.
Examples of alien corporations
Alien corporations are relatively common in today’s economy. Many businesses come to the United States after finding success in their home countries. Others intentionally register in foreign countries to solely do business in the United States.
Some well-known, modern examples of alien corporations include the following.
- Ikea: Registered in the Netherlands
- Aldi: Registered in Germany
- Toyota: Registered in Japan
- AB Volvo: Registered in Sweden
- LG: Registered in South Korea
- L’Oréal: Registered in France
- Lego: Registered in Denmark
- Nestlé: Registered in Switzerland
Alien corporation vs. foreign corporation vs. domestic corporation
An alien corporation is a company that does business in the United States and is registered in a different country. It’s not required for a company to also do business in the country where it’s registered. To the rest of the world, “alien corporations” are simply foreign corporations.
A foreign corporation in the United States is a company that is registered in one state and does business in a different state. It’s not required for a company to also do business in the state it’s registered in, though it is common.
A domestic corporation is a company that is registered in one state and does business in that same state. It’s possible for a company to qualify as both a foreign and a domestic corporation if they do business in multiple states.
Utilize tax services when further expertise and guidance is needed throughout the process of filing taxes.
Whitney Rudeseal Peet
Whitney Rudeseal Peet is a former freelance writer for G2 and a story- and customer-centered writer, marketer, and strategist. She fully leans into the gig-based world, also working as a voice over artist and book editor. Before going freelance full-time, Whitney worked in content and email marketing for Calendly, Salesforce, and Litmus, among others. When she's not at her desk, you can find her reading a good book, listening to Elton John and Linkin Park, enjoying some craft beer, or planning her next trip to London.
