Best offshore jurisdiction for collecting AdSense income?

[OffshorePhantom]

There are options in Bharain. I don't know if Kuwait, Oman and Qatar have options.

The Channel Islands and The Isle of Man have no corporate tax, no capital gains, but they do have income tax and health + pension contributions. I don't know the situation on how much you could take out of your company in dividends.

Lichtenstein looked interesting. Don't know the situation on Monaco.

Vanuatnu is no-tax, but it's not a good jurisdiction. I believe they are cut off from the USD.

I am not an expert on these topics, but on average UAE banks have 18% of assets on hand, compared to 7% in The UK and 11% in The US.

https://www.centralbank.ae/sites/default/files/2020-03/UAE%20Banking%20Indicators%20%28All%20Banks%20-%20English%29%20-February%202020.pdf

United Arab Emirates Capital Adequacy Ratio, 2010 – 2024 | CEIC Data

United Arab Emirates Capital Adequacy Ratio was measured at 17.9 % in Dec 2023, compared with the previous update of 18.5 % in Sep 2023.

www.ceicdata.com

FAB, is my favoutie bank, and has 58% liquid assets to deposits.

Largest Banks

www.theasianbanker.com

It's also become more crypto friendly.

There doesn't seem to be much of an alternative.

Thank you!

I am not very much oriented to Islamic jurisdictions since as a western I see them very far from my culture and thus I would not like to take up residence there.
I know for example in UAE you can come back 1 day every 6 months but if this rule changes in the future it may be an issue since I do not see myself spending time in Dubai now or in the future.

The reputation of the jurisdiction is not an issue (for example for Vanuatu) since Google or the other ad networks do not care where to send the payment.
The problem is when it comes to banking there since Google would need a bank located in Vanuatu, for example.

The Channel Islands may be interesting but I guess to completely avoid taxes I have to reside in another country.

I can take out 80-90% of the company revenue since we have only very little expenses to run the business that's why it is very important for our target country to have 0 corporate tax.

At the same time, I want to obtain a residency permit in a country, where in the future I may spend a few months living there but that does not require staying 180 days per year as an example.
For instance, I was looking at something like the Bahamas but this was just an idea.

The key points are a country with 0 corporate tax + local baking (for Google) and another country (or the same) with a more western-like lifestyle with a warm climate.

UAE is the perfect option apart from the fact that I do not like taking residency there.

 

[4br]

I am not very much oriented to Islamic jurisdictions since as a western I see them very far from my culture and thus I would not like to take up residence there.

That is what I thought. But I have been surprised at the lack of any real presence of Islam. That is at least if you stay on the main roads and most of Dubai, Abu Dhabi. If you go into Sharjah and Ajman, you will see more of people I would describe as Islamic. People who have been living there for ten years have not been outside the Dubai conurbation.

At least in my experience Muslims in Dubai are more liberal than me, but that is not saying much . Girls in hijabs smoking shishas, Arabs done up like some plush beatnik, fat slobs with their trophy wives, prostitute calling cards all over the place in certain areas, likely-prostitutes strutting about in skimpy clothing all come to mind before Allah-u-abah. Have a look at the next ruler of Dubai's Instagram. I forget his name.

Marina seems to be the most liberal/Western place of all, and most European, but mostly Russian, Ukranian.

I know for example in UAE you can come back 1 day every 6 months but if this rule changes in the future it may be an issue since I do not see myself spending time in Dubai now or in the future.

It's possible, but if it happens it will come from outside the country, so you probably won't be able to expect much better elsewhere.

The reputation of the jurisdiction is not an issue (for example for Vanuatu) since Google or the other ad networks do not care where to send the payment.

That's what I thought until my USD wires began bouncing and two merchants cut me off. With what The IMF, OECD, WEF, UN etc. are up to I am not taking chances on backwaters again.


Maybe a consultant could put something together that is between countries. This company has been recommended on the forum - Jurisdictions - The Sovereign Group

There was a guy on here who did Isle of Man formations, forget the name.

 

[vlado]

"Nobody" uses UAE offshore companies anymore. They have a very bad reputation. They're the same as a Belize/Seychelles/BVI IBC. They're typical shell companies and getting a bank account will be close to impossible.
I think it might have made sense earlier when freezone companies were $10k and more per year. But nowadays, there are so many affordable freezone options that it doesn't matter.
In that case, I would just go with BVI/Seychelles directly since it's cheaper.

Getting a UAE bank account for a "cheap" UAE freezone company without a proper office and without a local director will still be a challenge. You could get a residency visa for yourself to improve your chances, but then you'd have to enter the UAE at least once every 6 months - and even then there wouldn't be any guarantees. You could try UAE EMIs like Mashreq Neobiz - they would probably be more willing to open a bank account for you than traditional UAE banks. Or simply use an international EMI like Transferwise or Payoneer or Bankera if that's an option.
Otherwise you should work with someone like Fred who can guarantee that you'll be able to open a bank account.

So we can get a bank account for Google adsense in almost any country with Transferwise, Payoneer, or Bankera and use it to receive payments?

 

[Asterion]

@4br what about privacy when using a UAE company? Is your name on some register that anyone with half a brain and an internet connection can find? What appeals me about US LCCs such as New Mexico and Wyoming is the secrecy they offer from the average Joe (and then some more).

@hireblade89 sounds like you are getting close to your solution. Do you actually do work in your business? Are you in it with other people?
Because the UK could be a good place for you. Any foreign income doesn't even need to be declared, AS LONG AS you don't bring it in the UK (i.e. wire it to a UK bank account). The only catch would be CFC regulations. But if your ownership is less than a certain amount and maybe with the fact that you had that business from before, you could be ok.

 

[OffshorePhantom]

@Asterion I am the owner of half the company so I think this will trigger CFC regulations? What you are meaning is having a UAE company and living in the UK as a non-dom? The problem is that I am a major shareholder of the company.

 

[Asterion]

@Asterion I am the owner of half the company so I think this will trigger CFC regulations? What you are meaning is having a UAE company and living in the UK as a non-dom? The problem is that I am a major shareholder of the company.

Yes, that's what I meant. I think being an owner could be ok, it depends on the amount of work that you can demonstrably put into it. The fact that somebody else is also an owner sounds good to me. If you have employees, they could potentially do all the work and you might just be a fat cat owner cashing in. I can't give final advice, but the whole UK Resident-but-Non-Dom might be worth a check.

 

[krowxela]

@hireblade89, did you make any research about UAE company taxation on US income?

All your ad networks like Applovin, Admob, etc. require to fill a US tax form (W8-ben-e or smth). The United Arab Emirates have not sign a double taxation agreement with the United States of America yet. So it looks like you have to pay up to 30% of all revenue generated by US users (in-apps and ad revenue). It will be deducted from your earnings by ad networks.

Does anybody know how to be exempt from this tax for UAE company?

 

[OffshorePhantom]

@hireblade89, did you make any research about UAE company taxation on US income?

All your ad networks like Applovin, Admob, etc. require to fill a US tax form (W8-ben-e or smth). The United Arab Emirates have not sign a double taxation agreement with the United States of America yet. So it looks like you have to pay up to 30% of all revenue generated by US users (in-apps and ad revenue). It will be deducted from your earnings by ad networks.

Does anybody know how to be exempt from this tax for UAE company?

@krowxela I read about this and it can be an issue with networks like AppLovin. Admob is not an issue since in UAE you will be paid by Google Ireland Ltd, not the US entity, I read it in their terms and conditions by setting the billing country as UAE: Google AdSense - Terms and Conditions

The problem still remains with other US-based Ad-Networks (like AppLovin etc), but since the only one which is not flexible was Google for the other I think you can create a foreign company with UAE shareholder & director in the BVI for example, or other tax-heaven jurisdiction that has a tax treaty with the US and billing the Ad-network from it?

Is this a feasible solution?

 

[krowxela]

@krowxela I read about this and it can be an issue with networks like AppLovin. Admob is not an issue since in UAE you will be paid by Google Ireland Ltd, not the US entity, I read it in their terms and conditions by setting the billing country as UAE: Google AdSense - Terms and Conditions

The problem still remains with other US-based Ad-Networks (like AppLovin etc), but since the only one which is not flexible was Google for the other I think you can create a foreign company with UAE shareholder & director in the BVI for example, or other tax-heaven jurisdiction that has a tax treaty with the US and billing the Ad-network from it?

Is this a feasible solution?

Not sure about Admob. They are collecting your US tax info. Seems like they will deduct it from your US income. It's better to ask someone with real experience of such setup.

Company in the BVI may be a solution for other ad networks. Even though I don't know how difficult it will be to open a bank account for such setup - BVI company with nomenee director and UAE company, as beneficial owner.
The other issue is automatic exchange of information for tax purposes (oecd?). if you have a residency in UAE, then UAE banks will not send the info to your country. Have no idea how it will change if you add the BVI company into the formula.

Any ideas? We can go to PM. I can't PM you here by some reason.

 

[OffshorePhantom]

Not sure about Admob. They are collecting your US tax info. Seems like they will deduct it from your US income. It's better to ask someone with real experience of such setup.

View attachment 2979

Company in the BVI may be a solution for other ad networks. Even though I don't know how difficult it will be to open a bank account for such setup - BVI company with nomenee director and UAE company, as beneficial owner.
The other issue is automatic exchange of information for tax purposes (oecd?). if you have a residency in UAE, then UAE banks will not send the info to your country. Have no idea how it will change if you add the BVI company into the formula.

Any ideas? We can go to PM. I can't PM you here by some reason.

Yeah there are asking for tax information but I do not think that it is the Google LLC US entity that will pay you, but I really do not know if they will apply the 30% cut on US revenue even if they pay you with their Ireland subsidiary.

I can't PM you either. I left you my contact on your profile to further discussion.

 

[ElBotellon]

Maybe to help some of you out regarding the US Withholding taxes...

I actually setup in the UAE with Fred (I can recommend him) one month before they announced the withholding tax on US revenue. 50% of my revenue is coming from the US, so staying in the UAE was no option for me...

It makes no sense setting up a UK Ltd or LLP or Cyprus company to 'avoid' withholding taxes.. Pretty much all tax treaties the US has signed have LOB (Limitation of benefit) clauses. Meaning it doesn't matter where the company has been setup it's about where the company and the UBO is resident.

If you have a lot of revenue coming from the US your best options are Georgia and Malta. I decided to move to Malta because there is a tax treaty between Malta and the US allowing for a 15% reduction and the other 15% can be partially set off against the corporate tax of 5% in Malta.

what about Georgia? they have 0% WHT on royalties and their DTA is soviet-union USA tax treaty (no LOB)

You may have a 1% freelance setup in georgia and get the royalties wht free at 1% or an international company at 5%. In theory also a virtual private zone but that seems to be difficult nowadays due to an aggressive position taken form their revenue service on it.

 

[Mr Gus]

what about Georgia? they have 0% WHT on royalties and their DTA is soviet-union USA tax treaty (no LOB)

You may have a 1% freelance setup in georgia and get the royalties wht free at 1% or an international company at 5%. In theory also a virtual private zone but that seems to be difficult nowadays due to an aggressive position taken form their revenue service on it.

If there is no LOB that sounds like a very good option. However I can't imagine the US has not put something into place to counter this.

I am not really into the tax rates in Georgia? Is there somewhere I can find information about this?

 

[OffshorePhantom]

Hi guys,
I read this article: Non-US Entrepreneurs: You Can Sell Products into the US without Paying US Tax – US Tax Services
Apparently, you could operate through a US LLC being a resident of UAE for example and you should not own any taxes to the US even if you are being paid by Google US LLC and other US companies. Is this something that might work?

 

[OffshorePhantom]

Hello, I studied the US LLC setup with UAE residency but Adsense will apply the withholding tax, unfortunately. When you complete the tax form on the AdSense dashboard you have to enter the LLC as a disregarded entity and then they ask your residence when you input UAE they said there is no tax treaty with the US and apply the 30% tax.
If you input your UAE company created as a UAE resident it is the same, in the form it shows that the US does not have a tax treaty with UAE so Google applies the 30% tax.

Is there any 0 tax solution for Adsense at the moment? The only way we can achieve that I think is through a country that has 0 % tax but also a treaty with the US, don't know if it exists.
Otherwise, there is the Malta solution with NHR in Portugal for example but it is not a 0 % tax solution.

Even opening a UAE company as a UAE resident would trigger the 30% tax.

 

[Asterion]

Thanks @Fulton Abraham Sanchez
The problem with SMLLC is the interpretation of ECI. The IRS will be always free to come back to you and argue that your income is not ECI.... and I don't like interpretation. I prefer jurisdictions where tax rules for foreign income are "clear".

My actual case that involves this uncertainty is this:
- I have mobile apps on Google Play Store and App Store and I offer "In-App-Purchases"
- This IAP are collected by Google and Apple and they send me a periodical transactions (for instance, monthly).
- When they send transactions they send it from Google US and Apple US entities and the transactions are directed to my company bank account (US). Although anything is digital and I will never go to the US, anything seems to be happening in the US (just digitally, but all between US entities).
- Moreover al lot of In-App-Purchases are made from US users

=> I'm not sure how the IRS will deem this case. If this is considered ECI, the SMLLC is no longer an attractive setup for my offshore. I don't want to take this risk and getting future penalties.

Everything mentioned above does not come only from my personal thoughts. I had a call with 10 different "CPA" from all over the US. There is a lot of confusion on this matter... and I don't like confusion. This is what they say:

Hi diginomad,

I read your post just now, and with horror. I can't believe different people belonging to the same professional body can give such completely different answers. Seriously, they should be put in a cage with no food or water until they have agreed on something. Thank you for sharing your experience with these "professionals".

I'm in your same situation (soon to be launched app-based business whose revenue will necessarily have to come from IAP with Google and Apple, so no way to have it through Stripe or the like).

Did you have any progress?

I was thinking about a SM US LLC that either owns or that extracts revenue from an Estonian limited company, which publishes the app. You'd be dealing with European Google and Apple (based in Ireland or Luxembourg I think) and the only source of income of the US LLC would come from Estonia.
The Estonian limited company would not have any tax on profit until they are paid as dividends. All retained earnings are untaxed. It is to be seen if having another company as the shareholder works in terms of privacy, because that's almost more important than low taxation to me.

 

[Zaki]

I read the whole thread, I found a lot of mistakes, errors, misleading, misinterpreted information.
so I want to clarify some things here

let's break it down one by one:

I get consistent and solid revenue from AdSense (Technically AdMob), and I need to register an offshore company to collect this revenue (Yes, I have no other choice. I need to go offhsore).

Bacause beside Adsense income (I also offer "In-App-Purchases on my apps) and sometimes US users make these purchases.

first of all, we have to distinguish between Admob and AdSense :
Google AdMob is a mobile advertising company(it's an ad-networks like AppLovin..)while Google Adsense is for websites.

@JustAnotherNomad Thanks for your interest in this.
With regards to the withholding tax issue, here is the google official statement: U.S. tax requirements for YouTube earnings - YouTube Help

Basically I will need to pay withholding taxes only for the US audience and I don't actually care... because it's small audience (no need treaties... I will just pay, no problem).

that's why we have to understand the difference between Admob and AdSense because each one has its own tax rules and regulations
AdSense POV: in that case, Google will deduct taxes when NRA creators earn income from viewers in the US.as you said:

Basically I will need to pay withholding taxes only for the US audience and I don't actually care... because it's small audience (no need treaties... I will just pay, no problem).

that's correct only from AdSense perspective (if you are a YouTuber, blogger, content creator and you have a US audience)
But then you said :

My actual case that involves this uncertainty is this:
- I have mobile apps on Google Play Store and App Store and I offer "In-App-Purchases"
- This IAP are collected by Google and Apple and they send me a periodical transactions (for instance, monthly).
- When they send transactions they send it from Google US and Apple US entities and the transactions are directed to my company bank account (US). Although anything is digital and I will never go to the US, anything seems to be happening in the US (just digitally, but all between US entities).
- Moreover al lot of In-App-Purchases are made from US users

so it appears that you are dealing with Admob, AppLovin.. Not Adsence
in that particular situation :
Admob POV: Google consider your earnings as Royalties (which is an FDAP, and FDAP Income is subject to US Taxes) that's why US Company(in that case Google) will deduct up to 30% as withholding tax; Meaning your earnings would be subject to a 30% withholding tax(it can be reduced(tax treaty)).

 

[JohnLocke]

Thank you for clarification @Zaki

 

[Zaki]

The second thing I want to clarify is:

Bacause beside Adsense income (I also offer "In-App-Purchases on my apps) and sometimes US users make these purchases.
This can potentially lead the IRS to argue that I am ETBUS (even if its not physical product). I don't think that is likely to happen, but I don't want to worry anymore about this interpretation.. I prefer to find a jurisdiction with CLEAR rules, even if it involves a little more taxes/expenses that US entity.

who told you that? that's wrong
You are an ECI/ETBUS:
-->if you have at least one dependent agent(Companies or individuals who provide services exclusively to you; I mean dedicated service for you and only you)
-->or if you operate in the US through a “permanent establishment;(an office or other fixed place of business).
-->or you performed services inside of the US.
-->if you lived in the US long enough to pass the “substantial presence test.”
My sources are IRS resources; code sections, Court cases

Effectively Connected Income (ECI) | Internal Revenue Service

Generally, when a foreign person engages in a trade or business in the United States, all income from sources within the United States other than certain investment income, is considered to be Effectively Connected Income (ECI).

www.irs.gov

US SMLLC will be tax free if the income received is not US sourced and it will require tax filing form 5472 only.

as an NRA owns a US SMLLC if the income received is US Sourced it doesn't mean you are subject to US taxes, in most cases even with US Source income you Won’t pay any taxes.
You are subject to US Taxes Only if you have:

1. ETBUS /ECI
2. FDAP

Resources:

Effectively Connected Income (ECI) | Internal Revenue Service

Generally, when a foreign person engages in a trade or business in the United States, all income from sources within the United States other than certain investment income, is considered to be Effectively Connected Income (ECI).

www.irs.gov

Nonresident Aliens - Source of Income | Internal Revenue Service

A nonresident alien (NRA) usually is subject to U.S. income tax only on U.S. source income.

www.irs.gov

Fixed, Determinable, Annual, Periodical (FDAP) Income | Internal Revenue Service

This section defines FDAP income and discusses its tax treatment.

www.irs.gov

Thanks @Fulton Abraham Sanchez
The problem with SMLLC is the interpretation of ECI. The IRS will be always free to come back to you and argue that your income is not ECI.... and I don't like interpretation. I prefer jurisdictions where tax rules for foreign income are "clear".

It's clear to me(I am a foreigner too just like you)I hope it'll be clear for you.

=> I'm not sure how the IRS will deem this case. If this is considered ECI, the SMLLC is no longer an attractive setup for my offshore. I don't want to take this risk and getting future penalties.

Everything mentioned above does not come only from my personal thoughts. I had a call with 10 different "CPA" from all over the US. There is a lot of confusion on this matter... and I don't like confusion. This is what they say:

like I stated before it's not ECI it's FDAP(Royalty)
regarding "CPAs": well well well hahaha, let's break them down one by one

Alan:
"App Store contracts are characterized as a "sales/commission" agreement, as opposed to a "royalty" agreement.
Commissions are basically taxed as services income, therefore if the app development or services did not happen in the US, then the sales in the app store or play store should not be subject to US taxes"

in your particular situation there are two types of revenue
Ad revenue and IAP revenue:
Ad revenue from Admob is considered as royalties.
regarding IAP: IDK (I am eager to know)

Robert:
"From what I understand the earnings from the App Store, Google Play etc. are considered royalties and taxed as such. Meaning they would be subject to a 30% withholding tax.

That's correct Unless there is DTA.

Neil:
"You have a Single-member LLC disregarded entity and you will always work/live outside the US, plus you don't have any office or dependent agent in the US (just a registered address to receive mails).
Moreover you sell digital goods, therefore you should never pay taxes in the US. So, there is absolutely no need to file 1040nr. You don't have any US-source income."

it's not your choice to decide whether to pay taxes or not
in that case google/apple decides to withhold taxes or not.

, there is absolutely no need to file 1040nr.

Correct.

Larry:
"You did right submitting a W-8 form to Google, because although you have a company in the US, that is a disregarded entity and you are a foreign owner living outside the US"

Correct.
US SMLLC owned by a person files W8BEN.
US SMLLC owned by a foreign company files W8BEN-E.

Simon:
"You don't have ECI, but besides 1120 and 5472 It's much better to file also 1040NR as a protective measure, in case the IRS will come to you"

Correct.
P.S: 1040NR you don't have to file it as Neil said.

Loren:
"You have a registered address in the US and you have a US bank account, therefore all your income will be automatically taxed as US source income"

that's silliness.

Cindy:
"You have a US entity with a US bank account. All your income will be seen as US-source income. Plus you might need to file form 8832. For sure all your income will be subject to a 30% taxation"

nonsense

Thomas:
"You have a company in the US so you should submit a W-9 to Google... not a W-8"

no comment

Hello, I have the exact same problem.
I have an app that generates revenue from Google (Admob), Apple and other US-based ad-networks like AppLovin etc. in the magnitude of $2.5M per year.
I wanted to setup a US LLC but what scares me is that IRS may interpret it as US-based income.

read my first and second replies

Google revenue is half our total revenue but it is still a consistent chunk + in order to handle Google Play subscriptions we still require to work with Google since it collects the payments.
I read your recent setup and seems quite good.
If no better solutions are found we may consider it, even if I would prefer a 0 tax-setup which does not include UAE, something like Caymans for example but as of my understanding this would be an issue in finding a local bank then.
US LLC would have been the perfect solution but this US-source income scares me.

Are there any 0-tax good solutions except UAE in the Caribbean for example? Otherwise, I guess UAE is the only way to go.

There are options in Bharain. I don't know if Kuwait, Oman and Qatar have options.

The Channel Islands and The Isle of Man have no corporate tax, no capital gains, but they do have income tax and health + pension contributions. I don't know the situation on how much you could take out of your company in dividends.

Lichtenstein looked interesting. Don't know the situation on Monaco.

Vanuatnu is no-tax, but it's not a good jurisdiction. I believe they are cut off from the USD.

If your goal is to pay less/avoid withholding taxes by setting up a company in UK or Cyprus or even The moon, it doesn't matter at all. because at end of the day google/apple will withhold taxes whether your offshore company is in UAE, UK, USA...
regarding DTA with the US; what matters is UBO residency.
P.S: UAE doesn't have a tax treaty with the US
Thai has one.

If you input your UAE company created as a UAE resident it is the same, in the form it shows that the US does not have a tax treaty with UAE so Google applies the 30% tax.

Exactly.

Is there any 0 tax solution for Adsense at the moment? The only way we can achieve that I think is through a country that has 0 % tax but also a treaty with the US, don't know if it exists.
Otherwise, there is the Malta solution with NHR in Portugal for example but it is not a 0 % tax solution.

I hope you read my first and second replies
Now I'll reveal my solutions to this particular problem(30% withholding tax).

1. Make a claim (a tax treaty benefit) for a reduction on the tax withheld from U.S. income you may receive in your account. United States Income Tax Treaties: United States Income Tax Treaties - A to Z | Internal Revenue Service
2. Use a US C-Corp so that you can give them(the Withholding Agent i.e Google)a W-9; if you operate out of a corporation, you give them a W-9 they won't withhold taxes, and then you can either pay yourself as expensive OR pay all of your profits to your LLC (LLC would be tax-free)
3. As an SMLLC owner, you can elect to treat your LLC as a corporation for tax purposes. If you do, the corporation must file Form 1120 (U.S. Corporation Income Tax Return) to report and pay tax on corporate income. Form 5472 must be included with Form 1120 to report your ownership interest. the goal of that election is to provide a W-9 form.

P.S: these solutions require you to work with US Accountant

 

[OffshorePhantom]

The second thing I want to clarify is:

who told you that? that's wrong
You are an ECI/ETBUS:
-->if you have at least one dependent agent(Companies or individuals who provide services exclusively to you; I mean dedicated service for you and only you)
-->or if you operate in the US through a “permanent establishment;(an office or other fixed place of business).
-->or you performed services inside of the US.
-->if you lived in the US long enough to pass the “substantial presence test.”
My sources are IRS resources; code sections, Court cases

Effectively Connected Income (ECI) | Internal Revenue Service

Generally, when a foreign person engages in a trade or business in the United States, all income from sources within the United States other than certain investment income, is considered to be Effectively Connected Income (ECI).

www.irs.gov

as an NRA owns a US SMLLC if the income received is US Sourced it doesn't mean you are subject to US taxes, in most cases even with US Source income you Won’t pay any taxes.
You are subject to US Taxes Only if you have:

1. ETBUS /ECI
2. FDAP

Resources:

Effectively Connected Income (ECI) | Internal Revenue Service

Generally, when a foreign person engages in a trade or business in the United States, all income from sources within the United States other than certain investment income, is considered to be Effectively Connected Income (ECI).

www.irs.gov

Nonresident Aliens - Source of Income | Internal Revenue Service

A nonresident alien (NRA) usually is subject to U.S. income tax only on U.S. source income.

www.irs.gov

Fixed, Determinable, Annual, Periodical (FDAP) Income | Internal Revenue Service

This section defines FDAP income and discusses its tax treatment.

www.irs.gov

It's clear to me(I am a foreigner too just like you)I hope it'll be clear for you.

like I stated before it's not ECI it's FDAP(Royalty)
regarding "CPAs": well well well hahaha, let's break them down one by one

in your particular situation there are two types of revenue
Ad revenue and IAP revenue:
Ad revenue from Admob is considered as royalties.
regarding IAP: IDK (I am eager to know)


That's correct Unless there is DTA.

it's not your choice to decide whether to pay taxes or not
in that case google/apple decides to withhold taxes or not.

Correct.

Correct.
US SMLLC owned by a person files W8BEN.
US SMLLC owned by a foreign company files W8BEN-E.


Correct.
P.S: 1040NR you don't have to file it as Neil said.


that's silliness.


nonsense


no comment


read my first and second replies



If your goal is to pay less/avoid withholding taxes by setting up a company in UK or Cyprus or even The moon, it doesn't matter at all. because at end of the day google/apple will withhold taxes whether your offshore company is in UAE, UK, USA...
regarding DTA with the US; what matters is UBO residency.
P.S: UAE doesn't have a tax treaty with the US
Thai has one.

Exactly.

I hope you read my first and second replies
Now I'll reveal my solutions to this particular problem(30% withholding tax).

1. Make a claim (a tax treaty benefit) for a reduction on the tax withheld from U.S. income you may receive in your account. United States Income Tax Treaties: United States Income Tax Treaties - A to Z | Internal Revenue Service
2. Use a US C-Corp so that you can give them(the Withholding Agent i.e Google)a W-9; if you operate out of a corporation, you give them a W-9 they won't withhold taxes, and then you can either pay yourself as expensive OR pay all of your profits to your LLC (LLC would be tax-free)
3. As an SMLLC owner, you can elect to treat your LLC as a corporation for tax purposes. If you do, the corporation must file Form 1120 (U.S. Corporation Income Tax Return) to report and pay tax on corporate income. Form 5472 must be included with Form 1120 to report your ownership interest. the goal of that election is to provide a W-9 form.

P.S: these solutions require you to work with US Accountant

Thank you for your suggestions.

The problem is if the US C-Corp is managed and directed outside the US are we sure it can be seen as a US opaque entity even if it is a C-corp?
From what I understood the place of management and controls determine where the company resides.
In your particular case, you can reside in a country that has no tax treaty since the revenue you take from the C-corp to your LLC is not considered royalties, right? So no 30% will be withheld.
Can't this structure be seen by IRS as a way to circumnavigate the 30% tax since you basically create a C-corp but take all the revenue of it outside of the company with your LLC and the C-corp is also managed outside US. Is this the solution you are using for your company?

At this point the same may work for an LTD for example or any other opaque company that has a tax treaty with US and then you take out all the revenue as expenses before paying the corporate tax.

 

[flyinglow]

Thank you for your suggestions.

The problem is if the US C-Corp is managed and directed outside the US are we sure it can be seen as a US opaque entity even if it is a C-corp?
From what I understood the place of management and controls determine where the company resides.
In your particular case, you can reside in a country that has no tax treaty since the revenue you take from the C-corp to your LLC is not considered royalties, right? So no 30% will be withheld.
Can't this structure be seen by IRS as a way to circumnavigate the 30% tax since you basically create a C-corp but take all the revenue of it outside of the company with your LLC and the C-corp is also managed outside US. Is this the solution you are using for your company?

At this point the same may work for an LTD for example or any other opaque company that has a tax treaty with US and then you take out all the revenue as expenses before paying the corporate tax.

Another consideration for people earning royalties through adsense that I just wanted to add.

"A C with 60% or greater total yearly $ passive revenues (royalty income) represents a personal holding company ("PHC") for US tax purposes. A PHC has restrictions on accumulating profits. (1) So, a PHC has to pay out all of its taxable income each year as a dividend. This statement means the C cannot let the excess cash stay in the C. The C pays out the profits each year or if not, the C will face a 20% penalty tax on profits not paid out when its files its corporate tax return. (2)"

(1)Treasury Regulation Section 1.543-1(b)(3)
(2) Section 541