Hi thanks for your reply,
I’m Interested to know how that would work, can you elaborate a little?
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Best country for with territorial tax only and a double taxation agreement with the IRS - for Royalties Accrued in USA.
- Thread starter SmartestSmarty
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I’m Interested to know how that would work, can you elaborate a little?
You're smart but US closed that loophole by adding this paragraph under Article 4 (Residence) of the treaty: "This term,however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or of profits attributable to a permanent establishment in that State."
Basically what it says is that if you are UK non-dom or IE non-dom then US will not consider you tax resident and you wouldn't be able to claim treaty benefits.
Hi, quick question.. Is Portugal also the best option for an invertor/trader who earns capital gains and dividends in the US when it comes to paying the least amount of taxes and the lowest WHT rate from the US? I thought the US WHT rate on dividends if you live in Portugal is 15%
I'm looking for a country to move to where they don't tax me on foreign earned capital gains from financial investments and where the WTH rate from US is the lowest. I know Thailand doesn't tax you on foreign earned money, but the WHT rate from the US is 15%. Mexico has a 10% WHT from the US, but if I live in Mexico I've to pay taxes there, so any suggestions that you can recommend?
Thanks in advance.
Indeed, the rate for US WHT on dividends in PT is 15% (US WHT on royalties instead is 10%)
Mexico could be a good option because according to this thread their taxation of expats is relaxed.
If i were in you i would open a different thread asking specifically about which residency programs are offered by Mexico.
Other solutions beside Mexico with 10% US WHT on dividends are Bulgaria and Romania.
Thank you, will there be any accounting to provide on behalf of the LLC in this case? I ask because I am wondering how the funds should be drawn from the LLC while being in Georgia (general income or dividend), or just nothing at all. I'm just trying to get a clear understanding of how this structure operates?
I have a few consultations coming up, I will post the results.
I am wondering, if the profit can simply be paid as a one off salary payment per year, or even perhaps (a royalty) again. Both of these will be untaxed in Georgia for sure.
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How is Portugal better than Thailand though? Both have 15% WHT from the US, but Thailand doesn't tax capital gains at all if you don't remit the money to Thailand the same year the capital gains arose.
I assume, however --and maybe incorrectly--, that under Portugal's NHR regime, one would also get tax-free capital gains?
Beside the fact that in this thread we are talking about US WHT on royalties and you are talking about US WHT on dividends, Thailand apparently could be seen an even better option than Portugal from royalties perspective because Thailand has a 5% US WHT on royalties while Portugal has a 10% WHT on royalties.
So why Thailand isn't a good option?
For the same reason UK non-dom and IE non-dom aren't a good option.
If you take a look at the US-TH treaty under article 4 you'll find this phrase "The term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State."
This means that if you are taxed in Thailand only on local source income (and this happens exactly if the income is not remitted in Thailand in the same year when it is earned), US will not considers you a Thai tax resident so no treaty benefits.
I was answering and quoting a post that asked about US WHT on dividends, sorry about the confusion generated.
By the way, I don't think that sentence of article 4 of the US-TH treaty removes the benefits, because a Thai tax resident is also liable to tax on foreign income sources; the existence of the remittance rule doesn't make the Thai resident completely free of foreign income tax. Furthermore, such Thai tax resident can also choose to pay foreign income tax in Thailand through remitting a fraction of that dividend income.
That line applies to legal Thai residents who spend less than 6 months in Thailand and are only liable to local source tax, independently of any remittances they make.
So lets say you earn $100K dividends / royalties and you only remit 10K in Thailand.
Does this make you tax resident from US perspective?
The first paragraph of article 4 says "For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, citizenship,place of management, place of incorporation, or any other criterion of a similar nature"
In any case, you don't have to convince me.
I know exactly what could happen.
"According to the Supreme Court, the fact that a U.K. resident non-domiciled is subject to U.K. tax only if he derives income from sources within the U.K., while no U.K. tax is collected on non-U.K. source income, unless and until that income is remitted to the taxpayer in the U.K., results in the taxpayer’s failing to me the Treaty’s tax residence test of article 4, par. 1). As a consequence, according to the Supreme Court, the Taxpayer could not be treated as resident of the U.K. under the definition of article 4, paragraph 1) of the Treaty, and the tie-breaker provision of paragraph 2) of the Treaty did not apply."
Don't even start the discussion "yes but here we are talking about UK, Thailand is more relaxed and so on" because the discussion is not about Thailand but US.
Do you know why they drafted their treaties with that paragraph under article 4 and limitation on benefits?
Because they don't want you to f*ck with them.
If a person is actually living in Thailand, spending enough time every year and has an abode there, that person is a tax resident of Thailand. As such, the double tax treaty will consider them a Thai tax resident.
Any exemptions or lower rates that they can achieve due to the inner-workings of the tax code of Thailand do not change that fact.
All of this assuming, of course, that it is a reality that they live there, and that they are not simply claiming to live there for the tax benefits.
Yes, under Thai domestic laws.
But as we know double tax treaties overrules domestic laws so if you want to be considered a Thai tax resident by uncle Sam to be able to claim treaty benefits you have to remit everything in Thailand.
I suggest you to carefully read the Supreme Court's ruling because it says exactly that.
I mean you can be more clear than this: "until that income is remitted to the taxpayer in the U.K., results in the taxpayer’s failing to me the Treaty’s tax residence test of article 4, par. 1)"
As i said, i don't want to convince you.
If you are using this setup be aware that you aren't safe.
Same thing goes for the lump sum regime in Switzerland! You can't claim treaty benefits thus you will have no choice but pay 30% to Uncle Sam! (unless you opt for the modified lump sum taxation)
Several European countries are doing this too
Where would you suggest is best to set up the LLC for these purposes? In which state?
It doesn't really matter.
Wyoming or Delaware for non US citizen and non-resident?
Do you advise Wyoming or Delaware company? I will also have Mercury account. Which is cheaper to form and has lower yearly renewal fee? And are there any tax concerns? Lastly, I saw that Alabama is very cheap but I guess there is tax and not similar to Wyoming or Delaware? Do you advise me LLC type?
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So this is why the Georgian-US (USSR) tax treaty is so powerful as it doesn't have this.
From what I can tell, the only definition of "resident" in that tax treat is:
"Resident of the Soviet Union" means:
(a) a legal entity or any other organization treated in the USSR as a legal entity for tax
purposes which is created under the laws of the Soviet Union or any Union Republic and
(b) an individual resident in the Soviet Union for purposes of its tax.
But from who's perspective is this or does it matter? Because from Georgia's perspective, you can be a tax resident there without any days spent in the country using the HNWI program.
Furthermore, there is no mention of the "tie-breaker" rule in the treaty either. So doesn't that mean that as long as you have tax residency in Georgia, for the purpose of this treaty, it shouldn't matter if you potentially have tax residency in a 3rd country (not Georgia and not the US) too?
I mean it could matter if you were tax liable in that 3rd country but what I'm trying to ask, does that matter from the US perspective and being able to use the Georgian tax treaty?
As long as you are Georgian tax resident you can do whatever you want as there are no limitation of benefits nor article 4 tricks.
I own two Amazon KDP accounts as well; first of all, I would say a few things:
1) Don't believe that since the "work is already done," you won't do any other job in the future, especially if you want to live off KDP, the market is becoming saturated, and the AI tools are not helping at all, also, all the new platforms and marketplace boost new listing and content, so, if you don't create new books, your income will sharply decline after some time, so, don't believe that you are set and done, you will need to work if you want to maintain your income
2) When you talk about Royalties, people believe you are treated the same as an artist, this is not the case with amazon KDP in most countries; in Italy, for example, it is treated and taxed as an e-commerce rather than Royalties for IP, same in France and Spain, so, yes theoretically you receive royalties but then the interpretation change from country to country
3) Since you need to run ads and since you are effectively working on publishing and creating the books, the place of effective management counts, so if you choose Portugal, you will need a nominee director to be compliant with the law. otherwise, you will need to pay taxes on a Portugal level
I consulted with quite a few people and one lawyer told me (freshportugal) that I can deduct expenses from a US LLC, so the total tax rate would be lower than the 10% since you'll get a credit from the US.... I am not sure that this is true since the withholding at the US Level, so I call it BS, so far I didn't find a better option that Portugal, even because I don't want to live in Georgia, another option would be cyprus with their 12.5% total tax rate... and I am now looking at Thailand, Philippines, Malaysia or Mexico, Domincan Republic or Honduras /caraiibbean to see what can I do to lower my taxes since I visited Portugal and It doesn't make me crazy in love
1) Don't believe that since the "work is already done," you won't do any other job in the future, especially if you want to live off KDP, the market is becoming saturated, and the AI tools are not helping at all, also, all the new platforms and marketplace boost new listing and content, so, if you don't create new books, your income will sharply decline after some time, so, don't believe that you are set and done, you will need to work if you want to maintain your income
2) When you talk about Royalties, people believe you are treated the same as an artist, this is not the case with amazon KDP in most countries; in Italy, for example, it is treated and taxed as an e-commerce rather than Royalties for IP, same in France and Spain, so, yes theoretically you receive royalties but then the interpretation change from country to country
3) Since you need to run ads and since you are effectively working on publishing and creating the books, the place of effective management counts, so if you choose Portugal, you will need a nominee director to be compliant with the law. otherwise, you will need to pay taxes on a Portugal level
I consulted with quite a few people and one lawyer told me (freshportugal) that I can deduct expenses from a US LLC, so the total tax rate would be lower than the 10% since you'll get a credit from the US.... I am not sure that this is true since the withholding at the US Level, so I call it BS, so far I didn't find a better option that Portugal, even because I don't want to live in Georgia, another option would be cyprus with their 12.5% total tax rate... and I am now looking at Thailand, Philippines, Malaysia or Mexico, Domincan Republic or Honduras /caraiibbean to see what can I do to lower my taxes since I visited Portugal and It doesn't make me crazy in love
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