Residency Choices for LLC Owners?

[GalacticGazelle]

Hello,
I've been contemplating the advantages of LLCs in Delaware and similar states, highly favorable due to their nature, taxation, ease of operation, flexibility with applications and minimal bureaucracy.

In light of this, what are the best places for EU citizens within the EU or outside the EU to relocate while retaining their LLC and minimizing taxes on distributions.

I'm aware that Dubai is a feasible option, also Paraguay. In the EU maybe Slovakia that should tax only 7%?

 

[Jackx3]

GalacticGazelle said:
Hello,
I've been contemplating the advantages of LLCs in Delaware and similar states, highly favorable due to their nature, taxation, ease of operation, flexibility with applications and minimal bureaucracy.

In light of this, what are the best places for EU citizens within the EU or outside the EU to relocate while retaining their LLC and minimizing taxes on distributions.

I'm aware that Dubai is a feasible option, also Paraguay. In the EU maybe Slovakia that should tax only 7%?
Click to expand...

"best places" is subjective. Depends on your specific wants & needs. You will find plenty of exploratory discussions/debates in this forum.

 

[Marzio]

GalacticGazelle said:
minimizing taxes on distributions.
Click to expand...

First thing is that LLCs don't distribute dividends and second thing is that generally you'll have to pay corporate income tax in the country where you manage your LLC from.

 

[bizman]

GalacticGazelle said:
In light of this, what are the best places for EU citizens within the EU or outside the EU to relocate while retaining their LLC and minimizing taxes on distributions.
Click to expand...

For me I have been in Cyprus for years and Switzerland for years, despite what you read here it has been wonderful for me.

Toggle signature
The reason to fail while you try to setup your business offshore....the guide that helped me setup my offshore company.

Wiseman sayings - May the gifts of three wise men fill your home with prosperity.

 

[fshore]

Marzio said:
First thing is that LLCs don't distribute dividends and second thing is that generally you'll have to pay corporate income tax in the country where you manage your LLC from.
Click to expand...

A us llc doesn't distribute dividends in the views of irs, however you can run the llc from another country and distribute dividends that might be taxed in that country.

 

[Don]

GalacticGazelle said:
Hello,
I've been contemplating the advantages of LLCs in Delaware and similar states, highly favorable due to their nature, taxation, ease of operation, flexibility with applications and minimal bureaucracy.

In light of this, what are the best places for EU citizens within the EU or outside the EU to relocate while retaining their LLC and minimizing taxes on distributions.

I'm aware that Dubai is a feasible option, also Paraguay. In the EU maybe Slovakia that should tax only 7%?
Click to expand...

Bulgaria is not a bad choice:

• 10% CIT (lowest in EU)
• PEs of foreign tax residents (e.g. branches) are treated as separate entities similar to Bulgarian residents for tax and accounting purposes, so you would need to register a branch and keep separate accounting records according to local GAAP

Estonia is also quite decent:

• There is no management and control test for the purpose of determining corporate residency, meaning that Estonia can only tax profits that arise from the permanent establishment of the US LLC in Estonia - so it will work out as territorial tax (if you are not Estonian tax resident yourself and 100% in Estonia)
• You can register the branch but don't have to and can operate as just a registered permanent establishment.
• In the latter case, there is no need to follow local accounting requirements.
• Everything can be done online.
• All undistributed corporate profits of the PE are tax-exempt. This exemption covers both active (e.g. trading) and passive (e.g. dividends, interest, royalties) types of income.
• Introducing assets for the purpose of a permanent establishment and taking assets out of a permanent establishment is not deemed to be introducing or taking out assets or posting them as collateral in connection with financing securities if the assets are brought back, or the collateral is released within a period of 12 months.

 

[GalacticGazelle]

Don said:
Bulgaria is not a bad choice:

• 10% CIT (lowest in EU)
• PEs of foreign tax residents (e.g. branches) are treated as separate entities similar to Bulgarian residents for tax and accounting purposes, so you would need to register a branch and keep separate accounting records according to local GAAP

Estonia is also quite decent:

• There is no management and control test for the purpose of determining corporate residency, meaning that Estonia can only tax profits that arise from the permanent establishment of the US LLC in Estonia - so it will work out as territorial tax (if you are not Estonian tax resident yourself and 100% in Estonia)
• You can register the branch but don't have to and can operate as just a registered permanent establishment.
• In the latter case, there is no need to follow local accounting requirements.
• Everything can be done online.
• All undistributed corporate profits of the PE are tax-exempt. This exemption covers both active (e.g. trading) and passive (e.g. dividends, interest, royalties) types of income.
• Introducing assets for the purpose of a permanent establishment and taking assets out of a permanent establishment is not deemed to be introducing or taking out assets or posting them as collateral in connection with financing securities if the assets are brought back, or the collateral is released within a period of 12 months.

Click to expand...

What about Slovakia? Is the CIT not 7%?

And in Bulgaria, with an LLC, do you only pay 10% on dividends?

bizman said:
For me I have been in Cyprus for years and Switzerland for years, despite what you read here it has been wonderful for me.
Click to expand...

Having the LLC and being resident in Switzerland and Cyprus? What's the tax on distribution?

Marzio said:
First thing is that LLCs don't distribute dividends and second thing is that generally you'll have to pay corporate income tax in the country where you manage your LLC from.
Click to expand...

And so how to take out money from LLC on your resident, for example, in Dubai?

Jackx3 said:
"best places" is subjective. Depends on your specific wants & needs. You will find plenty of exploratory discussions/debates in this forum.
Click to expand...

Prague could works?

 

[Don]

GalacticGazelle said:
What about Slovakia? Is the CIT not 7%?

And in Bulgaria, with an LLC, do you only pay 10% on dividends?


Having the LLC and being resident in Switzerland and Cyprus? What's the tax on distribution?


And so how to take out money from LLC on your resident, for example, in Dubai?


Prague could works?
Click to expand...

Slovakia's CIT rate is 21% A withholding tax (WHT) of 7% may apply to certain taxable dividend payments to individuals.

In Bulgaria, profits repatriated by a branch to its head office abroad are not subject to WHT. However, certain income payable by a Bulgarian branch or a PE to other parts of the enterprise abroad may trigger WHT.

 

[Marzio]

fshore said:
A us llc doesn't distribute dividends in the views of irs
Click to expand...

And in the view of many countries for which LLC is a transparent entity: Poland, Spain and so on.

 

[GalacticGazelle]

Don said:
Slovakia's CIT rate is 21% A withholding tax (WHT) of 7% may apply to certain taxable dividend payments to individuals.

In Bulgaria, profits repatriated by a branch to its head office abroad are not subject to WHT. However, certain income payable by a Bulgarian branch or a PE to other parts of the enterprise abroad may trigger WHT.
Click to expand...

So the total tax on LLC distribution in Slovakia would be 21% + 7%, if I understand correctly. So CIT must be paid pratically.

In Bulgaria, do I need to create a local company or branch, or can I simply distribute funds from the LLC to my personal residence in Bulgaria? Will this incur only a 10% CIT without any Withholding Tax (WHT)?

 

[offshore8]

Don said:
Bulgaria is not a bad choice:

• 10% CIT (lowest in EU)
• PEs of foreign tax residents (e.g. branches) are treated as separate entities similar to Bulgarian residents for tax and accounting purposes, so you would need to register a branch and keep separate accounting records according to local GAAP

Estonia is also quite decent:

• There is no management and control test for the purpose of determining corporate residency, meaning that Estonia can only tax profits that arise from the permanent establishment of the US LLC in Estonia - so it will work out as territorial tax (if you are not Estonian tax resident yourself and 100% in Estonia)
• You can register the branch but don't have to and can operate as just a registered permanent establishment.
• In the latter case, there is no need to follow local accounting requirements.
• Everything can be done online.
• All undistributed corporate profits of the PE are tax-exempt. This exemption covers both active (e.g. trading) and passive (e.g. dividends, interest, royalties) types of income.
• Introducing assets for the purpose of a permanent establishment and taking assets out of a permanent establishment is not deemed to be introducing or taking out assets or posting them as collateral in connection with financing securities if the assets are brought back, or the collateral is released within a period of 12 months.

Click to expand...

I own both US LLC single member disregarded entity and Estonian OU company and I sell mostly to EU customers. I'm Slovak citizen and tax resident but living mostly in SEA. I'm cutting ties with Slovakia this year and figuring out where to move my tax residency. What would you suggest? Also how can US LLC not have to pay CIT on undistributed profits like Estonian OU company? Do I need to transfer all shares of US LLC to Estonian company? You seem really smart please let me know what would you do if you were me. Thanks.

Last edited: Nov 19, 2023

 

[Don]

offshoremario said:
I own both US LLC single member disregarded entity and Estonian OU company and I sell mostly to EU customers. I'm Slovak citizen and tax resident but living mostly in SEA. I'm cutting ties with Slovakia this year and figuring out where to move my tax residency. What would you suggest? Also how can US LLC not have to pay CIT on undistributed profits like Estonian OU company? Do I need to transfer all shares of US LLC to Estonian company? You seem really smart please let me know what would you do if you were me. Thanks.
Click to expand...

I would recommend setting up something compliant, otherwise you might get screwed soon.
Check this: New Reporting obligations for Payment Service Providers - VAT CRS

 

[Alexmorgan]

LLC in US and residency in UAE

 

[offshore8]

Don said:
I would recommend setting up something compliant, otherwise you might get screwed soon.
Check this: New Reporting obligations for Payment Service Providers - VAT CRS
Click to expand...

What is not compliant about my setup?

 

[Cloudbanck]

Alexmorgan said:
LLC in US and residency in UAE
Click to expand...

That's not bad, but you risk having to register the US LLC in the UAE and pay 9% on profits above 375k AED. Purely tax-wise there are better options, like all the Caribbean zero tax islands, the Latam territorial tax countries, Sub-Saharan Africa which is de facto territorial and has no CRS or anything, lots of Pacific island nations with territorial tax like Palau, Thailand if you dont remit money into Thailand, central Asian countries wouldnt tax you either I think. And Argentina might be a good option if Milei wins.

And I wonder how it works with a US LLC in balkan countries, like Kosovo, Bosnia, Albania, Macedonia, Montenegro.

Last edited: Nov 20, 2023

 

[offshore8]

Cloudbanck said:
That's not bad, but you risk having to register the US LLC in the UAE and pay 9% on profits above 375k AED. Purely tax-wise there are better options, like all the Caribbean zero tax islands, the Latam territorial tax countries, Sub-Saharan Africa which is de facto territorial and has no CRS or anything, lots of Pacific island nations with territorial tax like Palau, Thailand if you dont remit money into Thailand, central Asian countries wouldnt tax you either I think. And Argentina might be a god option if Milei wins.

And I wonder how it works with a US LLC in balkan countries, like Kosovo, Bosnia, Albania, Macedonia, Montenegro.
Click to expand...

Yes that's what im considering to move my tax residency to one of these countries. What would be the best way to do it? Set up a home in territorial tax country and use that address on 5472 form and also bank account as your operational address? Also how about paying yourself a small salary from LLC to a local territorial tax country and pay taxes on it so you have a record of paying taxes somewhere each year. Would that work? Thanks

 

[Cloudbanck]

offshoremario said:
Yes that's what im considering to move my tax residency to one of these countries. What would be the best way to do it? Set up a home in territorial tax country
Click to expand...

Yes, or zero tax, have a residence there, spend time there, have bills in your name there.

offshoremario said:
and use that address on 5472 form
Click to expand...

Yes

offshoremario said:
and also bank account as your operational address?
Click to expand...

Sure , but you dont have to. One can have many personal bank accounts in different countries using different addresses.

offshoremario said:
Also how about paying yourself a small salary from LLC to a local territorial tax country and pay taxes on it so you have a record of paying taxes somewhere each year.
Click to expand...

There are different schools of thought here. Some think that it is good to show that one is paying a little bit of taxes somewhere. I guess it depends on what tax authority might want to see this, and in which country you are in.

In many territorial tax countries it s a bit of a grey zone what counts as permanent establishment when you are just one person with a laptop running a US LLC. Might be safest to keep entirely out of view of tax authorities and pay zero. The more messed up the country you are in, the better it is to pay zero Id say. If you pay something to a corrupt tax agency, they might get ideas to get more money from you, or share your details with cartels/criminals or something.

For the US it doesnt matter if you pay zero or something in the country you live in. It's more if you recently left some country with an aggressive tax authority like Spain or Australia, then maybe they will want to see that you pay tax abroad as part of you showing that you are not a tax resident in Spain/Australia. In most cases though, for most countries, this is not an issue.

 

[offshore8]

Cloudbanck said:
Yes, or zero tax, have a residence there, spend time there, have bills in your name there.


Yes


Sure , but you dont have to. One can have many personal bank accounts in different countries using different addresses.


There are different schools of thought here. Some think that it is good to show that one is paying a little bit of taxes somewhere. I guess it depends on what tax authority might want to see this, and in which country you are in.

In many territorial tax countries it s a bit of a grey zone what counts as permanent establishment when you are just one person with a laptop running a US LLC. Might be safest to keep entirely out of view of tax authorities and pay zero. The more messed up the country you are in, the better it is to pay zero Id say. If you pay something to a corrupt tax agency, they might get ideas to get more money from you, or share your details with cartels/criminals or something.

For the US it doesnt matter if you pay zero or something in the country you live in. It's more if you recently left some country with an aggressive tax authority like Spain or Australia, then maybe they will want to see that you pay tax abroad as part of you showing that you are not a tax resident in Spain/Australia. In most cases though, for most countries, this is not an issue.
Click to expand...

I understand that about personal bank accounts but what operation address you put on business bank account?

Also which country would you choose for this setup in South East Asia? In Thailand I can only live off of savings starting the next year right? Could Philipines work? In central Asia you mean Kazakhstan or Kyrgyzstan?

Well i do have contractors in EU. I was thinking about paying them from Estonian company so US LLC doesn't have to pay VAT in EU. Then VAT of US LLC should be paid in my current tax residence country. At least that's what I was told by tax authorities from my home EU country. And I could create contract between Estonian and US company so Estonia has capital to pay contractors. Could this work?

That is interesting. Do we have a list of aggressive tax countries? So far I only saw Spain, Italy and now you mentioned Australia.

Thanks

 

[Cloudbanck]

offshoremario said:
I understand that about personal bank accounts but what operation address you put on business bank account?
Click to expand...

There you put the US address that you set up for your US LLC, typically with mail forwarding.

offshoremario said:
Also which country would you choose for this setup in South East Asia? In Thailand I can only live off of savings starting the next year right?
Click to expand...

That were the old rules, now they tax any remittance into Thailand regardless of year. But you can send money into Thailand tax free in a year you are not a tax resident in Thailand. And well, do small scale p2p should work, and keep the bulk of the funds outside Thailand.

offshoremario said:
Could Philipines work?
Click to expand...

I think so, that for foreigners it is territorial, but Im no expert on the Philippines. There was a thread on it.

offshoremario said:
In central Asia you mean Kazakhstan or Kyrgyzstan?
Click to expand...

Either, or Uzbekistan and Tajikistan. Few people know about these countries. Need to do more research myself.

offshoremario said:
That is interesting. Do we have a list of aggressive tax countries? So far I only saw Spain, Italy and now you mentioned Australia.
Click to expand...

France and Norway too, and to some extent Germany. See Who are the most aggressive and least aggresive tax authorities?

 

[Juleski70]

Philippines if you like Asia, especially if you're not setting up local operations/staff and its mostly a quiet one-man management. They don't tax non-Phillipine sourced income if you're a resident alien. You can exist under a tourist visa for a long time (but that's often not enough to convince your home country to let you give up your tax residency).