Corporation
Delaware has long held a central role in the corporate legal landscape of the United States. Recognized both domestically and internationally for its well-established legal framework and corporate governance standards, Delaware is the legal home to a significant proportion of American businesses. Approximately half of all publicly traded companies in the United States and over 65% of Fortune 500 corporations are incorporated in the state. Major firms across a wide range of industries—including technology, consumer goods, and finance—have chosen Delaware as their state of incorporation.
A principal factor contributing to Delaware’s attractiveness is its specialized judiciary, particularly the Delaware Court of Chancery. Established in 1792, it is the oldest business court in the United States and focuses exclusively on matters of corporate, fiduciary, and trust law. Unlike many state courts, the Court of Chancery adjudicates cases without juries. Instead, experienced judges—referred to as Chancellors and Vice Chancellors—issue detailed legal opinions grounded in corporate jurisprudence.
This judicial model is notable for its efficiency and predictability. The Court has generated a comprehensive body of precedents, enabling businesses and legal counsel to anticipate how legal disputes are likely to be resolved. The result is a stable and predictable legal environment, which reduces uncertainty and the likelihood of protracted litigation. This clarity is particularly valuable for companies navigating complex mergers, acquisitions, or internal governance issues.
Delaware’s corporate statutes, particularly the Delaware General Corporation Law (DGCL), are widely regarded as among the most modern and flexible in the United States. The DGCL provides a wide range of governance structures and operational flexibilities, allowing businesses to tailor their corporate frameworks to suit their needs. For instance, Delaware permits a single individual to simultaneously serve as the sole shareholder, director, and officer of a corporation. This simplicity can be especially beneficial for small businesses, startups, and sole proprietors seeking legal protection without a complicated organizational structure.
In addition to flexibility, the DGCL offers strong protections for directors and officers. The law allows for broad indemnification provisions and limits on personal liability, thereby encouraging qualified professionals to serve in executive and fiduciary roles without undue fear of litigation.
From a taxation perspective, Delaware offers several incentives that make it particularly appealing to companies that conduct business outside the state. Corporations that do not operate within Delaware are not subject to its corporate income tax on out-of-state earnings. Moreover, the state does not levy taxes on intangible assets such as trademarks, copyrights, or other forms of intellectual property—a crucial consideration for companies with intangible-heavy balance sheets.
Additionally, Delaware imposes no sales tax, no inheritance tax on stock held by non-residents, and no tax on shares of stock owned by individuals outside the state. These provisions have contributed to Delaware’s reputation as a low-tax environment for holding companies and other corporate vehicles established primarily for asset management or investment purposes.
Corporate confidentiality is another aspect of Delaware’s appeal. Unlike some jurisdictions, only minimal information is made publicly available through the Delaware Division of Corporations. This level of privacy is often attractive to investors, high-net-worth individuals, and private enterprises seeking to maintain a degree of anonymity in their ownership or internal governance arrangements.
Delaware’s Division of Corporations is recognized for its efficient processing and administrative support. The process for incorporating a company is straightforward and can often be completed within a single business day. The state also offers expedited services for urgent filings. When compared to other U.S. jurisdictions, Delaware’s incorporation fees and annual franchise taxes are relatively moderate, particularly for small or newly formed entities with limited capitalization.
Delaware is frequently the preferred jurisdiction for startups and venture-backed enterprises. Investors, particularly venture capital firms, private equity funds, and institutional backers, often require that companies in which they invest be incorporated in Delaware. This preference stems from the legal predictability, robust shareholder protections, and well-developed governance norms found in Delaware corporations.
For early-stage companies seeking equity investment, incorporating in Delaware can facilitate fundraising, simplify due diligence, and align governance structures with investor expectations. Many leading technology companies—ranging from software startups to multinational platforms—have followed this path.
While Delaware offers numerous advantages, it is important to recognize the limitations of incorporating in the state. Companies that operate primarily in other U.S. states must still register as foreign entities in those states and comply with local business regulations, licensing requirements, and tax obligations. Incorporation in Delaware does not exempt a company from filing tax returns or paying income tax in jurisdictions where it maintains a physical presence or generates revenue.
Furthermore, although the state offers substantial flexibility and protection, corporate governance must still adhere to legal standards of fiduciary duty, good faith, and fair dealing. Delaware courts have historically enforced these obligations rigorously, particularly in cases involving minority shareholders or conflicts of interest.
Delaware’s legal, structural, and administrative frameworks make it a highly favorable jurisdiction for incorporating and operating a business. Its Court of Chancery, flexible corporate statutes, tax incentives, and investor-friendly reputation combine to provide a stable and efficient environment for corporate activity. However, businesses must also consider their operational footprint, tax nexus, and compliance requirements in other jurisdictions.
For both domestic entrepreneurs and international firms seeking a U.S. presence, Delaware offers a mature, transparent, and highly regarded platform for corporate formation and governance.
Legal
Country code – US
Legal Basis – Common law
Legal framework – Delaware General Corporation Law (Title 8, Chapter 1 of the Delaware Code)
Company form – Corporation
Liability - The liability of the shareholders for the company is limited to the amount of their respective shareholdings.
Share capital – There is no minimum share capital required. A corporation must designate the amount of shares that it is authorized to issue and the par value for each stock, although it is possible to issue no-par value shares.
Shareholders – Corporations may be formed by one or more shareholders, who can be either natural or legal persons, residents or non-residents, without limitations. The identity and personal information of the stockholders are not publicly disclosed.
Directors – A Delaware corporation should have at least 1 director, who must be a natural person, may be resident or non-resident, and who may be a shareholder. Details of directors are not available to the public.
Directors of publicly traded companies must meet certain requirements including, in certain circumstances, the requirement to be independent (that is, not to have a material relationship with the company or its management).
Secretary – The company may be required to appoint a secretary.
Registered Address – Every Delaware Corporation must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on behalf of the Corporation.
If the Corporation is physically located in Delaware, it may act as its own registered agent. A registered agent may be either an individual resident or business entity that is authorized to do business in Delaware. The registered agent must have a physical street address in Delaware.
General Meeting – Meeting is required, and could be held in any country. The board of directors may, in its sole discretion, determine that the meeting may be held solely by means of remote communication. The failure to hold an annual meeting does not affect the validity of any corporate action.
Electronic Signature – Permitted.
Re-domiciliation – Continuation of a foreign entity in Delaware is permitted.
Compliance – Any records maintained by a corporation in the regular course of its business, including its stock ledger, books of account, and minute books, must be kept in the corporation's principal office. The corporation's principal office can be in any country.
Delaware does not require corporations to file any financial reports, corporations are not required to appoint an auditor and file financial statements audited.
Delaware corporations must file an annual franchise tax report and pay an annual corporate franchise tax up to a maximum of US$180,000. The tax is assessed based on the number of shares authorized by the company using either the authorized shares method of computation or the assumed par value capital method.
All annual franchise tax reports must be filed electronically on or before 1 March, and payment is accepted only in US dollars and drawn on US banks.
The Delaware Code requires that a corporation's annual report be signed by a director or officer. Failure to file a complete annual report and/or pay annual franchise taxes can result in the corporation being voided.
Every domestic or foreign corporation doing business in Delaware that is not specifically exempt must file a Delaware corporate income tax return and a gross receipts tax return. Corporations whose activities are limited to maintaining a statutory registered office and not conducting business within Delaware, may be exempt from filing the Delaware Corporate Income Tax Return.
Delaware corporations are also required to file Federal Income tax Returns. US Entities with 25% or more ownership by a foreign shareholder may be required to file IRS Form 5472 “Information Return of Foreign-Owned US Corporation or Foreign Corporation Engaged in a US Trade or Business”.
- Shareholders not disclosed
- Directors not disclosed
- Corporate shareholders permitted
- Corporate directors permitted
- Local director required
- Secretary required
- Local secretary required
- Annual general meetings required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Common law Legal basis
- 1 Minimum shareholders
- 1 Minimum directors
- - Minimum issued capital
- - Minimum paid up capital
- USD Capital currency
- Anywhere Location of annual general meeting
Taxes
Tax residency – A corporation organized or established under the Delaware General Corporation Law is tax resident in Delaware and the United States.
Basis – Federal income tax is levied on US effectively connected income (ECI), while Delaware state income tax is levied on income arising in Delaware.
Taxation – Delaware corporations may elect to be taxed as an S-Corp or a C-Corp.
C-corporations are subject to federal income tax and state income tax.
S-corporations are closely held corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code.
S-corporations do not pay any federal income taxes. Instead, the corporation's income or losses are divided among and passed through to its shareholders, who must then report the income or loss on their own individual income tax returns.
To be treated as an S-corp, shareholders must be natural persons and citizens/residents of the United States.
Tax rate – Resident corporations are subject to tax at a 21% rate.
Income derived from Delaware is subject to State Income Tax at 8.7%.
Capital gains – Gains or losses derived from assets held for more than 12 months are treated as long-term capital gains or losses, gains and losses derived from assets held for 12 months or less are treated as short-term capital gains or losses.
Net gains are the excess of net long-term capital gain over the net short-term capital loss. Capital losses may be used to offset capital gains. Excess of losses may be carried back three years and carried forward five years to offset capital gains.
Net gains are subject to tax at applicable federal income tax rates.
Dividends – Dividends received by a US corporation from another US corporation may be 70% deductible income. Dividend deduction may be increased up to 80% if the recipient holds between 20%-80% shares of the distributor.
Dividends payments between US corporations that are members of the same Group may be exempted. Certain Corporations may be subject to Accumulated earning tax on undistributed profits if it is not justified that the accumulation is based on business needs. Certain Holding Companies that receive substantial passive income may be subject to Personal Holding Company Tax on undistributed profits at a 15% rate.
Dividends received from foreign entities may be considered deductible income.
Interests – Interests are generally included in the taxable base.
Royalties – Royalties are generally included in the taxable base.
Foreign-source income – Corporations are taxed on their worldwide income, including foreign-branch income when earned and foreign-source dividends received. Relief from double taxation may be available by tax treaties, tax credit or claiming a deduction for foreign tax paid.
A Foreign subsidiary owned by more than 50% by United States tax residents, is considered a controlled foreign company (CFC). Certain undistributed income (Subpart F income) retained in a CFC will be subject to taxation.
Passive income retained in a foreign investment company (75% or more of the income is passive or at least 50% of the assets held produce passive income) may be also subject to taxation.
Foreign-source income may be exempt from Delaware state income tax.
Withholding taxes – Dividends, interests, and royalties paid to non-residents are usually subject to withholding tax at a 30% tax rate. Withholding tax may be reduced or exempted under a tax treaty.
Losses – Losses arising from taxable income may be carried forward for 20 years and carryback for 2 years.
Inventory - Inventory may be valued at the lower of acquisition/production costs or market value. To determine costs are allowed First in first out (FIFO) and Last in first out (LIFO) methods.
Anti-avoidance rules – Transactions between related parties must be carried out on arm’s length terms. If a company is not in compliance, the IRS may raise taxable income and tax payable.
Thin capitalization rules apply to disallow interest payments related to excess debt and make these payments as dividends.
A Foreign subsidiary owned by more than 50% by United States tax residents, is considered a controlled foreign company (CFC). Certain undistributed income (Subpart F income) retained in a CFC will be subject to taxation.
Passive income retained in a foreign investment company (75% or more of the income is passive or at least 50% of the assets held produce passive income) may be also subject to taxation.
Labor taxes – Employers may be subject to social security contributions tax of 6.20% on the first USD 127,200 of wages paid to employees and 1.45% of Medicare tax on any wages, regardless of amount.
In addition, employers must pay, under certain conditions, federal unemployment insurance tax (FUTA) of 6.2% on the first USD 7,000 of wages paid to employees meeting certain criteria.
Tax credits and incentives – A tax credit or deduction is usually available for foreign tax paid.
Business and employment credits are also available business to provide special incentives for the achievement of certain economic objectives.
Credits may be also available for qualified research expenditures (QREs) to develop new or improved products, manufacturing processes, or software in the United States.
Qualifying private activity bonds interests may be exempt from federal income tax.
Compliance – On average, a company in the United States may require 11 payments and 175 hours per year to prepare, file and pay corporate income tax, value-added tax, and labor taxes, including payroll taxes and social contributions.
Personal income tax – An individual is deemed to be tax resident in the United States if he or she is a citizen or permanent resident or he or she is physically present in the US during 31 days in a year and a total of 183 equivalent days during the current year and prior two years.
US citizens and permanent residents are tax residents, no matter the days spent in the country during a year.
Tax residents are subject to tax on their worldwide income.
The federal tax rate is progressive at rates ranging from 0% to 39.6%. Delaware personal income tax rates are progressive up to 6.6%.
Self-employed individuals may be subject to self-employment tax at 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
Capital gains derived from assets held more than 12 months are subject to a maximum tax rate of 20%. Gains derived from assets held 12 months or less are subject to tax at standard rates.
Dividends, interests, royalties and rental income are subject to individual income tax at applicable rates.
In addition, individuals may be subject to net investment income tax (also known as Medicare contribution tax) on investment income received by individuals with modified adjusted gross income above certain amounts.
Other taxes – There are no value-added tax or sales tax in Delaware.
Real property ownership and transfer of assets are subject to local taxes in Delaware.
Estate inheritances are taxed in the U.S.
There are no wealth taxes in the United States.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 21% Offshore Income Tax Rate
- 21% Corporate Tax Rate
- 38% Capital Gains Tax Rate
- 11.4% Dividends Received
- 30% Dividends Withholding Tax Rate
- 30% Interests Withholding Tax Rate
- 30% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- 20 Losses carryforward (years)
- 7.65% Social Security Employee
- 15.3% Social Security Employer
- 46% Personal Income Tax Rate
- 0% VAT Rate
- 84 Tax Treaties
Country details
The United States of America (USA) is a North American country constituted in a federal constitutional republic composed of 50 states and a federal district.
It is located between the Pacific and Atlantic Oceans, borders Canada to the north and Mexico to the south. The state of Alaska is in the northwest of the continent, bordering Canada to the east and separated from Russia to the west by the Bering Strait. The state of Hawaii is a Polynesian archipelago in the middle of the Pacific Ocean, and it is the only American state that is not located in the American continent. The country also has several territories in the Caribbean Sea and in the Pacific.
With 9.83 million sq. km, and with more than 324 million inhabitants, the country is the fourth largest in total area and the third in population.
The capital is Washington D.C. However, New York is the trade and financial center and the most populated city, with over 8 million inhabitants, and 22 million within its metropolitan area. Other large urban areas include Los Angeles, Chicago, Dallas, Houston, Philadelphia, Miami, and Atlanta, among others. English is the official language of all states and territories, although some of them have their own co-official language.
As it is one of the world’s most ethnically diverse and multicultural nations, there are more than 20 languages with an important number of speakers, such as Spanish, Chinese, French, German, Tagalog, Vietnamese and Italian, among others.
The United States is a constitutional, democratic and representative republic. In the US federalist system, citizens are generally subject to three levels of government: federal, state, and local; The duties of local government are commonly divided between the county and municipal governments. In almost all cases, executive and legislative officials are elected by direct suffrage of the citizens of the district.
Its official currency is the US Dollar (USD), which is the most traded currency, the world’s primary reserve currency and the currency used in the international markets for commodities such as gold and petroleum.
The USA is the largest economy worldwide in nominal terms and the second, after China, in purchasing power parity terms, home of the largest multinationals and well-known brands worldwide and leader in technological innovation and scientific research.
It has a mixed capitalist economy, characterized by abundant natural resources, like coal, natural gas, oil and uranium, developed infrastructure and high productivity.
Its economy is mostly based on the services sector, but it maintains large and competitive industrial sector, specialized in high technology, where the chemical, military, energy, oil, metallurgical, steelworks, automotive, aeronautics, electronics and IT are the largest.
It is the third largest oil producer in the world, as well as the largest importer. It is also the first world producer of electric power and nuclear power, as well as liquefied natural gas, sulfur, phosphates and salt. Despite primary sector accounts about 1% of its GDP, the country is one of the world’s largest producers of a wide variety of agricultural, livestock and fishing products.
Regarding the services sector, the largest of the USA economy, its most important activities are banking, insurance, education, healthcare, research, transport, trade, and tourism.
The US financial market is the most extensive and the most complex worldwide, and stands out for its influence in any economic decision at an international level. New York is the most important financial center worldwide, the New York Stock Exchange (NYSE) is also the largest world’s capital market and the NASDAQ is the third one. USA is also the second most touristic country worldwide, ranking 2nd, after France and ahead of Spain.
Delaware is one of the fifty states that, together with Washington D., form the United States of America. Its capital is Dover and its most populated city, Wilmington.
It is located in the South region of the country, South Atlantic division, bordering to the north with Pennsylvania, to the northeast with the bay of Delaware that separates it of New Jersey, to the east with the Atlantic Ocean and to the South with Maryland.
With 6447 km² it is the second less extensive state, with around 900,000, the sixth least populated, and with 139,28 hab / km², the sixth most densely populated.
Despite its small size, Delaware is a large financial center. The services sector is the most important, with 79% of GDP. The provision of financial and real estate services is 38% of the state's GDP. More than 200 thousand companies are based in the state. Therefore, this state is also one of the largest banking centers in the United States.
Agriculture and cattle ranching together account for 1% of the state's GDP. Milk and cherries are the main product of Delaware's agricultural industry.
The secondary sector accounts for 20% of Delaware's GDP. The main industrialized products manufactured in the state are chemical products, transport equipment (mainly automobiles), chemicals, processed foods and paper.
Tax treaties
Tax treaties Map
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