Delaware LLC & federal tax.

[MikeJigsaw]

Good afternoon to everybody. I have a question about Delaware LLC.

If I set up a company in Delaware, will the company income or the dividends will be subject to federal U.S. tax?
I am tax residence of Bulgaria and the services that will be provided through LLC, will be outside of USA.

I would appreciate some assistance, thank you in advance.

 

[neweraoffshore]

Sole membership LLCs will be taxed through (Like S-Corps). So your regular income tax in Bulgaria will apply. There is only a federal flat tax of 250$/year. So should be 10% in your case, which is a pretty good and fair deal.

 

[Sols]

Sole membership LLCs will be taxed through (Like S-Corps). So your regular income tax in Bulgaria will apply.

That's only if Bulgaria recognises the LLC as a pass-through entity (or doesn't bother to look into it). UK and Canada for example treat LLCs as taxable companies. It's probably untested in most jurisdictions, and interpretation may vary depending on how the LLC is effectively controlled and managed.

Odds are this is uncharted territory, where the US aspect is clear (no tax would apply under normal circumstances) but what happens in Bulgaria is uncertain.

 

[MikeJigsaw]

That's only if Bulgaria recognises the LLC as a pass-through entity (or doesn't bother to look into it). UK and Canada for example treat LLCs as taxable companies. It's probably untested in most jurisdictions, and interpretation may vary depending on how the LLC is effectively controlled and managed.

Odds are this is uncharted territory, where the US aspect is clear (no tax would apply under normal circumstances) but what happens in Bulgaria is uncertain.

In Bulgaria the dividends from foreign companies are taxed with 5%.
But my question was if I must pay a federal tax in any case in U.S.

 

[Golden Fleece]

In Bulgaria the dividends from foreign companies are taxed with 5%.
But my question was if I must pay a federal tax in any case in U.S.

As a general rule, the answer is no.

If you live outside the US and operate your business alone, or you have employees who help you but all of them are located outside the US, then you generally should be able to operate your business without paying US tax.

Non-US Entrepreneur services – US Tax Services

Simply selling products into the US does not subject you to US tax (as long as you've planned ahead and structured things correctly). Then, operating through a limited liability company ("LLC") formed in the US opens up additional opportunities.

ustax.bz

 

[MikeJigsaw]

As a general rule, the answer is no.

Non-US Entrepreneur services – US Tax Services

Simply selling products into the US does not subject you to US tax (as long as you've planned ahead and structured things correctly). Then, operating through a limited liability company ("LLC") formed in the US opens up additional opportunities.

ustax.bz

Thank you very much.