What Is an Alien Corporation?
An alien corporation is a corporation that was created in another country but is doing business in the U.S. The term is generally only used in the U.S., where other countries do not refer to U.S.-based corporations doing business internationally as alien corporations.
Alien corporations are called foreign corporations by the IRS and SEC, although there’s a distinct difference on the state level.
How an Alien Corporation Works
Alien corporations are sometimes referred to as foreign corporations, notably by the Securities and Exchange Commission (SEC) and Internal Revenue Service (IRS). However, there is a technical difference on the state level, where foreign corporations are generally defined as companies doing business in one state while being incorporated in another state. Domestic corporations, meanwhile, are those companies incorporated and doing business in the same state.
Requirements of an Alien Corporation
Operating as an alien corporation requires registering with the U.S. government and/or state the operations will be in. As well, alien corporations that have shares trading on US exchanges must file Form 20-F with the Securities and Exchange Commission. This form is for filing a foreign company's annual report—similar to a Form 10-K, which is the annual report filing with the SEC for U.S.-based companies, such as Apple (AAPL).
Alien companies must also file other forms, such as Form 6-K, which is required when an alien corporation files a report with regulators in its home country. There’s also Form F-1, which is required when alien corporations register securities with the SEC, among other forms.
Meanwhile, an alien corporation must file Form 1120-F with the International Revenue Service (IRS) to report its income and file taxes. This income must be “effectively connected” to a U.S. business, which can include having employees or a facility/location in the U.S.
- Alien corporations are companies operating in the U.S. but incorporated in another country.
- Alien corporations are sometimes referred to as foreign corporations, but on the state level, foreign corporations are those doing business in one state but incorporated in another state.
- Alien companies trading on U.S. exchanges must make filings with the SEC.
- Any alien company generating income connected to a U.S. business activity must file related tax forms with the IRS.
Example of an Alien Corporation
As a basic example, if an insurance company is incorporated in Germany, but does business in Utah, it’s an alien corporation. Major brands that are operating as alien corporations in the U.S. include Nestle, Ikea, H&M, Toyota, Samsung, Royal Dutch Shell, and Aldi.
Toyota, for example, files Form 6-Ks with the SEC when it translates press releases to English that it has filed with Japanese regulators. The carmaker filed its most recent 20-F in June 2021, which covers is fiscal year ended March 31, 2021. Royal Dutch Shell files Form 6-Ks when it makes filings with the London Stock Exchange. The oil company that operates gas stations in the U.S. filed its 20-F in July 2021 for reporting the 2nd quarter dividend.