Isle of Man Company + Wise (transferWise)

[stevy777]

Can an isle of man company or any other company open a Wise Account?

 

[Sols]

It has more to do with you and the business activities than the jurisdiction itself. Isle of Man on its own merits shouldn't be a problem.

 

[stevy777]

It has more to do with you and the business activities than the jurisdiction itself. Isle of Man on its own merits shouldn't be a problem.

that's useful thank you! Just one follow up question if I may:

If the Isle of Man company owns a US LLC, and the US LLC is making investments in the USA - should i open a business account with Wise / Paysera with the US LLC, or the Isle of Man company, for the profits the US LLC will generate?

(either way i will pay my US tax obligation for the investments, i just wonder which business name the bank account should be in for the US LLC investment profits?)

 

[Sols]

The trading entity itself normally has its own bank account, separate from the bank account held by the parent/holding company.

 

[JustAnotherNomad]

If the Isle of Man company owns a US LLC, and the US LLC is making investments in the USA

I really hope you have good advisors and that they have looked into the US branch office tax for you. You're potentially looking at 30% tax on any money you pay out from your US company to the Isle of Man company.

 

[stevy777]

I really hope you have good advisors and that they have looked into the US branch office tax for you. You're potentially looking at 30% tax on any money you pay out from your US company to the Isle of Man company.

I do have some good US advisors. They said the US LLC is a straight pass through. Right now it passes directly to me as i have no IOM company yet.

So my US tax obligation of the US LLC profits is taxed as ordinary income in US

If it was to flow to a new IOM company instead of me after being taxed in USA ..... i'm not totally sure if there is IOM withholding tax ... still researching ..

 

[MrYellow]

Better forget this plan. I can gurantee you 99,99% it won’t work as you expect it to be.

 

[JustAnotherNomad]

I do have some good US advisors. They said the US LLC is a straight pass through. Right now it passes directly to me as i have no IOM company yet.

So your situation is completely different from what you're planning.

If it was to flow to a new IOM company instead of me after being taxed in USA ..... i'm not totally sure if there is IOM withholding tax ... still researching ..

Do yourself a favor and ask about the branch profits tax, especially if there are US investments. BEFORE you pay any money for a new setup.
I don't know enough about it to advise you, but when the LLC is owned by a company instead of a natural person, it can be an issue.

United States - Corporate - Branch income

Detailed description of corporate branch income tax rules in United States

taxsummaries.pwc.com

 

[stevy777]

That's good advice from you both !!!! thank you

i'll keep researching ....

 

[JustAnotherNomad]

Would be great if you could update the thread with what you find out, so we can all learn from this.

 

[stevy777]

Would be great if you could update the thread with what you find out, so we can all learn from this.

Yes i'll update about this specific situation here

 

[stevy777]

i'm still researching but so far these two articles have been the best so far.

article 1:
- good summary of ECI vs FDAP

Tax Planning Considerations for Foreign Clients Making U.S. Private Equity Investments | JD Supra

The United States is no stranger to capital from foreign investors. Perhaps in South Florida especially, this is no more evident than in the real...

www.jdsupra.com

article 2
- triangular tax treaties
- older US tax treaties

Can a Foreign Investor Utilize a “Triangular” Tax Treaty Position to Reduce or Eliminate FDAP and FIRPTA Withholdings? | SF Tax Counsel

Foreign investors are subject to a different set of rules for income that is not effectively connected with a trade or business in the U.S.

sftaxcounsel.com

 

[stevy777]

Would be great if you could update the thread with what you find out, so we can all learn from this.

Solution possibility: would be to treat both US LLC and foreign company as "disregarded entities" for US tax purposes (i think IRS form 8832). That means the owner of the foreign company would pay individual US tax. Of course it only works for foreign entities who have one sole owner, and then if there is no double taxation treaties it could be taxed again - not sure(?)

Please do critique this ? any thoughts?

 

[JustAnotherNomad]

That suggestion doesn't even make sense.
You'll want to talk to a CPA, this way you'll only get yourself in trouble.

 

[stevy777]

That suggestion doesn't even make sense.
You'll want to talk to a CPA, this way you'll only get yourself in trouble.

Thank you! Definitely would not implement without confirming with expert CPA / attorney on the matter

But check this out, i think it explains it better than me above : Election of Entity Classification - U.S. Tax Form 8832 - it's pretty interesting

i still think this looks a good solution for investing in USA

 

[JustAnotherNomad]

I can't imagine that you'd be able to tell the IRS that your IoM corporation is tax transparent, when it's actually taxed as a corporation.
Common sense should also tell you that's not how things work: "Oh, there's a 30% tax? Wait, let me check this box... Now there isn't!"

 

[stevy777]

I can't imagine that you'd be able to tell the IRS that your IoM corporation is tax transparent, when it's actually taxed as a corporation.
Common sense should also tell you that's not how things work: "Oh, there's a 30% tax? Wait, let me check this box... Now there isn't!"

here’s another idea
create a US corporation which would just tax profits at 21%

distribution to isle or man would be another 30% or if I moved to some other places as resident it could be 5-10%

though if I just invest all profits back in USA it’ll be 21% tax , which isn’t bad for opportunity to invest in USA

what do you think of this ?

 

[JustAnotherNomad]

I think you should talk to a CPA who has experience with what you want to do, instead of wasting time trying to come up with a solution yourself.

 

[stevy777]

I think you should talk to a CPA who has experience with what you want to do, instead of wasting time trying to come up with a solution yourself.

Actually all above is from US attorneys I’m chatting with - both LLC disregarded entity and US corporation

I’m making conversation here to see if people here have more ideas on this topic or other useful things to share or would like to discuss what they are doing. I don’t act randomly from forum ideas but do enjoy others perspective

I’m actually clear about what I’m doing and understand branch tax and when and how that applies in my situation

If anyone wants to share their experience feel free

 

[Tr0nad0r]

what do the US attorneys think about this strategy?

Tax Obligations for Investing in USA (foreigners & non US Residents)

What i want to do: - i'd like to invest in USA funds and investments. These funds pay interest, equity kickers and returns on investment. What I'm currently doing: - i am investing through a US LLC owned by me (individual) - the US LLC acts as a straight pass through to me - my US tax...

www.offshorecorptalk.com