Any experts on taxation of non resident UK LTD/LPP or US LLC?

[NwWork]

Limited Liability Company (LLC) | Internal Revenue Service

Review information about a Limited Liability Company (LLC) and the federal tax classification process.

www.irs.gov

The US LLC is not itself taxable in US.

A US LLC has to meet three criteria, in order to not be subject to US federal income tax

1. Be 100% owned by non-US tax residents (either natural or legal persons)
2. Have no US presence or economic substance
3. The income must not be “effectively connected”

“An LLC is a pass-through or tax-transparent entity. That means the LLC is not being taxed directly. Instead, the tax obligations of the business ‘pass through’ to the owners (members) of the LLC. They then report them on their personal tax returns.

Since the member would be ABC PVT LTD which is a corporation then what happens?

Also saw need a registered agent from state u decide to incorporate in meaning yearly u need to pay so you can get IRS mails, EIN mails, etc

Besides this it seems you can't e-file your tax returns and has to be mailed or faxed which means another recurring cost

So isn't UK like a way better option since u can e-file taxes and u don't need a registered agent on retainer right(Probably only need initially to get like bank docs, etc)?

 

[Sols]

“An LLC is a pass-through or tax-transparent entity. That means the LLC is not being taxed directly. Instead, the tax obligations of the business ‘pass through’ to the owners (members) of the LLC. They then report them on their personal tax returns.

Since the member would be ABC PVT LTD which is a corporation then what happens?

The LLC itself pays no corporate income tax and the profits become income of some sort for ABC. Exactly how that income is counted depends on where ABC is incorporated and/or tax resident. A good accountant/tax adviser could help with optimising that.

So isn't UK like a way better option since u can e-file taxes and u don't need a registered agent on retainer right(Probably only need initially to get like bank docs, etc)?

If you want the absolutely cheapest option, then it's UK. US is second cheapest.

 

[Marzio]

If you're lucky, you can declare the income from your US LLC as whatever type of income is subject to the lowest tax (i.e. income, foreign salary, dividends, capital gains, or something else).

Or simply defer taxation indefinitely by keeping the money in your US LLC bank account.

 

[Sols]

Or simply defer taxation indefinitely by keeping the money in your US LLC bank account.

Because an LLC is a pass-through entity, it cannot defer distribution of profits (or at least not the taxation of the profits, after QBI). The income is taxable to the members immediately. You can only defer if you opt for the LLC to be taxed like a C corp.

The same would apply if the LLC is considered pass-through wherever ABC is incorporated. Profits from the LLC would in that case become taxable income for ABC right away.

However, if ABC is incorporated in a place which doesn't recognize LLC as pass-through, you might be able to claim your LLC is pass-through in the US but treat is as opaque elsewhere when it's convenient. That might cause some issues if the whole structure ever gets dragged through a tax audit or court, but that's an unlikely scenario.

 

[Marzio]

Because an LLC is a pass-through entity, it cannot defer distribution of profits (or at least not the taxation of the profits, after QBI). The income is taxable to the members immediately.

In some countries (many actually) US LLC is treated like a company so you’ll pay taxes only on profit distribution allowing you to actually defer taxation indefinitely.

 

[Sols]

In some countries (many actually) US LLC is treated like a company so you’ll pay taxes only on profit distribution allowing you to actually defer taxation indefinitely.

Yes, I mentioned that as well.

However, if ABC is incorporated in a place which doesn't recognize LLC as pass-through, you might be able to claim your LLC is pass-through in the US but treat is as opaque elsewhere when it's convenient.

 

[Marzio]

Yes, I mentioned that as well.

Ok so he could actually defer taxation because lets face it, i don’t see Bangladesh enforcing PE rules ever.

 

[Sols]

Ok so he could actually defer taxation because lets face it, i don’t see Bangladesh enforcing PE rules ever.

Yes, I mentioned that as well.

That might cause some issues if the whole structure ever gets dragged through a tax audit or court, but that's an unlikely scenario.

 

[NwWork]

Is it correct that in UK LTD u can e-file taxes and u don't need a registered agent on retainer right(Probably only need initially to get like bank docs, etc)?

Regarding tax defferal i geuss UK LTD company would pay tax yearly for liable income and dividend tax u can control and differ to claim at an appropriate time.

Does UK LTD owned by non resident PVT LTD come with a tax exemption clause/schedule on foreign income it earns?

 

[Sols]

Is it correct that in UK LTD u can e-file taxes and u don't need a registered agent on retainer right(Probably only need initially to get like bank docs, etc)?

Correct, you can do it all yourself. You need a UK address, but that's it.

Regarding tax defferal i geuss UK LTD company would pay tax yearly for liable income and dividend tax u can control and differ to claim at an appropriate time.

There are some conditions under which a UK LTD can defer taxes. A good accountant can help you optimise deductions and deferrals.

Does UK LTD owned by non resident PVT LTD come with a tax exemption clause/schedule on foreign income it earns?

As we've discussed, there is no such thing. UK LTD is taxed at corporate income tax on its worldwide income. There is no difference between 10 GBP earned from a customer in Manchester and 10 GBP earned from a customer in Mombasa. It's all taxed the same.

The only exception is if the company pays tax somewhere else for the non-UK customer. So if your UK company already pays tax in Bangladesh for non-UK customers, you can use those taxes paid as tax credit and reduce or remove your UK tax burden.

 

[JustAnotherNomad]

You can obtain non-residence only through a tax treaty, and then only if the other country where the company is tax resident has same or higher tax rate.

Source?

 

[humus]

Because an LLC is a pass-through entity, it cannot defer distribution of profits (or at least not the taxation of the profits, after QBI). The income is taxable to the members immediately. You can only defer if you opt for the LLC to be taxed like a C corp.

The same would apply if the LLC is considered pass-through wherever ABC is incorporated. Profits from the LLC would in that case become taxable income for ABC right away.

However, if ABC is incorporated in a place which doesn't recognize LLC as pass-through, you might be able to claim your LLC is pass-through in the US but treat is as opaque elsewhere when it's convenient. That might cause some issues if the whole structure ever gets dragged through a tax audit or court, but that's an unlikely scenario.

Is US LLC considered transparent or opaque in India?
I was planning to form a US LLC with 2 shareholders both in India. Do I need to file an audit report for the LLC in India? And if yes, does the auditor need to be from India?
Because as I understand, the income of the LLC needs to be shown in individual tax returns for both the shareholders. So suppose if the LLC makes 200k euros per year, each shareholder will declare 100k on their tax return. Is audit required for each shareholder separately, or a single audit for the company as a whole?
or is the US LLC not require to have an audit in India?

 

[Sols]

Is US LLC considered transparent or opaque in India?
I was planning to form a US LLC with 2 shareholders both in India. Do I need to file an audit report for the LLC in India? And if yes, does the auditor need to be from India?
Because as I understand, the income of the LLC needs to be shown in individual tax returns for both the shareholders. So suppose if the LLC makes 200k euros per year, each shareholder will declare 100k on their tax return. Is audit required for each shareholder separately, or a single audit for the company as a whole?
or is the US LLC not require to have an audit in India?

Only someone with knowledge about Indian law can answer this accurately. I would recommend speaking with an Indian tax lawyer to get clarity on these questions, as they are very specific to India. Hopefully, there is guidance issued already by the tax authority or courts.

 

[JackAlabama]

Is US LLC considered transparent or opaque in India?
I was planning to form a US LLC with 2 shareholders both in India. Do I need to file an audit report for the LLC in India? And if yes, does the auditor need to be from India?
Because as I understand, the income of the LLC needs to be shown in individual tax returns for both the shareholders. So suppose if the LLC makes 200k euros per year, each shareholder will declare 100k on their tax return. Is audit required for each shareholder separately, or a single audit for the company as a whole?
or is the US LLC not require to have an audit in India?

it has to be single member llc. Otherwise it does not work the same way in usa.