Amazon US for wholesale with LLC

[Dz48]

Hi everyone,


I’d like to get your thoughts on how to optimize a tax situation.

I’m planning to start a wholesale business in the US through Amazon. My suppliers and customers will all be based in the US, so I need to form a US LLC, as it’s very difficult to open accounts with US distributors using a foreign company.

In this case, my income will be considered Effectively Connected Income (ECI).
My current tax residence is in a country that does not have a tax treaty with the US, so I would have to pay income taxes in the US.
Do you have any advice or solutions to optimize this setup?
My country of origin does have a tax treaty with the US, and I still have an address there. Is it risky to use that address?

Thanks,

 

[daniels27]

ETBUS or not is a difficult story. In many cases, there are people claiming ETBUS but it actually is not. In case you only buy and sell, it most likely is not if you handle your business properly, relying on third party shippers and warehouses only. You can seach the forum, I have many posts on that matter. But in the end, it is your call.

If you believe that you are ETBUS and have done your research, a treaty most likely won't help you to escape corporate taxation in the US either as you will have more than just a warehouse in most cases. You will then be left with reduction of withholding tax on dividends.

In any case, you can check the treaties that the US has with various countries. There are quite some. The main focus will be on the limitation on benefits. Check them and try to find a way, there are really big differences. You most likely want to resort to Ireland and Georgia as they will most likely offer the best options. All CIS countries have no limitations, you can get the dividends tax-free in any case (or claim the US LLC to be a single-member entity of the Georgian one to further optimise). Note that you will have to pay corporate taxes in Georgia once you remit money into Georgia. You can then hire you in Georgia as self-emplyed and benefit from some low-tax benefits below a certain threshold. Or you can keep all the money in the US and invest it elsewhere without taking it back to Georgia. Ireland, you need to check but it is a favourable jurisdiction in the EU for low withholding taxes with the US.

 

[Cloudbanck]

Hi everyone,


I’d like to get your thoughts on how to optimize a tax situation.

I’m planning to start a wholesale business in the US through Amazon. My suppliers and customers will all be based in the US, so I need to form a US LLC, as it’s very difficult to open accounts with US distributors using a foreign company.

In this case, my income will be considered Effectively Connected Income (ECI).
My current tax residence is in a country that does not have a tax treaty with the US, so I would have to pay income taxes in the US.
Do you have any advice or solutions to optimize this setup?
My country of origin does have a tax treaty with the US, and I still have an address there. Is it risky to use that address?

If you just deal with Amazon which clearly isnt a dependent agent of you, and you have no employees, offices, warehouses or other stuff in the US, you are probably not ETBUS and then it doesn't matter that you have Effectively Connected Income. There will be no tax to the US, tax treaties are irrelevant, but the country where you reside matters a lot.

Startfleet guide is pretty good on this: https://startfleet.io/guide/us-llc-for-non-residents-guide

And there is case law from the 1940s from a radio station in Mexico based close to the border with the US. 95% of the ad revenue of the radio station was from the US, and they had a US LLC and a post box in the US. At the end the radio station was deemed to not be ETBUS and not liable to US tax.