Three experts on what European brands need to know before entering the US.

Entering the U.S. market is one of the most consequential strategic decisions a European brand will ever make and one of the most frequently underestimated. Over nearly two decades of guiding European brands through their U.S. launches, we at ALLY have seen the same patterns again and again: brilliant products held back by avoidable legal and tax missteps, ambitious launch budgets undone by supply chain and tax surprises, and category-leading European companies blindsided by the operational realities of doing business in America.

So we asked three of the sharpest minds in our network to share the advice they give European founders and CEOs at the most decisive moments of their U.S. journey. Over the next three INSIDER pieces, you'll hear from:

Christoph Gabel, Partner at RSM US and Co-Leader of the firm's Germany Practice, on tax, finance, and the structural decisions that shape every U.S. launch.
Juliane Eichler, LL.M., Director Legal Department at the German American Chamber of Commerce (GACC New York), on the legal and strategic groundwork of entering the U.S. market.
Kai Schäffner, former CEO of Vorwerk North America (Thermomix USA), on the operational realities that no consultant prepares you for.

Three lenses. Three disciplines. One complex market.

In Conversation with Christoph Gabel: The Tax & Financial Architecture Behind a Successful U.S. Launch

Few topics surface more anxiety (and more avoidable mistakes) than tax and financial structuring when European brands enter the U.S. market. Ask any European founder six months into their U.S. operation what surprised them most, and tax will rank near the top of the list — usually right after a $25,000 penalty notice for a form they didn't know existed. Christoph Gabel is the person you want on the phone before that letter arrives.

As Managing Director at RSM US LLP in New York and Co-Leader of the firm's Germany Practice, Christoph advises German and European companies on the full spectrum of inbound U.S. tax matters:

corporate structuring, transfer pricing, IP planning, treaty benefits, state and local tax exposure, and the intricate cross-border questions that arise when a European parent and a U.S. subsidiary start operating side by side.

RSM US is one of the largest assurance, tax, and consulting firms in the United States, and its Germany Practice has become a go-to resource for DACH-region brands building their U.S. footprint. Talk to Christoph for ten minutes and you realize how much of U.S. tax exposure is decided before a single dollar of revenue comes in. The structural choices made in the first weeks after incorporation

- entity type, IP placement, transfer pricing setup -

silently dictate a company's tax position for years. Most founders only see them when the bill arrives.

So we asked him the three questions European founders should be asking before that first meeting goes wrong.

A European brand has just incorporated its U.S. entity. What are the immediate tax obligations most founders aren't prepared for?

Incorporation in the US creates tax filing obligations from day 1, even with zero revenue, both for Federal purposes as well as the State of incorporation. Most European founders assume

“no activity = no tax filing.” In the U.S., that’s simply wrong.

Not filing, not filing timely, or filing inaccurate information exposes the business to significant penalties. For example, a missing filing of Form 5472 which is mandatory for ≥25% foreign-owned U.S. entities and covers any related-party transactions (capital injections, intercompany charges, etc.) will likely result in minimum penalties of $25,000 per year, per form. Also often ignored is the concept of economic Nexus which can very quickly result in State and Local filing requirements and tax obligations even without a physical presence. Fixing past tax filing mistakes becomes very expensive in the US. Investing in the proper tax set-up from day 1 is critical.

Germany and the U.S. have a double taxation treaty. But how much does it actually help a mid-size brand setting up a subsidiary?

Short answer:

It helps—but far less than founders think at the operating level. The double taxation treaty, for example with Germany, will prevent the same income from being taxed twice (through, for example, foreign tax credits/exemption mechanisms). It provides real cash tax savings through reduced or zero withholding taxes when profits are repatriated to Germany via dividends and interest (and depending on the structure royalties). However, the treaty does not reduce U.S. corporate taxation. That is your U.S. subsidiary still pays full U.S. corporate tax (21% + state). If the German parent operates in the U.S. through a branch (not a subsidiary), the treaty may reduce or eliminate the branch profits tax, but this is less relevant for a subsidiary structure. The practical takeaway for a mid-size German brand with a U.S. subsidiary is:

The treaty is a defensive tool (avoid over-taxation), not an offensive planning tool (reduce core tax burden).

Proper documentation (e.g., IRS Form W-8BEN-E) is required to claim treaty benefits. Also note that the treaty does NOT protect against State and Local taxes, only Federal.

What's the single biggest tax planning opportunity that European brands entering the U.S. consistently leave on the table?

The single biggest missed tax planning opportunity where European brands consistently leave money on the table relates to transfer pricing and IP and supply chain structuring (too late, too reactive). A suboptimal setup can result in profits being trapped in high-tax jurisdictions. For example,

Transfer Pricing: Many mid-size brands fail to establish robust transfer pricing policies and documentation for intercompany transactions (sales, services, royalties, management fees) between the U.S. subsidiary and the German parent. Early planning can optimize the allocation of profits, reduce global effective tax rates, and avoid costly disputes or penalties.
Intellectual Property (IP) Planning: Brands often overlook the benefits of licensing IP to the U.S. subsidiary rather than transferring it outright. Licensing can allow for ongoing royalty payments (potentially subject to reduced treaty withholding rates), while an outright transfer may trigger immediate U.S. tax on built-in gain and complicate future planning.
Check-the-Box Elections: U.S. entity classification rules allow certain foreign entities to elect their U.S. tax status. Strategic use of these elections can enable loss utilization or deferral opportunities, but many brands do not consider this at formation.

Proper up-front tax planning and structuring can provide real cash savings on a worldwide basis.

In summary, founders should engage experienced U.S. and international tax advisors before or immediately after U.S. incorporation to address these issues proactively and avoid costly surprises.

Learn more & get in touch

If your brand is preparing for the U.S. market or if you've already incorporated and want to make sure your tax setup is working in your favor, RSM is one of the strongest resources we know. Learn more at www.rsmus.com, or reach Christoph directly at christoph.gabel@rsmus.com.

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Written by Yvonne Busch, Founder of ALLY

ALLY Communication & Marketing is a Los Angeles-based boutique agency specializing in helping European lifestyle brands enter and scale in the US market. From brand strategy and messaging localization to content production, influencer programming, and media relations — ALLY is your bridge to the American consumer.

Want to discuss your US market entry strategy? Get in touch →yvonne@ally-la.com