Can a foreign company get a US EIN?

At a glance#

What an EIN is and what it does#

The US employer identification number, EIN for short, is a nine-digit identifier under which tax authorities, banks and contract partners keep track of a company. An EIN is not to be confused with a personal taxpayer number, which identifies a person rather than a business. An EIN is issued once and stays with the company permanently. The European counterpart is the company tax number that a German, Austrian or Swiss business already has at home.

The practical value of an EIN lies in the fact that much does not start without one. A US bank account, a contract with a payment processor, a supplier relationship on payment terms, the registration of employees: every one of these asks for an identifier under which the company is recorded.

What the EIN does not do matters just as much, and it is regularly overestimated. An EIN is not proof of creditworthiness, adds nothing to anyone’s credit report, is not an act of incorporation, not an account approval and says nothing about residence or work authorization. Anyone who obtains the number and then waits for access is waiting for something the number does not contain. The EIN is a key to administration, not to the market: it makes a company addressable and answers none of the questions that banks, processors or lenders ask. What follows comes from activity, documents and reported obligations, and that takes time.

Who needs an EIN#

The reason decides whether a foreign company needs an EIN#

A company without a US seat does not need an EIN because it could have one, but because a specific transaction requires it. The most common reasons are a subsidiary, a warehouse or staff in the US, a payment processor that will not sign a contract without an identifier, and tax reporting duties.

Without such a reason, the application is effort without return. The EIN does not age into something more valuable; it simply exists, and every later use asks for the same documents again.

The order is frequently reversed. Many applicants request the number first, as if it were step one, and only then discover that the bottleneck sits elsewhere, with the bank or with proving the business activity.

The responsible party on the EIN application#

The EIN application asks for a natural person who controls the company, the responsible party. The entry is not a formality: it ties the number to a human being, and it is consulted in later checks, for instance when a bank identifies the beneficial owners.

For foreign companies the first real hurdle appears here. Where the responsible party holds no US taxpayer number, the convenient online route is closed and the application runs through slower channels. Which personal numbers exist and what each one is good for is covered in ITIN or SSN: which number a US card application needs.

With a formation service, this entry deserves a second look. A service that lists itself as the responsible party creates a link that later triggers questions at every bank and takes effort to correct.

Forming a US company or registering the existing one#

Two routes lead into the US market, and they are often mixed up. The first is forming a US company of its own, which then gets its own EIN and acts as a US business. The second is registering the existing foreign company, which keeps its legal form and is only recorded for tax purposes.

Both routes have their own consequences for liability, bookkeeping and reporting duties, and the choice belongs before the application, not after it. For building US credit the difference is significant, because a business credit file forms around the entity that carries the obligations. The sequence for that is laid out in How to build US business credit from abroad.

Choosing a formation state, and why the choice is overrated#

Two states come up again and again for founders abroad, and the debate about them regularly hides the more important questions.

What the formation state governs. Company law, recurring state fees and filing duties, and which courts are competent in a dispute. For companies with investors or a complex structure those differences matter.

What the formation state does not govern. Where business takes place. A company with staff, inventory or customers in another state usually has to register there as well and pay fees there too.

What the formation state means to banks. Very little. Banks care about the beneficial owners, the activity and whether the company can be reached. A popular formation state opens no account any faster.

For the typical case from abroad, a small company with a digital product and no staff in the US, the choice is therefore secondary. What comes first is who signs as responsible party, which bank will open an account at all, and which filings fall due every year.

What an EIN sets in motion#

Once the EIN is issued, an account with the tax authority exists, and with it a set of expectations. Three consequences follow directly and regularly come as a surprise.

Filing duties begin. Depending on the entity and the activity, returns fall due even with zero revenue. Missed filings accumulate, surface in every later review and in some setups trigger penalties.

The address becomes the service address. Mail from the tax authority goes to the address given, even when nobody is there. Working mail forwarding is therefore part of the duties, not a convenience.

Changes have to be reported. A new responsible party, a new address or a new legal form belongs on record. Where that is skipped, the file drifts away from reality, and banks notice the drift at the next review.

Worked example: two sequences, one goal#

A German company wants to sell in the US through a payment processor. Route A applies for the EIN first; route B first collects the processor’s requirements.

The timings are illustrative. What decides the outcome is week 10, when route A learns that an EIN issued to the wrong entity cannot be reassigned. The number belongs to the company that applied, and if the contract partner requires a different entity, the process starts over.

The better sequence costs nothing but discipline. Knowing the requirements before applying means filing one application, once, for the right entity.

What is still missing after the EIN#

Access is not settled once the EIN arrives. Three steps follow, each with its own requirements.

The bank account. Banks check beneficial owners, business activity and reachability. For a company without a US presence this is the hardest step, and a bank’s refusal says more about its house rules than about the venture.

Payment processing. Processors ask for documents on the business model, often sample invoices, occasionally evidence about supply chains. Their review is independent of the tax authority and follows rules of its own.

The business credit file. The business credit file comes last and only when trading partners report. Without reported obligations the company stays invisible in the credit system, and every card decision keeps falling on the owner, as Am I personally liable for a business credit card? shows.

When it is not worth applying for an EIN#

In these situations the number achieves nothing, and the application is not worth the effort:

• No US business in sight. Without a contract partner, activity or filing duty there is no use for the number. A stock of identifiers for later does not exist.
• A personal card is the only goal. For personal credit products the company number is useless. What counts there is the personal history described in How do I build a US credit report from scratch?.
• The structure is still open. As long as it is unclear whether a US company will be formed or the existing one registered, any application is premature, because it may name the wrong entity.
• Real activity without tax advice. A company with real operations in the US has questions on permanent establishment and tax treaties to settle, and the costs at stake exceed any saving on the application.
• A package that bundles everything. Offers that promise an EIN, a bank account and a credit line in one breath describe three separate checks as a single step. The first is administration, the second depends on documents, and the third depends on a history that does not exist yet.

Preparing the EIN application#

The EIN application itself is a form, and it rarely fails on the form. It fails on documents that do not match. Four preparations handle most of it.

Keep the company documents current. Name, seat, authorized representatives and legal form must match what the application states. Variations in spelling, such as umlauts or legal form suffixes, lead to queries.

Settle the responsible party. The responsible party should be authorized to represent the company and stay reachable. A change is possible but has to be reported, and any mismatch shows up later at the bank.

Know the application channel. Without a US taxpayer number for the responsible party, the online route is closed. The alternative takes longer, and knowing that in advance turns the wait into a planned step.

Check the address. Official mail goes to the address given and is not always available digitally. An address without working forwarding lets deadlines pass that nobody hears about.

The most common mistakes#

• Treating the EIN as incorporation. The number identifies an existing company and creates none.

• Applying before the structure is decided. Which entity will act has to be settled first, or the number may land on the wrong one.

• Letting the service provider sign as responsible party. The responsible party belongs to the company; anything else keeps the questions coming at every bank.

• Expecting immediate bank access. The bank checks independently, and its requirements are the real bottleneck.

• Expecting credit history. A business credit file comes from reported obligations, never from an identifier.

• Settling tax consequences afterwards. They depend on the activity, cost more than any application, and belong at the start.

Related topics#

• How to build US business credit from abroad
• Am I personally liable for a business credit card?
• Statement date vs due date: which one matters for your score
• Hard pull vs soft pull: what each one does to a score
• What credit utilization is and why it moves every month
• FICO or VantageScore: which number decides