The Comandita (S.C.A.)

This type of “limited silent partnership” entity exists in civil law countries such as Argentina, Brazil, Chile, Colombia, Mexico, Portugal, Spain, and Venezuela.

The basic elements of a Sociedad en Comandita por Acciones (S.C.A.) or a Sociedad en Comandita Simple are similar to those of an S.A.

However, one difference between the S.A. and S.C.A. is that the Comandita has at least one owner that is subject to unlimited liability with respect to the company’s business activities, similar to that of a general partner’s liability under U.S. partnership law.

For U.S. tax purposes, U.S. tax law will treat a Sociedad en Comandita as an eligible entity [i.e., as if it were either a corporation or a pass-through entity, provided that it so elects through the Check-the-Box election. Without the Check-the-Box election, its default U.S. tax treatment is not entirely certain, although practitioners and taxpayers should generally anticipate that the IRS would take the largest U.S. revenue-raising position in the event of an examination of a foreign structure with no such election in place.

Although an S.C.A. comandita should default as a limited partnership for U.S. tax purposes.

Consider making a Check-the-Box election is made to clarify the desired U.S. tax treatment.

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