Any experts on taxation of non resident UK LTD/LPP or US LLC?

[Nw1]

Sols said:
https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc


The US LLC is not itself taxable in US.
Click to expand...

A US LLC has to meet three criteria, in order to not be subject to US federal income tax

1. Be 100% owned by non-US tax residents (either natural or legal persons)
2. Have no US presence or economic substance
3. The income must not be “effectively connected”

“An LLC is a pass-through or tax-transparent entity. That means the LLC is not being taxed directly. Instead, the tax obligations of the business ”˜pass through' to the owners (members) of the LLC. They then report them on their personal tax returns.

Since the member would be ABC PVT LTD which is a corporation then what happens?

Also saw need a registered agent from state u decide to incorporate in meaning yearly u need to pay so you can get IRS mails, EIN mails, etc

Besides this it seems you can't e-file your tax returns and has to be mailed or faxed which means another recurring cost

So isn't UK like a way better option since u can e-file taxes and u don't need a registered agent on retainer right(Probably only need initially to get like bank docs, etc)?

 

[Sols]

NwWork said:
“An LLC is a pass-through or tax-transparent entity. That means the LLC is not being taxed directly. Instead, the tax obligations of the business ”˜pass through' to the owners (members) of the LLC. They then report them on their personal tax returns.

Since the member would be ABC PVT LTD which is a corporation then what happens?
Click to expand...

The LLC itself pays no corporate income tax and the profits become income of some sort for ABC. Exactly how that income is counted depends on where ABC is incorporated and/or tax resident. A good accountant/tax adviser could help with optimising that.

NwWork said:
So isn't UK like a way better option since u can e-file taxes and u don't need a registered agent on retainer right(Probably only need initially to get like bank docs, etc)?
Click to expand...

If you want the absolutely cheapest option, then it's UK. US is second cheapest.

Toggle signature
This is the probably the answer to your question.

 

[Marzio]

Sols said:
If you're lucky, you can declare the income from your US LLC as whatever type of income is subject to the lowest tax (i.e. income, foreign salary, dividends, capital gains, or something else).
Click to expand...

Or simply defer taxation indefinitely by keeping the money in your US LLC bank account.

 

[Sols]

marzio said:
Or simply defer taxation indefinitely by keeping the money in your US LLC bank account.
Click to expand...

Because an LLC is a pass-through entity, it cannot defer distribution of profits (or at least not the taxation of the profits, after QBI). The income is taxable to the members immediately. You can only defer if you opt for the LLC to be taxed like a C corp.

The same would apply if the LLC is considered pass-through wherever ABC is incorporated. Profits from the LLC would in that case become taxable income for ABC right away.

However, if ABC is incorporated in a place which doesn't recognize LLC as pass-through, you might be able to claim your LLC is pass-through in the US but treat is as opaque elsewhere when it's convenient. That might cause some issues if the whole structure ever gets dragged through a tax audit or court, but that's an unlikely scenario.

Toggle signature
This is the probably the answer to your question.

 

[Marzio]

Sols said:
Because an LLC is a pass-through entity, it cannot defer distribution of profits (or at least not the taxation of the profits, after QBI). The income is taxable to the members immediately.
Click to expand...

In some countries (many actually) US LLC is treated like a company so you'll pay taxes only on profit distribution allowing you to actually defer taxation indefinitely.

 

[Sols]

marzio said:
In some countries (many actually) US LLC is treated like a company so you'll pay taxes only on profit distribution allowing you to actually defer taxation indefinitely.
Click to expand...

Yes, I mentioned that as well.

However, if ABC is incorporated in a place which doesn't recognize LLC as pass-through, you might be able to claim your LLC is pass-through in the US but treat is as opaque elsewhere when it's convenient.
Click to expand...

Toggle signature
This is the probably the answer to your question.

 

[Marzio]

Sols said:
Yes, I mentioned that as well.
Click to expand...

Ok so he could actually defer taxation because lets face it, i don't see Bangladesh enforcing PE rules ever.

 

[Sols]

marzio said:
Ok so he could actually defer taxation because lets face it, i don't see Bangladesh enforcing PE rules ever.
Click to expand...

Yes, I mentioned that as well.

That might cause some issues if the whole structure ever gets dragged through a tax audit or court, but that's an unlikely scenario.
Click to expand...

Toggle signature
This is the probably the answer to your question.

 

[Nw1]

Is it correct that in UK LTD u can e-file taxes and u don't need a registered agent on retainer right(Probably only need initially to get like bank docs, etc)?

Regarding tax defferal i geuss UK LTD company would pay tax yearly for liable income and dividend tax u can control and differ to claim at an appropriate time.

Does UK LTD owned by non resident PVT LTD come with a tax exemption clause/schedule on foreign income it earns?

 

[Sols]

NwWork said:
Is it correct that in UK LTD u can e-file taxes and u don't need a registered agent on retainer right(Probably only need initially to get like bank docs, etc)?
Click to expand...

Correct, you can do it all yourself. You need a UK address, but that's it.

NwWork said:
Regarding tax defferal i geuss UK LTD company would pay tax yearly for liable income and dividend tax u can control and differ to claim at an appropriate time.
Click to expand...

There are some conditions under which a UK LTD can defer taxes. A good accountant can help you optimise deductions and deferrals.

NwWork said:
Does UK LTD owned by non resident PVT LTD come with a tax exemption clause/schedule on foreign income it earns?
Click to expand...

As we've discussed, there is no such thing. UK LTD is taxed at corporate income tax on its worldwide income. There is no difference between 10 GBP earned from a customer in Manchester and 10 GBP earned from a customer in Mombasa. It's all taxed the same.

The only exception is if the company pays tax somewhere else for the non-UK customer. So if your UK company already pays tax in Bangladesh for non-UK customers, you can use those taxes paid as tax credit and reduce or remove your UK tax burden.

Toggle signature
This is the probably the answer to your question.

 

[JustAnotherNomad]

Sols said:
You can obtain non-residence only through a tax treaty, and then only if the other country where the company is tax resident has same or higher tax rate.
Click to expand...

Source?

 

[humus]

Sols said:
Because an LLC is a pass-through entity, it cannot defer distribution of profits (or at least not the taxation of the profits, after QBI). The income is taxable to the members immediately. You can only defer if you opt for the LLC to be taxed like a C corp.

The same would apply if the LLC is considered pass-through wherever ABC is incorporated. Profits from the LLC would in that case become taxable income for ABC right away.

However, if ABC is incorporated in a place which doesn't recognize LLC as pass-through, you might be able to claim your LLC is pass-through in the US but treat is as opaque elsewhere when it's convenient. That might cause some issues if the whole structure ever gets dragged through a tax audit or court, but that's an unlikely scenario.
Click to expand...

Is US LLC considered transparent or opaque in India?
I was planning to form a US LLC with 2 shareholders both in India. Do I need to file an audit report for the LLC in India? And if yes, does the auditor need to be from India?
Because as I understand, the income of the LLC needs to be shown in individual tax returns for both the shareholders. So suppose if the LLC makes 200k euros per year, each shareholder will declare 100k on their tax return. Is audit required for each shareholder separately, or a single audit for the company as a whole?
or is the US LLC not require to have an audit in India?

 

[Sols]

humus said:
Is US LLC considered transparent or opaque in India?
I was planning to form a US LLC with 2 shareholders both in India. Do I need to file an audit report for the LLC in India? And if yes, does the auditor need to be from India?
Because as I understand, the income of the LLC needs to be shown in individual tax returns for both the shareholders. So suppose if the LLC makes 200k euros per year, each shareholder will declare 100k on their tax return. Is audit required for each shareholder separately, or a single audit for the company as a whole?
or is the US LLC not require to have an audit in India?
Click to expand...

Only someone with knowledge about Indian law can answer this accurately. I would recommend speaking with an Indian tax lawyer to get clarity on these questions, as they are very specific to India. Hopefully, there is guidance issued already by the tax authority or courts.

Toggle signature
This is the probably the answer to your question.

 

[JackAlabama]

humus said:
Is US LLC considered transparent or opaque in India?
I was planning to form a US LLC with 2 shareholders both in India. Do I need to file an audit report for the LLC in India? And if yes, does the auditor need to be from India?
Because as I understand, the income of the LLC needs to be shown in individual tax returns for both the shareholders. So suppose if the LLC makes 200k euros per year, each shareholder will declare 100k on their tax return. Is audit required for each shareholder separately, or a single audit for the company as a whole?
or is the US LLC not require to have an audit in India?
Click to expand...

it has to be single member llc. Otherwise it does not work the same way in usa.