Advice with international tax structuring (UAE / USA / Poland)

[windsurfer]

Hi everyone, just posting here looking to hopefully gather some advice on my situation. I’ll try my best to explain it as easy as possible.

Myself and my partner, own a USA LLC, it’s a e-commerce business. We also own a UAE mainland business and have been UAE residents for around 3 years or so. This year we have moved to Poland and will be there for more than the 183 days, therefore triggering tax residency there. (We have to be here for family so moving isn’t really an option).

Previously, due to the USA LLC pass-through tax, we have been fine as we have been living in Dubai. Obviously, now being in Poland that will be passed as Polish income (or so I believe).

We are happy to pay personal tax here as we only pay ourselves enough to live essentially. I will add we pay ourselves from our UAE company. That UAE does consulting for our USA LLC. It would be great if there was an option to not have to pay that either, but we are happy to do so.

Is there a way to navigate the USA LLC pass-through tax as that would be quite substantial this year? I did some research and the easiest way could be to pay the UAE business more so we will eventually have to pay tax, but not as much. Alternatively, I read that the UAE company could become the owner of the USA LLC as profits would be passed to the UAE business, therefore mitigating the USA pass through tax.

We are most bothered about USA LLC pass-through tax not so much personal.

Is it an option to literally not disclose the USA LLC to Poland as at the moment they have no idea that we have it. We only pay ourselves from the UAE business into our UAE personal bank accounts.

It would be great if anyone has any advice on this situation, honestly anything is welcome I’m all ears.

If there is anything else you might need to know about the situation I’ll do my best to answer!

 

[daniels27]

Hi and welcome. There are a couple of problems with your setup.

First of all, you need to be aware that by working as director for any company while you are in Poland, you risk that the company builds a permanent establishment or becomes essentially a Polish company as the company has its place of effective management in Poland. Hence, it does not matter much what company you use, you will always have the same problems. Essentially, you can just incorporate in Poland and pay tax on your profits there.

There are some ways to migitate this, but there are caveats as well.

You could in theory incorporate a Hong Kong / Singapore company or use your UAE one. You will then need to hire directors in a jurisditction where this does not trigger any tax implications (or in the case of UAE, you just pay full profit taxes there). From there on, you can always add a US LLC for banking etc. should this make any difference to you. You will then have to become self-employed or hire yourself in Poland as engineer or whatever and then pay yourself a salary on the amount you need.

But then, you still have the CFC rules problem.

As you can see, Poland is among the very strict ones and even if you are not the director of the company, they will still want money as you are trying to evade. Hence, you also cannot be the owner of the company. Maybe, your third friend is staying in UAE and can then own the company while you just get paid a low salary?

And then? What do you do with the profits amassed in UAE? You cannot take them back to Poland either. And even if you could, you would have to pay taxes on the distributed divdends.

Long story short, all others are paying taxes, so can you.

 

[windsurfer]

Hi and welcome. There are a couple of problems with your setup.

First of all, you need to be aware that by working as director for any company while you are in Poland, you risk that the company builds a permanent establishment or becomes essentially a Polish company as the company has its place of effective management in Poland. Hence, it does not matter much what company you use, you will always have the same problems. Essentially, you can just incorporate in Poland and pay tax on your profits there.

There are some ways to migitate this, but there are caveats as well.

You could in theory incorporate a Hong Kong / Singapore company or use your UAE one. You will then need to hire directors in a jurisditction where this does not trigger any tax implications (or in the case of UAE, you just pay full profit taxes there). From there on, you can always add a US LLC for banking etc. should this make any difference to you. You will then have to become self-employed or hire yourself in Poland as engineer or whatever and then pay yourself a salary on the amount you need.

But then, you still have the CFC rules problem.
View attachment 9212
As you can see, Poland is among the very strict ones and even if you are not the director of the company, they will still want money as you are trying to evade. Hence, you also cannot be the owner of the company. Maybe, your third friend is staying in UAE and can then own the company while you just get paid a low salary?

And then? What do you do with the profits amassed in UAE? You cannot take them back to Poland either. And even if you could, you would have to pay taxes on the distributed divdends.

Long story short, all others are paying taxes, so can you.

I'm going to digest all of this and then come back to you with some questions if you don't mind lol, this is all new too me!