Best offshore jurisdiction for collecting AdSense income?

[Zaki]

of course, they are not royalties because you file⁠ w-9 form
(meaning that you are a real US Entity paying taxes at end of⁤ the year like any other US corp so google treat like other US Entities)

1. the answer is No
   
2. even if IRS cares and wants to audit︂ you, it's not you who will be on the hook(in that case Google will be)because︃ like I told you before all forms will be submitted to the Payor(Google)not IRS.
   
3. IRS only cares about you paying taxes(in that case you need a US CPA to help︄ you with that)
   

 

[startfleetio]

If you use the C-Corp to receive the royalties,︆ you need to pay corporate income tax on the profits since Corporations are "US Persons"︇ by definition.
And then when you pay dividends to you from the Corporation, the dividends︈ are still subject to FDAP income withholding taxes.

You are correct on many counts.︂ There are a lot of wrong information regarding US taxes here.

Adsense indeed are not︃ subjected to FDAP income and thus no withholding because Google treat it as "Services". If︄ you are a non-resident alien providing services outside of the USA, it is regarded as︅ foreign source income. This link from Google says it all. FAQs about submitting US tax︆ info in AdSense - Google AdSense Help

Do you have the reference to where they︇ treat Admob revenues as royalties? I can't seem to find it.

 

[rowena]

Apple IAP revenue is not considered as royalties and is not subject to any withholding‌ tax.

 

[OffshorePhantom]

I think it︃ count as royalties since if you do not provide a treaty to use they withhold︄ the 30% tax.

At this point, if we use a C-corp and have to pay︅ the corporate tax I do not see how it can be useful.
The only way︆ is to create another business that takes out all the revenue of the C-corp as︇ a business expense but I do not know if in some extent you are the︈ owner of both the C-corp and the business which invoices the C-corp to take out︉ all the revenue to pay no corporate tax this can be seen as an issue︊ from IRS standpoint.

 

[Zaki]

Thanks
Such as‌ ?.!.!
if google is a bit conservative about how they consider profits gained by⁣ NRA it doesn't mean they won't withhold.
in practice, you are obliged to fill tax⁢ information form on your AdMob/Adsense account

yes of course
But you don't have to, Cos in practice when you fill your︂ tax information; you either go with option 1: you are a US Persons(C-Corp) -->W-9
option 2: you are NRA-->W-8
there is no middle ground.

https://support.google.com/admob/answer/4381375?hl=enhttps://support.google.com/admob/answer/2772513?hl=en&ref_topic=2772131
you don't have to create another business, you simply pay yourself from your corp︊ as management fees.
but like I said before you need a US CPA to help︋ you.

 

[startfleetio]

I'm not referring to you 😉

 

[rowena]

If you have income from Apple, then there is no withholding tax. Does not imporant‌ your residency or DTT agreements but I don't know why they require W8BEN. The official‍ response below.

 

[startfleetio]

Because PSPs are obliged to keep a record⁠ of it if they pay more than $600 to an individual for the year

 

[badabums]

Now it's 2023 and someone from this thread might have try and see AppLovin, Meta,‌ AdMob and Google Play IAPs/subscriptions in action with their withholding taxes and such. Could you‍ please share your real world experience with the community?

@hireblade89 did you try any⁠ offshore jurisdictions or UAE? For instance, I was able to register a corporation in St⁤ Lucia + bank account there and now I see (too late to change anything) that⁣ St Lucia does not have tax treaty with the US, so at least all revenue⁢ from US users in all Google products is subject to the 30% withholding tax, right?︀ It looks like an offshore dream cannot come true. I was so happy that I︁ was able to establish an entity in the Carribean which is not blacklisted by the︂ EU that now I can't believe that my dream is ruining because of the DTT.︃ Unfortunately, a notable portion of my revenue is generated by users from the US. Also,︄ the same s**t happens with my SMUSLLC - my country of residency does not have︅ DTT with the US and it is being services by Google LLC (not Ireland), so︆ Google will withhold 30% from my revenue generated by users from the US, right?

And one more question about SMUSLLC is still open: what tax will be applied by the︇ IRS to money distributions from this LLC to my personal US accounts? I'm a non-resident︈ alien in the US. Most CPAs told me that this type of distribution will be︉ considered as US sourced income and is subject to the federal income tax - is︊ it correct? Who did this type of business with 6-7 figure amounts?

 

[OffshorePhantom]

Unfortunately, you have to establish your︅ company in a jurisdiction that has a DTT with us in order to avoid the︆ WTH on US purchases or ad views. You can then shift the profits to an︇ offshore entity or UAE company using for example a management contract or something else.

This really depends on the nature of the income, if it is US︌ source income or not. Generally wherever a WTH tax is applied then if you are︍ not a US resident alien no need to pay any federal tax and you can︎ distribute profits without any problems. If there is no WTH applied then you have to️ check the nature of the income, if it is US-sourced income or not, and the‌ true of the service provided.

In your case if the WTH is applied no need‍ to pay any federal taxes. But also make sure that your country of residency does⁠ not see the US LLC as a local company since it is managed from there⁤ and tax it.

I am glad to discuss more in DM if you want.