Hello,
Setup:
I'm a non-dom tax resident in the UK who will soonish (Q1 2023?) start to sell an app product on App Store and Google Play using a single member Wyoming LLC.
I thought I could avoid US tax simply because I am a Non-Resident Alien to the US and the SM LLC is a disregarded entity.
I also thought I could potentially avoid tax in the UK thanks to my non-dom status, as long as I did not bring that income to the UK.
However, tax reasons were not the main driver for the US LLC choice. Privacy was and still is.
Plottwist:
In this thread (link), a fellow forum member cast a serious doubt on the doability of that loophole. According to his careful interpretation of article 4 of the US/UK DTT, my non-dom status in the UK means I don't qualify for the benefits of the DTT of zero tax withholding from the US. At a push, I could have zero withholding, but I'd have to show very clearly that I'd remit that income to the UK and pay tax on it.
More setup:
I'm a UK tax resident. I already have my UK ltd company paying me the optimal mix of salary and dividends. Any more income (unless it could be capital gains I think) would be 40%.
The US withholding would be 30%.
However, unless the product is really successful, I'd rather prioritise other aspects in the choice between US and UK (assuming I have one).
Also, I don't plan to be UK-based forever. In fact, probably less than 2 years more.
My questions:
1) What would be the cons of starting to have a tax presence in the US, which I wouldn't have (as much) otherwise if I claimed zero withholding?
2) Also, how much leeway can I expect in having cost in the LLC, to decrease its "profit" and that 30% tax liability?
3) Anything else I should consider?
Thanks
Setup:
I'm a non-dom tax resident in the UK who will soonish (Q1 2023?) start to sell an app product on App Store and Google Play using a single member Wyoming LLC.
I thought I could avoid US tax simply because I am a Non-Resident Alien to the US and the SM LLC is a disregarded entity.
I also thought I could potentially avoid tax in the UK thanks to my non-dom status, as long as I did not bring that income to the UK.
However, tax reasons were not the main driver for the US LLC choice. Privacy was and still is.
Plottwist:
In this thread (link), a fellow forum member cast a serious doubt on the doability of that loophole. According to his careful interpretation of article 4 of the US/UK DTT, my non-dom status in the UK means I don't qualify for the benefits of the DTT of zero tax withholding from the US. At a push, I could have zero withholding, but I'd have to show very clearly that I'd remit that income to the UK and pay tax on it.
More setup:
I'm a UK tax resident. I already have my UK ltd company paying me the optimal mix of salary and dividends. Any more income (unless it could be capital gains I think) would be 40%.
The US withholding would be 30%.
However, unless the product is really successful, I'd rather prioritise other aspects in the choice between US and UK (assuming I have one).
Also, I don't plan to be UK-based forever. In fact, probably less than 2 years more.
My questions:
1) What would be the cons of starting to have a tax presence in the US, which I wouldn't have (as much) otherwise if I claimed zero withholding?
2) Also, how much leeway can I expect in having cost in the LLC, to decrease its "profit" and that 30% tax liability?
3) Anything else I should consider?
Thanks
