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C-Corp vs LLC for non us citizens

#21
Another option... how far are you from the Romanian border?
If you're really interested to save those ~5/10% without moving too far, just move over the border and start a romanian Micro-enterprise and pay around 5-10% overall (including pension/social :) ), 100% legal.
But don't deal with stuff yourself, it's much better when you have a local law firm help you for the bank opening etc
Scroll down here and see the various options RO vs BG: Taxes - Example calculations
 
#22
StatiS said:
Bulgaria. I want to use the 10% personal income tax rate but so far I heard that I have to register as sole trader and pay 15%.
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Bulgaria has a tax treaty with the US. You can claim for tax treaty position, and not worry about the ETBUS issue anymore as long as you dont have a permanent establishment and dependent agent in the US.

As for Bulgaria, it will depend on how Bulgaria will see the LLC, some countries see it as a transparent entity like a partnership, so in the profits that you made are taxed as personal income. If it is like UK or Canada which treat it like a opaque entity (like a Corporation), the profits you draw from the LLC are seen as dividends. You could talk to your BG accountant and ask how BG treats foreign dividends.
 
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#23
Yeah but if BG works like other countries in EU, once they find out you are running your US company (no substance) from home, while paying nothing to BG, they'll ask you to pay EVERYTHING as a local company would... so social contribution/healthcare etc
I know it doesn't happen to everyone but only when you get caught, and eastern Europe is very old school/corrupted, but when/if it happens the bill is going to be huge and you're going to need a decent lawyer for sure :)
Things have changed, it's not like one or two decades ago when you could evade all you wanted with a cheap LLC.
IRS will ask your foreign tax number in many forms and it will explicitly say, in at least one c-corp form (forgot which one), something along the lines: "the info below could be exchanged with your home country".
 
#24
US is not in the CRS, they will not exchange information automatically. On IRS forms, you put in your ITIN number normally (if there's a need for that) and the ITIN is a tax number awarded by the US govt. Sometimes the ITIN is not even needed, just a random number would do (like the Form 5472), which they just need to track you as a uniquely identifiable person. They are only interested in you paying their taxes (if any), not your countries taxes.

Using an LLC is not just for "tax evasion" purposes, it could be other factors. And if you use it correctly, there are no tax liabilities in the US, so you are already winning the first half of the struggle. As for the Bulgarian side, that is why consulting an accountant in BG is necessary as well. Bulgaria is never a highly taxed country to start with, the corporate tax rate is just 10%.
 
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#25
marioIT said:
Yeah but if BG works like other countries in EU, once they find out you are running your US company (no substance) from home, while paying nothing to BG, they'll ask you to pay EVERYTHING as a local company would... so social contribution/healthcare etc
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They could also tax it as personal income, not like a local company (corporate income). It depends on local laws and a lot of factors, so please get proper legal counsel.

@startfleetio It's great to finally have someone here who knows what they're talking about. :)
 
#26
Most non-US residents want to have US LLC for Stripe and access to worldwide services, and it is a better reputation with clients USA based company than Seychelles for example. But the reason why I gave up from forming a company in the US is their tax system which some people say is the most complicated in the world. If I make any business mistake I rather owe something to my country where I know how things work, than to the USA who might be on your a55 forever if you owe IRS a $100 bucks. Also, if you earn any income from the US clients, you have to pay tax to the US on that income, so don't believe its tax free just because you are non-US resident. LLC is okay for non-resident if you don't do any business with the US.

This is just my opinion, Im not tax expert so don't take my words 100%.
 
#28
noname said:
Most non-US residents want to have US LLC for Stripe and access to worldwide services, and it is a better reputation with clients USA based company than Seychelles for example. But the reason why I gave up from forming a company in the US is their tax system which some people say is the most complicated in the world. If I make any business mistake I rather owe something to my country where I know how things work, than to the USA who might be on your a55 forever if you owe IRS a $100 bucks. Also, if you earn any income from the US clients, you have to pay tax to the US on that income, so don't believe its tax free just because you are non-US resident. LLC is okay for non-resident if you don't do any business with the US.

This is just my opinion, Im not tax expert so don't take my words 100%.
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If you need serious advice, I can introduce you to American international taxation experts, some individuals even have a lawyer and a CPA license at the same time. Taxation in any serious country is a complex issue, the key is you need to seek advice from the right person.
 
#29
startfleetio said:
US is not in the CRS
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That's because US has FATCA which predates CRS, and which is similar enough in terms of automatic exchange of information that it's not worth it for other countries to make a big deal about.

startfleetio said:
, they will not exchange information automatically.
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This is not true. While reciprocity of FATCA has been lackluster, it can and does occur.
 
#30
The keyword here is automatic. I'm not saying it does not happen, but upon request by a foreign treaty country, through an EOI Request, to the IRS's Exchange of Information Office, it could happen. Foreign tax offices with treaties with the US will have to open EOI Requests, and in cases like Dadon v. United States (2020), it even took the french tax office 2 years to get what they need after the person under investigation tried to block it through the courts.
 
#31
noname said:
But the reason why I gave up from forming a company in the US is their tax system which some people say is the most complicated in the world. If I make any business mistake I rather owe something to my country where I know how things work, than to the USA who might be on your a55 forever if you owe IRS a $100 bucks.
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Fair enough. And American lawyers are super expensive.

noname said:
Also, if you earn any income from the US clients, you have to pay tax to the US on that income, so don't believe its tax free just because you are non-US resident.
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But this part is not true.
 
#33
That page says: "As a non-US resident, your Delaware LLC will only be taxed in the US on income from US sources"

Income from US customers is not automatically income from US sources. The source of an income has a legal definition.
You can see here that for services provided from abroad from a non-US person are not US sourced income:

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 www.irs.gov

But if services are provided from US soil or if there are employees or offices in the US, then it can be a completely different story. So I understand your concerns.
 
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#34
JustAnotherNomad said:
Talk to a BG tax advisor first and foremost about how a US company would be treated by the BG tax authorities.
Saving taxes probably won't be possible, but you may be able to keep your name out of public records. Then again, there may be simpler ways to do that.
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Can you elaborate more on the simpler ways to do that? Or is there any post in the forum you write about it? Thanks.
 
#37
Finally i had a consultation with a big tax law company and they assured me I owe only 10% taxes as the LLC will not be taxed and I owe taxes only on personal income hence the 10%.

I would be able to save 5% if I incorporate in USA instead of Bulgaria.
 
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#38
Yes the LLC pass taxes to you owner, and if no US sourced income you pay your tax in Bulgaria. I discussed recently with agent from startfleet.io company, and he explained me how some things work and shared a really informative pdf guide about LLC taxation, C-corp. I suggest you to check them out, I will use them for LLC registration once I need it soon. I think their owner is a member here too, so you can talk to them.
 
#39
JustAnotherNomad said:
If registering a country abroad was sufficient, you could register it in a country like the UAE where there is no tax at all. Why even bother with a US company? Then you keep all the money in the company and voilà , no more tax to pay in your home country. Wouldn't that be amazing? Spoiler alert: Of course the government in your home country isn't stupid, so they have rules in place that limit/prohibit that.
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If UAE keeps avoiding exchanging info with the government, that would work, isn't that so?
 
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