No - this has to do with US LLCs being transparent entities and therefore their income in the US not being considered as corporate income. The important thing is not the fact that it is not taxable but the fact that it is not considered as corporate income at the US level.
US LLC + Cyprus residency
- Thread starter JustAnotherNomad
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So, if we speak about:
- CY LTD owns a US LLC OR Partnership between CY LTD and US LLC︀
- All the entities are managed from Cyprus
Can you confirm that:
- US LLC︁ or Partnership will be taxed at 12.5% (PE in Cyprus)
- US LLC can distribute︂ profits to the CY LTD and then the CY LTD can distribute them as dividends︃ (2.65%) to shareholders.
To sum up: How Cyprus treats a US LLC owns by a︄ local entity and not directly by an individual?
- CY LTD owns a US LLC OR Partnership between CY LTD and US LLC︀
- All the entities are managed from Cyprus
Can you confirm that:
- US LLC︁ or Partnership will be taxed at 12.5% (PE in Cyprus)
- US LLC can distribute︂ profits to the CY LTD and then the CY LTD can distribute them as dividends︃ (2.65%) to shareholders.
To sum up: How Cyprus treats a US LLC owns by a︄ local entity and not directly by an individual?
I think the question is how it will be handled on the US side.
From my experience, tax advice in the US quickly becomes very, very expensive. And the rules for when you should pay tax in the US are not always very clear, and they can vary from state to state (California sounds terrible).
I would really think twice if you absolutely have to incorporate in the US - maybe start with a European company and switch to US later once you see it makes sense?
There are also incubators in other countries like Canada - maybe you end up joining such a program, and then it would be better to have a Canadian company?
Since you're located in︀ Europe, it may also be easier to find European investors - and they probably won't︁ care if you have a European or US company.
From my experience, tax advice in the US quickly becomes very, very expensive. And the rules for when you should pay tax in the US are not always very clear, and they can vary from state to state (California sounds terrible).
I would really think twice if you absolutely have to incorporate in the US - maybe start with a European company and switch to US later once you see it makes sense?
There are also incubators in other countries like Canada - maybe you end up joining such a program, and then it would be better to have a Canadian company?
Since you're located in︀ Europe, it may also be easier to find European investors - and they probably won't︁ care if you have a European or US company.
To be clear why we are speaking about US in this setup:
The 'investor part' requires a US entity. They will invest only if the asset is owned by a US entity.
We do not have flexibility here and it's not any investor, we do want to proceed that way. That's why we are trying to find a solution here.
The 'investor part' requires a US entity. They will invest only if the asset is owned by a US entity.
We do not have flexibility here and it's not any investor, we do want to proceed that way. That's why we are trying to find a solution here.
I live in Cyprus and having this problem too. Can you not simply just have a 0 tax offshore shell company as 100% owner of the US LLC, whereby the shell company pays tax free dividends to the Cypriot non dom tax resident to achieve 0% tax (plus 2.65% up to the cap)?
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