U.S. Corporate Transparency Act: What Israeli Companies Need to Know
In new regulatory guidance issued on March 21, 2025 (the “Interim Final Rule“), the U.S. Department of Treasury (FinCEN) limits the Corporate Transparency Act (“CTA“) solely to foreign entities previously defined as “foreign reporting companies” and non-U.S. persons who are beneficial owners of such entities. In restricting the CTA’s scope to foreign entities and non-U.S. persons, the Interim Final Rule also explicitly exempts any “domestic entity” and any “U.S. person” (as defined under the Internal Revenue Code).
It is key for Israeli Companies to determine if they are subject to CTA reporting requirements. Under the Interim Final Rule:
- A “reporting company” is any entity created in a foreign country, if and when the foreign entity registers to do business in the United States (subject to the “large operating company” or other available exemption).
- A “domestic entity” is any corporation, limited liability company or other entity created in the United States through the filing of a state-level organizational document, regardless of the nationality of any management personnel, equity owner or other person.
Because “domestic” status depends solely on where an entity is formed, an entity remains “domestic” even if a non-U.S. person would otherwise be treated as a beneficial owner.
If the Israeli Company is subject to CTA reporting requirements note the new deadlines for compliance:
In general, a foreign entity that is reporting company (as newly-defined and not otherwise exempt) must comply with the revised CTA, no later than 30 days after the later of (a) the date on which the Interim Final Rule is published in the Federal Register (pending as of the date hereof)(the “Publication Date”) and (b) the date on which the foreign entity became a reporting company (by registering to do business in the United States).
- U.S. Person Exemption. On any required beneficial ownership interest report, a reporting company reports only non-U.S. beneficial owners. A U.S. person who is a beneficial owner of a reporting company is exempt from the CTA and is not required to provide any information to the reporting company.
FinCEN is soliciting comments on the “approach taken in this interim final rule” and intends to issue a “final rule” by the end of the year. Until comments are complete and the final rule is issued, monitoring for new CTA developments remains necessary.
Read more here.
