Buying real estate from US LLC - Reporting in EU

[European]

Hi all,
Imagine that you are tax resident in country 1 (C1) and you have a US LLC (non-ETBUS, not tax liable in the US).
During the year you run your business and have a profit of $300K.
Instead of disbursing that profit as dividend, you buy a house in country 2 (C2).
The house will be on your name but you pay for it via bank transfer from the US LLC corporate account with those $300K
Effectively, you are not declaring that profit in C1. Both C1 and C2 are in the EU.
Questions:
Q1) Will C1 be able to find out?
Q2) Is there a system similar to CRS for real estate within the EU? Does property ownership in a foreign country get reported to the tax office where the owner is a resident?
Q3) How about paying $150K directly from the LLC (undeclared) and $150K from your personal account (thus money you have already paid tax on)

Thanks

 

[CyprusLawyer101]

Have you checked whether the income from the LLC is not already subject to tax by the mere fact that your jurisdiction of tax residency sees the LLC as transparent for tax purposes?
Therefore a dividend distribution may not be possible.
If though the entity can be treated as opaque ( non transparent ) for tax purposes, then there may be planning available depending on your personal tax circumstances.
With reference to exchange of info on properties, no such system is in place yet- but it is generally advisable that you do not own an undeclared immovable asset especially if you will be recieving rental income therefrom; watch your back , especially when dealing with the state.

 

[European]

Thanks @CyprusLawyer101 for your reply.
Yes, the LLC would be a tax resident in C1 because it is managed from there. However, I am not talking strictly about distributing dividends but about purchasing the real estate directly from the LLC bank account, so that
1) the money does not hit my personal bank accounts
2) the profit of the LLC at the end of the year would be (close to) zero

Note I would be the sole shareholder of the LLC.
Thanks

 

[CyprusLawyer101]

1. If you transfer from the LLC a bank may block it if the RE ownership is on your name.
2. Why do tou think that profits would go to 0 because you will ise the funds to buy an asset? The asset acquisition should not count as an expense and profits should not be affected.

 

[European]

1. Which bank? The one with the LLC corporate account or the bank receiving the money for the RE transaction?
How would the bank know whose name the RE is on? You mean if they ask when the transfer is done?
2. Even if they are not zero, the LLC would not be liable for tax in the US if it doesn't activity there. As for C1, even if they said something the LLC would have no money in its accounts at the end of the fiscal year

 

[CyprusLawyer101]

1. Which bank? The one with the LLC corporate account or the bank receiving the money for the RE transaction?
How would the bank know whose name the RE is on? You mean if they ask when the transfer is done?
2. Even if they are not zero, the LLC would not be liable for tax in the US if it doesn't activity there. As for C1, even if they said something the LLC would have no money in its accounts at the end of the fiscal year

1. Any could block the transaction on the basis that fhe llc is paying for a personal acquisition. You may need additional agreement/provisiin in place for it. The banks would usually ask all aorts of documents for effecting a transaction involving a real estate asset.
2. The profits cannot go to zero by buying the property and whichever country has jurisdiction to tax , the income of the llc wouls be subject to tax. Saying that there will be no funds in thr account thereafter so you are ok with taxes is nonesense.

 

[punkstar69]

Im sure that there are a few countries and banks who dont really care about it - But still wondering which are they. If someone can comment through personal experience, that would be great.