Case studiesBusinessIllustrative example
A US start-up's European team, set up before it became a problem
A Delaware company was paying European engineers as contractors from the US. Their senior engineers were effectively running the product from Lisbon.
0.7USD m
of tax exposure avoided
- Client
- Venture-backed US company with engineers in Europe
- Countries
- US · PT · PL
- Timeline
- Typically three to four months.
The situation
A Delaware C-corp paid twelve engineers in Portugal and Poland as contractors directly from the US entity.
Two senior engineers were signing off releases and negotiating with vendors from Lisbon: the pattern that creates a permanent establishment and puts a share of the company's profit in scope of Portuguese tax.
What we did
- 1Formed local subsidiaries in Portugal and Poland and moved the team onto local employment.
- 2Set up cost-plus intercompany service agreements so each subsidiary earns a small, defensible margin and the IP stays with the parent.
- 3Documented the transfer pricing and aligned the founders' US equity grants with local tax rules.
- 4Put Guard on the filing calendars in all three countries.
The outcome
An estimated USD 0.7m of permanent-establishment and payroll exposure avoided, ahead of the next funding round's due diligence.
A structure investors can read in one page.
Completed engagements are marked as such; examples marked "Illustrative" show how a typical situation is handled and are not client results. Names, sectors, figures and timings are generalised or omitted so that no client is identifiable. Every result depends on that client's facts. Nothing here predicts what your position would produce, and nothing here is advice.
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