Programs or projects that intend to operate in any foreign country are subject to the host country’s legal statutes and regulations. Depending on the type and duration of the activity, Cornell may need to obtain special licenses, registrations, or other permissions (hereinafter “registrations”) to conduct the contemplated activities in the host country. Although Cornell is a tax-exempt organization in the U.S., foreign-earned income may be subject to local taxation. Some of the common types of activities that may require special registration include:
- Opening a Cornell bank account in the host country
- Hiring local nationals or third-country nationals to work in the host country
- Leasing office or lab space, or owning land or other real property in the host country
- Purchasing equipment or motor vehicles in the host country
- Providing in-person or virtual consulting services in the host country
- Teaching Cornell credit-bearing courses outside the U.S.
- Delivering online (credit- or non-credit bearing) education to residents of host country
The regulatory environment abroad is complex and everchanging and no two countries are the same. Conducting host country legal and tax due diligence when budgeting for a project is required; without proper planning, projects may incur unexpected costs, penalties, and legal fees. A strategy that worked five years ago may not meet today’s requirements. Global Operations’ staff work with departments to determine what to consider when setting up a project or program. In-house consultative services are available to the Cornell community, free of charge.
At times, registering a standalone legal entity may be needed. Determining whether and how to register the university in a foreign country is a legal and often strategic decision. If there are compelling legal and/or business reasons to justify creation of a separate corporation, the university will establish legal entities abroad to operate as separate subsidiaries or standalone affiliates. The university will register only if doing so is necessary to comply with foreign country laws and regulations, and more expedient—but equally as compliant—alternatives are not available. Approval to establish a foreign legal entity is required from the Cornell University Board of Trustees (Cornell University Policy 4.11). External, country-specific legal counsel may only be retained by Cornell’s Office of General Counsel, and Global Operations—in cooperation with Cornell’s tax office—maintains relationships with international tax advisors. Note that the program seeking legal registration is responsible for the cost of in-country counsel and tax consultation. This process can be lengthy and so advance planning is required.
Please contact Global Operations for advisory services.