International Finance Subsidiary

International finance subsidiary

A subsidiary incorporated in the US, usually in Delaware, whose sole purpose once was to issue debentures overseas and invest the proceeds in foreign operations, with the interest paid to foreign bondholders not subject to US withholding tax. Elimination of the corporate withholding tax has ended the need for this type of subsidiary.

---

International Finance Subsidiary

A subsidiary of an international company that is incorporated in the United States and that issues bonds in order to invest the proceeds in foreign operations. The way an international finance subsidiary is structured, the yields on the bonds are not subject corporate withholding taxes. Since the U.S. has eliminated the corporate withholding tax, this structure has become less common.