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

[Nw1]

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 member︀ would be ABC PVT LTD which is a corporation then what happens?

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

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

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

 

[Sols]

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.

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

 

[Marzio]

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

 

[Sols]

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

 

[Marzio]

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]

Yes, I mentioned that as well.

 

[Marzio]

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

 

[Sols]

Yes, I mentioned that as well.‍

 

[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]

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

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

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

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

 

[JustAnotherNomad]

Source?

 

[humus]

Is US LLC considered transparent or opaque in︃ 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 if︅ yes, does the auditor need to be from India?
Because as I understand, the income︆ 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 100k︈ on their tax return. Is audit required for each shareholder separately, or a single audit︉ for the company as a whole?
or is the US LLC not require to have︊ an audit in India?

 

[Sols]

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

 

[JackAlabama]

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