Would a website make US LLC ETBUS ?

[Cazorla]

Hey everyone

If I don't pay any taxes in the US as a non resident (I am offering services for US customers), would that change if I create a website for my LLC on US Server (for example "www.services. com") ? So I don't have any employees, fixed place of business or anything similar in US, so I am not paying taxes there because I am not engaged in US trade or business. But, if I have a website on US Server, would I start being engaged in US trade or business ? I would not have an option for payments on that website, it would be just for promoting my LLC ("our services", "about us" etc.).

Does anyone have an experience with this or knows something about this ?

Thank you.

 

[EuroKiss]

Cazorla said:
Hey everyone

If I don't pay any taxes in the US as a non resident (I am offering services for US customers), would that change if I create a website for my LLC on US Server (for example "www.services. com") ? So I don't have any employees, fixed place of business or anything similar in US, so I am not paying taxes there because I am not engaged in US trade or business. But, if I have a website on US Server, would I start being engaged in US trade or business ? I would not have an option for payments on that website, it would be just for promoting my LLC ("our services", "about us" etc.).

Does anyone have an experience with this or knows something about this ?

Thank you.
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Short answer...nope.
To have some kind of substance you need something like an office, employees, etc.

 

[Spinat]

EuroKiss said:
To have some kind of substance you need something like an office, employees, etc.
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that's only way to move forward if substance is a requirement which it is in most case after all.

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[LoveMyLife]

When the most of your customers are from US, you have a US TEBUS condition met and you will be taxed in the USA. Just having a website there means nothing.

 

[Cazorla]

@LoveMyLife

I think you are not right. That doesn't mean that you are considered ETBUS if most of your clients are from US.

 

[LoveMyLife]

Cazorla said:
@LoveMyLife

I think you are not right. That doesn't mean that you are considered ETBUS if most of your clients are from US.
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I red too many courts decisions about this in last years.. Opinion of IRS is exact and courts confirm it..

 

[exprtadvisrdev]

LoveMyLife said:
I red too many courts decisions about this in last years.. Opinion of IRS is exact and courts confirm it..
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Share the sources you read, that way @Cazorla can read and confirm if the LLC owns taxes to the US or not

 

[LoveMyLife]

exprtadvisrdev said:
Share the sources you read, that way @Cazorla can read and confirm if the LLC owns taxes to the US or not
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Rule Nr. 3 of ETOB rules says:

(3) if you are engaged in “considerable, continuous, and regular” business in the US

Based on resolution of the IRS and also courts in few cases, having a customers in the US when having a US LLC, who are not just occasional case of crossborder trade, it is considered to be continuous or regular business in the USA.
So, if you have customers in the USA occasionaly only, profit is not considered to be US sourced. But if your US LLC activity is perpetual, it means it is regular and continous, all income from US customers is considered to be a US sourced and entity is considered to be a US tax resident. If LLC is used, than members of the entity are considered to be a tax residents of the USA for US sourced income only.
Just read ETOB rules word by word.

Just few words from IRS:

Non taxable business of foreign owned LLC is just a business with US customers, which is not performed within USA and is occasional, only.

So, to have your LLC income non taxable in the USA, you can have a business with US customers occasionaly only, you have to do this business crossborders, not from the USA (You can not use fulfillment center in the USA, have storage there..) and US customers can be just a minor percentage of your trade in a company.

 

[exprtadvisrdev]

LoveMyLife said:
Rule Nr. 3 of ETOB rules says:

(3) if you are engaged in “considerable, continuous, and regular” business in the US

Based on resolution of the IRS and also courts in few cases, having a customers in the US when having a US LLC, who are not just occasional case of crossborder trade, it is considered to be continuous or regular business in the USA.
So, if you have customers in the USA occasionaly only, profit is not considered to be US sourced. But if your US LLC activity is perpetual, it means it is regular and continous, all income from US customers is considered to be a US sourced and entity is considered to be a US tax resident. If LLC is used, than members of the entity are considered to be a tax residents of the USA for US sourced income only.
Just read ETOB rules word by word.

Just few words from IRS:

Non taxable business of foreign owned LLC is just a business with US customers, which is not performed within USA and is occasional, only.

So, to have your LLC income non taxable in the USA, you can have a business with US customers occasionaly only, you have to do this business crossborders, not from the USA (You can not use fulfillment center in the USA, have storage there..) and US customers can be just a minor percentage of your trade in a company.
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That's not what we are waiting for, we know the law, we just want to see the "I red too many courts decisions about this in last years" because the law is unclear and it depends on the court decisions

 

[Cazorla]

I agree, it would be good if you could provide direct sources or links for some of those court decisions, so we could take a better look.

 

[fshore]

LoveMyLife said:
But if your US LLC activity is perpetual, it means it is regular and continous, all income from US customers is considered to be a US sourced and entity is considered to be a US tax resident. If LLC is used,
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That is not correct definition of us source income. It depends on the product sold. For resold products it's where it's sold, which normally mean where the title off the goods pass to the customer (where shipped from if FOB, or where the customer is if shipped DDP), or if you produced the good yourself then it's where its produced.
But even with us source income you need etbus to be taxable in the US.

 

[lavel]

Cazorla said:
Hey everyone

If I don't pay any taxes in the US as a non resident (I am offering services for US customers), would that change if I create a website for my LLC on US Server (for example "www.services. com") ? So I don't have any employees, fixed place of business or anything similar in US, so I am not paying taxes there because I am not engaged in US trade or business. But, if I have a website on US Server, would I start being engaged in US trade or business ? I would not have an option for payments on that website, it would be just for promoting my LLC ("our services", "about us" etc.).

Does anyone have an experience with this or knows something about this ?

Thank you.
Click to expand...

no you will not be liable for taxes in the USA if you live in a different country. That is exactly the problem for all of us, you get taxed where you live and not where you do business unless you have hard evidence that you manage and operate the company from somewehere else.