taxes, internationalThe way I understand it, the US only taxes profits for corporations.
I live in Hong Kong and have a company there (I am not American), I also have a company in the US, that holds the IP of my startup.
(Case 1 : HK comp and US comp are separate)
If the HK company invoices the US company for software outsourcing, does that count as a business expense ? (and thus is not calculated as a profit)
(Case 2 : US company owns HK company)
Does the previous statement still applies ?
Your question is very vague, so it is hard to answer.
All countries have different laws so I recommend that you find lawyers and accountants in both countries.
It also greatly depends on what the invoice is for.
You can deduct the costs of operating your business. These costs are known as business expenses. These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary. https://www.irs.gov/publications/p334/ch08.html
In simple terms:
If Your HK Company is Renting a building to the US company, The invoice would be a business expense to the US company and a profit to the HK company.
Vica Versa:
If Your US Company is Renting a building to the HK company, The invoice would be a business expense to the HK company and a profit to the US company.
For more information on US Busness Expences See the IRS website Section 535 Business Expense (https://www.irs.gov/publications/p535/index.html)
Hope that helps, and good luck
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