Privacy focused legal structure for foreign owned US WY LLC

[daniels27]

Let's do one by one.

Why would there be withholding taxes when getting paid from the US clients? What are the payments for?

 

[Island Insider]

daniels27 said:
Let's do one by one.

Why would there be withholding taxes when getting paid from the US clients? What are the payments for?
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Thanks! The payments will be for affiliate commissions

 

[daniels27]

Island Insider said:
Thanks! The payments will be for affiliate commissions
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Do they qualify as royalties under US law?

 

[Island Insider]

daniels27 said:
Do they qualify as royalties under US law?
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In the standard contracts of these US clients royalties are not mentioned, the payments are described as earnings based on revenue generated from the marketing activities

 

[daniels27]

Island Insider said:
In the standard contracts of these US clients royalties are not mentioned, the payments are described as earnings based on revenue generated from the marketing activities
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Have you ever checked with a lawyer whether these are royalties (which are subject to withholding tax)?

 

[Island Insider]

daniels27 said:
Have you ever checked with a lawyer whether these are royalties (which are subject to withholding tax)?
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No I have not done that but usually EU companies sign these contracts together with W-8BENE and pay taxes in their own jurisdiction. Switzerland is not part of EU so I will check it if i go this route but i think most likely it is going to be not taxed. So it would be interesting to discuss how Switzerland setup would work.

Last edited: Jan 19, 2025

 

[daniels27]

Island Insider said:
No I have not done that but usually EU companies sign these contracts together with W-8BENE and pay taxes in their own jurisdiction. Switzerland is not part of EU so maybe i should check it if i go this route?
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Ok, so there is no withholding tax on the US side? I would recommend you to be sure about this first, as this has a big influence over the choice of the jurisdiction.

 

[Island Insider]

daniels27 said:
Ok, so there is no withholding tax on the US side? I would recommend you to be sure about this first, as this has a big influence over the choice of the jurisdiction.
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Thanks I will check it out and then i will update this chat here as well

 

[Island Insider]

Island Insider said:
Thanks I will check it out and then i will update this chat here as well
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I checked with an attorney and he said that it should be treated as business profits, because royalties typically involve payments for the use of intellectual property rights.

He also mentioned I should choose a jurisdiction that has double taxation treaty with US, like Switzerland.

He also mentioned that the nominee director structure should be carefully documented to avoid creating a US trade or business nexus through agency relationships

 

[daniels27]

Double tax treaty with US
Tax-free
Anonymous

This is quite difficult.
Maybe Georgia with nominees and a holding on top
Or a US LLC managed from Malta

 

[Island Insider]

Thanks for pointing Malta out as I understand this would require non dom tax residency there and this is something interesting for me to think about.

Country of Georgia is also a great cheap option, but i am thinking as W-8BEN-E form is asking for the name of organization that is the beneficial owner the Georgian company. This might effect the tax relationship with US (if its a non treaty jurisdiction that would be the holding company)?

In general I think I have to make some compromises and I prioritize shareholder privacy so Switzerland sounds like the most solid option. I am a little bit worried about depositing 22,000 USD as minimum share capital when registering as I have no experience working with nominee directors before. But I am not sure if there are any other similar options like Switzerland.