If you set up an entity like a US LLC that is treated as a disregarded entity and thus not tax resident in the US, or a similar entity in some other country: Can your customers get into trouble with their tax office because invoices would not be accepted?
For example, say a Panama resident owns a LLC, or LLP, but the customer’s country classifies Panama as a tax haven whose invoices would not count as a business expense. Wouldn’t the customer have to demand a US corporate tax residency certificate? Which obviously one wouldn’t be able to produce.
Also one probably wouldn’t want to tell the customer that the business is managed from Panama. (Replace Panama with a different country of your liking if it doesn’t make sense with Panama.)
Could that be an issue?
How would you avoid it? Set up another company like a US corporation that will be deemed tax resident and use that to bill the customer? Then bill that company from the offshore company, or potentially the disregarded entity?
And of course in the EU, it would probably be even more difficult, as such a company presumably wouldn’t be able to obtain a VAT ID? Would that be an issue if you only do B2B transactions?
For example, say a Panama resident owns a LLC, or LLP, but the customer’s country classifies Panama as a tax haven whose invoices would not count as a business expense. Wouldn’t the customer have to demand a US corporate tax residency certificate? Which obviously one wouldn’t be able to produce.
Also one probably wouldn’t want to tell the customer that the business is managed from Panama. (Replace Panama with a different country of your liking if it doesn’t make sense with Panama.)
Could that be an issue?
How would you avoid it? Set up another company like a US corporation that will be deemed tax resident and use that to bill the customer? Then bill that company from the offshore company, or potentially the disregarded entity?
And of course in the EU, it would probably be even more difficult, as such a company presumably wouldn’t be able to obtain a VAT ID? Would that be an issue if you only do B2B transactions?
