Best country for with territorial tax only and a double taxation agreement with the IRS - for Royalties Accrued in USA.

[SmartestSmarty]

183+ or you take the HNWI route which doesn't require any minimum stay BUT one of the new criteria is ownership of assets in Georgia with a value of at least 500k USD. I'm not sure you want to invest 500K in Georgia.



The only option is Georgia.

If you don't like styaing 183+ days or owning $500K asset in Georgia you'll need to form a company on which you'll pay corporate income taxes and personal taxes on dividends distribution.



Romania has 10% US WHT then you'll have to pay corporate income taxes in Romania + personal taxes on dividends distribution.

You'll end up paying 19% if your royalties income is under $500K / year.

A better option both from taxation and lifestyle perspective would be to move to Portugal under NHR where foreign income isn't taxed.

You'll end up paying 10% because there's 10% US WHT.

The real problem is that i don't know how easy would be for you to move to Portugal, if you have a EU passport it's the second best option after Georgia.

In regards to this comment, of a $500k investment not requiring any stay, if I then stay outside of Georgia, would I not then become tax resident by spending more than 183+ days somewhere else, and lose the benefits of tax residency in Georgia?

Not sure how that option works. Please elaborate.

 

[LimitlessPossibilities]

"Another interesting aspect of Georgia is the tax residency base. It is associated with a 183-day residency, but there are still benefits to consider. These 183 days take into account stays for business, health, study or even tourism reasons. In other words, an occasional stay, even if less than 183 days, would still be sufficient to obtain tax residency. However, Georgia is not the best option for nomadic businessmen who, for example, want to be in the country only once a year. In these cases, it would be preferable to live in Panama or, if you are a European citizen, Cyprus and Bulgaria. This is due to the need to visit the country at least 2 or 3 times a year to obtain tax residency. Thus, an occasional stay in Georgia, even for less than 183 days, would still be sufficient for you to obtain tax residency there.

Georgia also offers a High Net Worth Individuals (HNWI) program for wealthy people, which does not impose a minimum time to be a tax resident.

To be accepted into this program, you must:
Either own property worth more than 3 million Georgian lari (at the time of publication of this article, 3.13 lari equaled 1 euro), or having an income of more than 200,000 laris annually in the last three years.

The last option can be relatively easy for entrepreneurs who have been doing business for a while. Also, all you need to enroll in this program is a regular residence permit.

People who wish to stay in the country after one year of residence can simply apply for a residence and work permit up to 40 days before the end of the first year.

Based on experience from multiple sources, this license is not difficult to obtain and is renewed annually, even if your income comes from outside of Georgia. But those aren't your only options, there are many different visas out there."

Source: Como Morar na Geórgia: Um dos Paraísos para Empreendedores na Europa - Settee (Portuguese)

Other countries with tax treaty with US:
United States - Corporate - Withholding taxes (last column, last item for amazon royalties)

 

[Marzio]

I’m considering the Romanian micro company structure. Do you happen to know if dividend tax is disregarded for someone that owns at least 10% of company. Is this correct?

Romania - Individual - Income determination

Detailed description of income determination for individual income tax purposes in Romania

taxsummaries.pwc.com

If you tell Amazon that you are an LLC disregarded entity, they will ask for your ITIN.

There's something wrong in the tax advice on that site.

W-9 is if you are a U.S. citizen or other U.S. person, including a resident alien individual. He's not.

if I then stay outside of Georgia, would I not then become tax resident by spending more than 183+ days somewhere else, and lose the benefits of tax residency in Georgia?

Of course you will become tax resident if you spend 183+ days somewhere else but this is not the only criteria.

 

[kekmaw]

If you tell Amazon that you are an LLC disregarded entity, they will ask for your ITIN.

Actually I'm pretty sure they give you the option to enter a foreign TIN or an EIN.

 

[SmartestSmarty]

Georgia is the only country that satisfy your needs but be aware that territorial taxation in Georgia is ONLY for natural persons, non companies.

The best way to structure this would be to be the single member of a US LLC with tax residency in Georgia.

The only downside is that you have to become Georgian tax resident.

Another question in regards to this, would the LLC not be taxed in Georgia as a corporation rather than myself as a resident? Which would then void the 0% tax on foreign income and subject it to 15%?

 

[Marzio]

To be subject to 15% CIT the company has to actively do some kind of work in Georgia.

You said that the work is already done so i don't see the problem.

 

[SmartestSmarty]

To be subject to 15% CIT the company has to actively do some kind of work in Georgia.

You said that the work is already done so i don't see the problem.

Sounds good! I thought not taxing foreign income was only for individuals in Georgia and companies would be taxed anyway.

Yes income is derived from historic work. If I wish to add to this I believe I should be able to work outside of Georgia half a year if required.

 

[Marzio]

I thought not taxing foreign income was only for individuals

Georgia's territorial taxation is valid for individuals but not for Georgian companies which are taxed on worldwide income.

If you operate your US LLC from within Georgia you'll make it tax resident in Georgia and you'll have to pay 15% CIT.

should be able to work outside of Georgia half a year if required.

If you can demonstrate to Georgian revenue service that while you were in Georgia somebody was managing ads on your behalf, support was outsourced then you'll be good.

 

[SmartestSmarty]

Georgia's territorial taxation is valid for individuals but not for Georgian companies which are taxed on worldwide income.

If you operate your US LLC from within Georgia you'll make it tax resident in Georgia and you'll have to pay 15% CIT.

That's what I thought.

I need the LLC to remove VAT liability from ads and withholding tax from revenue.

Just need a location that will then not tax the royalties after this, however, it appears the beneficial owner's location would determine the withholding tax, so it has to be a location what has a double tax treaty of 0% on royalties with the USA.

It looks like whichever way this is structured, something is lost somewhere. WHT, unreclaimable VAT expenses, or income tax etc...
I guess I just have to determine how much I am willing to let go, and in which form.

 

[Marzio]

I need the LLC to remove VAT liability

I presume you pay VAT only in UK right?

 

[SmartestSmarty]

I presume you pay VAT only in UK right?

At the moment yes I pay VAT on ad spend in the UK (but receive royalties net of VAT), along with corporation tax, income tax etc... (no VAT in the US due to having a UK VAT number and no WHT under the double tax treaty). I think having a US LLC will remove VAT on UK ads as well (provided I live outside the UK).

 

[Marzio]

I think having a US LLC will remove VAT in UK as well.

I'm not a VAT expert but i guess that if you run ads through a US LLC it'll remove your VAT liability UNLESS you'll have to register your US LLC on Amazon.co.uk to be able to run ads in UK.

 

[SmartestSmarty]

I'm not a VAT expert but i guess that if you run ads through a US LLC it'll remove your VAT liability UNLESS you'll have to register your US LLC on Amazon.co.uk to be able to run ads in UK.

I guess I need this: LLC (removes VAT from ad spend in US and Uk) > beneficial owner in country with 0% withholding tax agreement with USA, that country does not levy corporation tax on foreign income, and then a very low income or dividend tax to distribute the funds to myself.

Any suggestions?

If this does not exist all I can do is try find the combination which lowers the tax as much as possible.

If you operate your US LLC from within Georgia you'll make it tax resident in Georgia and you'll have to pay 15% CIT

after this would I then still have to pay further tax by distributing it to myself as an individual?

 

[Marzio]

Any suggestions?

Yes split your question in 2 parts because VAT is a different topic than US WHT

LLC (removes VAT from ad spend in US and Uk)

This is one problem and the problem is only for UK VAT.

Right now, does your UK LTD pays 20% on ad spent?

beneficial owner in country with 0% withholding tax agreement with USA, that country does not levy corporation tax on foreign income, and then a very low income or dividend tax to distribute the funds to myself.

This is another problem and the solution is Georgia.

 

[SmartestSmarty]

Yes split your question in 2 parts because VAT is a different topic than US WHT

I require a holistic approach that incorporates all elements.

This is one problem and the problem is only for UK VAT.

If I move to Georgia without a company, will I have to pay VAT on ad spend in the US and UK?

Yes currently, UK ad spend does add 20% VAT.

This is another problem and the solution is Georgia.

Only if I do not use an LLC, otherwise it is taxed at 15%.

So, Georgia solves things for sure, but only if it also resolves VAT without the use of an LLC.

Do you know if that is possible?

 

[Marzio]

I require a holistic approach that incorporates all elements.

No, you are mixing stuff that shouldn't be mixed together when trying to solve complex problems.

So, Georgia solves things for sure, but only if it also resolves VAT without the use of an LLC.

This is the result of mixing up stuff together: confusion.

Take out VAT out of the equation.

Only if I do not use an LLC, otherwise it is taxed at 15%.

US LLC is taxed in Georgia ONLY if you work while in Georgia but since IP is already created why in the world US LLC would be considered tax resident in Georgia if you don't do any work?

Georgia solves things for sure, but only if it also resolves VAT without the use of an LLC.

You see removing VAT as a part of the problem but it's something that can't be avoided.

You are already avoiding US WHT, corporate tax and personal income tax.

Are you really ignoring a 0% tax solution because you are paying UK VAT?

You have to live with it.

You can't avoid UK VAT on ads since advertising is from the UK.

It’s only non UK services that are exempt

 

[SmartestSmarty]

US LLC is taxed in Georgia ONLY if you work while in Georgia but since IP is already created why in the world US LLC would be considered tax resident in Georgia if you don't do any work?

Someone else has said on here that it will be taxed at 15%, if it is not going to be taxed in Georgia, where will it be taxed then?

Is not the LLC liable to be taxed in Georgia due to the owner being located in Georgia, and this is the purpose of a disregarded entity?

Are you really ignoring a 0% tax solution because you are paying UK VAT?

If that is the sacrifice to make, then perhaps not, but if I cannot use the LLC, and I simply receive the income as an individual in Georgia there will be VAT in the USA as well.
Essentially, if the LLC is not taxed in Georgia it will be fine, if it is, then this is NOT the solution.

 

[Marzio]

Someone else has said on here that it will be taxed at 15%

Great, so ask him why he said that will be taxed at 15%

if it is not going to be taxed in Georgia, where will it be taxed then?

Nowhere and that's the point.

A foreign owned US LLC is not taxed in US, all the income will be taxed at the member level where he is tax resident and if the member is tax resident in a territorial taxation country all foreign income will be tax free IF the member will not actively work from the LLC while within the country because foreign income will become local sourced income.

I simply receive the income as an individual in Georgia there will be VAT in the USA as well.

VAT doesn't exist in USA, what are you talking about?

From my point of view you in this thread already have all the information you need.

 

[SmartestSmarty]

Great, so ask him why he said that will be taxed at 15%

No need to ask if he already explained it.

VAT doesn't exist in USA, what are you talking about?

Before I had a UK Vat number, Amazon marketing in the US were adding VAT to my advertising spend.

 

[kekmaw]

Wouldn't Ireland and the UK work for this too under their Non-Dom programs? (Provided you're not a citizen)

Not asking for OP specifically but just wondering if this setup would work under the UK/Irish non-dom.