Living in Argentina, setting up LLC

[CHexpat]

I am a Swiss citizen, living for more than 7 years in Argentina. I am working for for various Swiss clients (as a logistics expert). For this purpose I set up a Swiss LLC. Gross income ca 200k US per year.

Until now, I have never applied for residency here in Argentina (extremely high taxation). The first four years i neither had residency in Argentina nor in Switzerland. During this time, i “charged” the Swiss LLC ca 85% of the income. The 85% is kind of an accepted rate in Switzerland, as the company itself also needs to be profitable. Over the last couple of years, i am registered again in Switzerland, even though i am only ca 40-50 days per year there. But, at least i have a residency, even not where I live. Currently I am taking out ca 60% in form of a salary, the rest i leave in the LLC.

I live in Argentina for personal reasons (family and house here). But i also know that I can’t live here forever as a “tourist”. I have the risk that at one point i might get refused entry to Argentina. So I am planning to get residency here next year.

The situation here in Argentina tax wise will always be a bit “fishy”; so I am not looking to get 100% legal in this regard. In Argentina I don’t plan to declare anything (or probably some rental income from an apartment which is part of the house where i live). I am looking for a way to minimize the risks.

In order to break the link between Switzerland and Argentina i am thinking about setting up a US LLC. I am familiar with Swiss LLC and the laws there, but not with offshore structures. The idea is to move 85% of the income from Swiss LLC to the US LLC. And there i would take out everything as a dividend.

Questions:

1. does this make sense? Are there better ways to deal with this situation?
2. The Swiss LLC I have under control (direct taxes, VAT etc). But what would be the tax implication in the US LLC? I understand that in Delaware I don’t have income tax neither VAT. Is this correct?
3. I don’t plan to open a US bank account for now. The idea is to record everything against a loan against me in the US LLC:

dr. Loan / current account cr. Service income 170 k USD
Once a year i take out the dividend
dr. Dividend cr. Loan / current account 170 k USD
is it complicated to do this? Or do i need formal meeting documents etc.?

Any input is greatly appreciated.

 

[Mike Williams]

so the US LLC will have income and you will pay the 21% corporate tax rate. The IRS also requires that you setup a prescribed rate loan at current rates of interest for funds you loan to the company. There may also be a WHT on the dividends you remove if there is no tax treaty with the country of your residency.

 

[myhand]

Sounds like a very good setup, will follow the thread a little.

 

[CHexpat]

so the US LLC will have income and you will pay the 21% corporate tax rate. The IRS also requires that you setup a prescribed rate loan at current rates of interest for funds you loan to the company. There may also be a WHT on the dividends you remove if there is no tax treaty with the country of your residency.

I don’t understand this. I thought as a foreigner if i am not engaged in business activities in the US then I am not subject to US taxes

 

[TheCryptoAnt]

I don’t understand this. I thought as a foreigner if i am not engaged in business activities in the US then I am not subject to US taxes

you are not.

RE point 3, idk if this would work in CH law. Id talk to an accountant / tax lawyer there.

What will work for sure is you convince your clients to pay you in USD/EUR so you can get easy banking for your US LLC and voila! Argentina is beyond mismanaged, enjoy your tax free life.

Id keep your personal accounts in CH tho, just in case.

 

[CHexpat]

you are not.

RE point 3, idk if this would work in CH law. Id talk to an accountant / tax lawyer there.

What will work for sure is you convince your clients to pay you in USD/EUR so you can get easy banking for your US LLC and voila! Argentina is beyond mismanaged, enjoy your tax free life.

Id keep your personal accounts in CH tho, just in case.

Thanks. Rethinking point 3 i think i will set up a US bank account for the US LLC. I read that mercury bank can be opened without too much problems. The banks in Switzerland (both Swiss LLC and private) I will keep for sure.

I have got a follow question regarding form 5472. I would have to enter Argentina as country of residence. What are the authorities doing with this information? My understanding is that the US does not share this information (or only in exceptional cases). Is this correct?

 

[jafo]

I would have to enter Argentina as country of residence. What are the authorities doing with this information? My understanding is that the US does not share this information (or only in exceptional cases). Is this correct?

Grüezi!
Nobody knows for sure. With for sure I mean, nobody is going to stake their lives on this. If I were you, I would take a trip to PY and seek a residence permit there. File PY on the form. You are so close, why take a chance?

 

[TheCryptoAnt]

Thanks. Rethinking point 3 i think i will set up a US bank account for the US LLC. I read that mercury bank can be opened without too much problems. The banks in Switzerland (both Swiss LLC and private) I will keep for sure.

Depending on your BA, Wise is also easy to open.

I have got a follow question regarding form 5472. I would have to enter Argentina as country of residence. What are the authorities doing with this information? My understanding is that the US does not share this information (or only in exceptional cases). Is this correct?

who cares g its Argentina what are they gonna do.