How to get paid a Tax Free Salary from your own company?

[JustAnotherNomad]

What? None of this makes any sense,⁠ an LLC with a single, non-resident member isn't taxable in the US anyway. You wouldn't⁤ even be submitting any documents that would contain such information. Or are you talking about⁣ choosing to be taxed as a corporation? That would make even less sense.

What?

What?!
A salary is a︂ deductible business expense in almost every country. There is almost never any withholding tax for︃ nonresidents, unless it's a director's fee and not a salary.

UK, Cyprus, Estonia are just︄ some of the popular European options, but there are probably dozens and dozens of other︅ options.

Does this really work if it's your own company?
And don't you︈ have to prove you have to work outside of Cyprus, i.e. you would love to︉ be in Cyprus all the time, but it's just not possible because your boss has︊ ordered you to work outside of the country?

Oh, great, 35% withholding tax/branch office︌ tax.

What's the point???? You could just set up a UAE company instead and pay a︎ salary from there instead.

@OP : You can use a company from almost any country.️ Your assumption that all countries charge withholding tax on salaries is wrong. Like Marzio sais,‌ US or UK could be good options.
US might be even better, especially if you‍ don't have US clients, as there is no risk of CIT.

 

[yngmind]

It makes sense to optimize⁤ the profits, you pay less CT in the UAE.
You will have to pay all the social security bs︂ if you get a salary in the US.

The point in payment processing and banking options. UAE sucks for that.

There is no withholding︄ tax.

UAE is the holding company, it holds US company, then you transfer the profits︅ to the UAE and pay yourself a salary or dividends.

So before asking what???? on︆ everything that I have wrote, read at least what OP asked for.

 

[JustAnotherNomad]

No.
There is no US tax if‍ you are a non-resident alien and you don't work physically in the US.
You also⁠ don't have to pay out a salary if you're using a single-member LLC, as it's⁤ a pass-through entity.

There is⁣ 35% withholding tax on dividends (if the US company is taxed as a corporation) or,⁢ alternatively, a 35% branch office tax, if the US company is a pass-through entity that︀ is ETBUS (of which there is always a certain risk, unless you never step foot︁ in the US and don't have any US clients, etc.).

 

[yngmind]

We are
all aware of that.

The OP asked about the SALARY.

I never recommend forming a corporation. My advice was to move to the UAE (if he︀ still hasn't), form a US single-member LLC, which is a pass-through entity with the UAE︁ company as a holding, and get a residency visa. That way, he can get a︂ tax-free salary, optimize his profits for the UAE CT, and get himself a residency visa.︃ You can also hire your friends/family members and optimize your profits even more.

Having a︄ salary is not a bad thing in today's world. I would love to have a︅ salary. Most banks don't like entrepreneurs. They like salaried customers. That's how you can quickly︆ get residency, bank accounts, mortgages, loans, etc.

Getting visas to other countries is way easier︇ if you have a "job" and "salary".

 

[JustAnotherNomad]

And I told you‌ there is no tax on a SALARY.

A single-member LLC cannot have a "holding" company. A member is not a holding⁣ company. That's why there cannot be withholding tax on dividends (since a single-member LLC cannot⁢ pay dividends), which was the reason why the branch office tax was invented.
But that's︀ actually an interesting idea - if the UAE tax authority doesn't understand that either, you︁ might be able to avoid UAE CIT. But then again, I wouldn't want to risk︂ that.

Until they look into it and say you've violated the GAAR.︄
But I think this point will be moot soon anyway - they'll introduce income tax︅ by 2030. Mark my words.

 

[yngmind]

There will be some social security contributions, and that's how it works in most‍ countries.

Other corporations can own a US single-member LLC.
UAE considers US LLC as a corporation.

The scheme was discussed here long time ago -︁




The difference only that now we have CT in the UAE.

 

[JustAnotherNomad]

No. Since you're‌ so sure about this, it should be easy for you to find a source for‍ this?

No. Not even European countries do this.
At least not the UK, Estonia or Cyprus, probably⁠ no other countries either (especially since social security laws should be harmonized across the EU).⁤

Of course,⁣ they can. It's literally what being a member means.
Any income from the US company⁢ will be considered income of the member (not parent) in the eyes of the IRS.︀ So there is no profit to transfer, it's already the income of the member.
However, 35% branch office tax applies if any ECI is transferred to the member (possibly only︁ if transferred outside the US, I don't remember the exact rules).

Source? It would be quite the revolution︃ if there was any kind of legal statement from UAE authorities on this.
Nobody really︄ knows anything. The FTA has written a lot about partnerships - so they are definitely︅ aware of tax-transparent entities.
It seems far more likely that they will view it as︆ a partnership.
In any case, I doubt that you'll find any official statement on this.︇ No, people trying to sell you stuff are not the same as legally binding statements︈ from a tax authority.

Lol. A very minor difference for sure.
As long as︊ there was not CIT, it didn't matter. Now 9% CIT is at stake for the︋ UAE.

 

[yngmind]

There are National insurance contributions (NICs) in the UK,‍ and most countries have something like that. The solid source can be PWC, that's a⁠ link for the US for example - United States - Individual - Other taxes
Any income of the single-member LLC will be taxed on the personal︂ level, which will be UAE in the case of the UAE holding company. Since the︃ company is managed from the UAE , it's a UAE company for tax purposes, and︄ because it's a transparent entity, there is no tax in the US, so there is︅ no 35% branch tax.

US company is a branch of the UAE company.

It's common sense, which was discussed on this forum many times.

 

[CyprusLawyer101]

These are valid concerns. The⁤ current case that I am working on has a different owner of the employer company⁣ than the employee. However it does not appear that the legislation forbids any established businessman⁢ abroad from entering the country and recieving salaries from and for his business abroad. Obviously︀ your business should not involve the Cyprus market. Also, relative substance is advisable to be︁ maintained in the Singaporean/ Offshore company to satisfy it being established abroad.

 

[Alexmorgan]

There is⁣ a limit to what considered salary in UAE

Let say you got 10 Million income⁢ in your US and your expenses 4 Millions and you move 6 M to your︀ bank account in UAE

They will say this is not a salay this is distribution︁ and you should pay 9% Corporate tax of your US company

 

[JustAnotherNomad]

Yes, for UK residents, and also former UK residents (up to a certain number of years).‌

Yes, for residents.‍

Yes, for residents.⁤

Lol. I have been on this forum for a while, but I︀ have never seen anyone be so wrong and so confident about it.
You even write︁ that the US company is a BRANCH, but you say there is no BRANCH tax?︂ Lol!
The BRANCH office tax was invented PRECISELY because there was no way to tax︃ such structures. Maybe go look it up, before you write about it.
It only applies︄ if you have ECI (are ETBUS), but it's still a risk. That's why it's usually︅ not advisable to have companies be the member of a SMLLC.

Lol! Ok, please︇ tell that to the judge when they sentence you to a couple of years in︈ jail.

Yes, but︊ this genius says you just hire your whole family, your neighbor and his dog, and︋ you're good. Lol.

 

[yngmind]

Who will say lol?
Are you making $10M+ to have an investigation on you or what? or are you as‍ famous as Shakira? Even in her case, it took 10 years to start the investigation.⁠

Nobody cares about you until you reach a certain level.
It's a common thing to⁤ hire your family members, you can always prove that they are working for the company⁣ and don't see any risks at all, my accountant confirmed that you can do that.⁢

For using common sense and paying︁ my taxes because I think I should?

Please send me a document that says a UAE company︉ branch will be taxed in the US.

Yeah, it︋ seems like it's for residents only in the UK. I'm not sure about the US.︌

 

[JustAnotherNomad]

Shakira was in Spain. The hacienda may suck, but there is still rule of⁤ law. It's not the UAE.
In the UAE, you are beyond screwed if you get⁣ in trouble. There is no rule of law, they can just make up rules as⁢ they go along.
The rules are so unclear that they can always stick you with︀ something if they want to. Lawyers are incredible expensive and there is nothing you can︁ do.
Fines are extremely high and they could even throw you into jail. If it's︂ fine for 99.9% of all people doesn't help you, if you're one of the 0.1%︃ that get in trouble.
It's just utterly, utterly stupid to do grey-area stuff in the︄ UAE.

Ah, your accountant said︇ so... Then it must be true. Lol.
Of course you can do that, probably in︈ many cases it will be fine. Until it's not anymore.
But even if you do︉ that and you're not overdoing - then there isn't much point in using the US︊ company. It's also doubtful you'd get access to US payment providers with a UAE corporate︋ member.
You'd probably be better of setting up a US corp, shifting profits using invoices︌ and paying some tax in the US.

You don't seem to understand︎ that common sense is a concept that doesn't apply in the UAE.
Well, common sense️ generally doesn't help much for taxes, but definitely not in the UAE.

https://taxsummaries.pwc.com/united-states/corporate/branch-income

There is no⁠ tax in the US if the employee is a non-resident alien and no work was⁤ performed in the US.

 

[yngmind]

In UK you have︋ to pay NIC if you have a director of the company and you get a︌ salary.

 

[JustAnotherNomad]

Not sure what one thing‍ has to do with the other. But if you get paid a salary and you⁠ have never lived in the UK, there shouldn't be any social security contributions, no.
Maybe if you draw a diretor's fee instead of a salary, not sure.

 

[yngmind]

You pay NIC only if you are a⁤ company director. If you're an employee and nonresident, you don't pay.

I told you that⁣ in lots of countries, you will have to pay social security on your salary. That's⁢ why my lawyer and accountant recommended that I find a way around this.

 

[JustAnotherNomad]

Like I said.

All you do in this thread is make bold claims and not back‌ them up with anything. Most countries do not charge social security for nonresidents. It's simply‍ not true that "lots of countries" do this. Just incorporate somewhere else then. Estonia, Cyprus,⁠ USA, ... whatever, none of those countries do that.
I also don't think the UK⁤ does that for salaries. If you pay a director's fee, probably. Then don't pay a⁣ director's fee (or only a very low one), and pay a salary otherwise.

 

[churumbelo]

I confirm that if you aren't a resident in Estonia you︀ can pay yourself a salary from the Estonian company without paying tax or SS in︁ Estonia. BUT the Estonian tax agency can request you proofs that you are paying the︂ tax and SS in the country where you are a resident. If you are required︃ to pay those in that country.

 

[yngmind]

https://taxsummaries.pwc.com/cyprus/individual/other-taxes

There is some logic behind it like you don't live︀ in the country, why would you pay social security, but I think it will be︁ a pain in the a*s to prove it, and it's not that common to have︂ overseas employees.

 

[JustAnotherNomad]

There's a lot of thinking and feeling in your comments. I can tell⁠ you it's not an issue. No EU country cares about this if you can explain⁤ to them that you are not an EU resident.
It's just a PITA if you⁣ live in another EU country, then you have to show coverage with form A1.