Small Business Reading Room

Wednesday, November 17, 2004

Delaware Headquarters Management Companies

The State of Delaware held a conference last week to outline how the new Delaware Headquarters Management Company will work to reduce the state tax burden on companies that do business in the United States of America.

This conference was sponsored by the Department of Finance – Division of Revenue, the Department of State – Office of the Secretary – and the Delaware Economic Development Office.

Delaware Headquarters Management Companies (HMCs) were created in order to counter the recent attacks, in Maryland, New York and other jurisdictions, on the previous vehicle for moving taxable income to Delaware – the Delaware Holding Company (DHC).

The legislation that enables the HMC is House Bill 403 and it amends Title 30 – Corporate Taxes – of the Delaware Code. The section on Delaware Headquarters Management Companies is available here:

In (very) general terms, an HMC is created by employing one to five (or more) new people in Delaware or increasing spending in Delaware to match certain guidelines. The HMC is then allowed a tax credit (a reduction in taxable income) of up to 99% (Limits apply).

The differences between an HMC and the older DHC is that the HMC is allowed, and indeed must, perform non-passive activities, The HMC pays taxes and has nexus in Delaware, and it enjoys substantial tax breaks of up to 99% off of taxable income.

We would be glad to refer you to a qualified Delaware tax attorney who could analyze your situation and advise you regarding the use of the Delaware Headquarters Management Company to reduce your corporate tax bill. Just give us a call or send us an email.


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Delaware Intercorp, Inc.
113 Barksdale Professional center
Newark, DE 19711-3258

"For all the best reasons to incorporate,the best place
is Delaware and the best incorporator is
Delaware Intercorp!"

Call Monday - Friday 09:00 (am) - 17:00 (pm) Eastern Time (GMT-05:00)

Toll Free - USA only - 888.324.1817
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FAX: 302.266.9940