Me > Dubai offshore > US LLC : expat from Europe to Dubai case

[rexooor]

Hi everyone,

first of all, amazing forum, happy it exists!

I am planning to start a business in the US, i have already both with a CPA and laywer established that this business will be subject to a 1120-F form and 21% fed tax on profit (business is engaged in a trade within the US) because I buy american goods and sell them to american customers, I would be getting paid exclusively on US bank accounts, and I use US credit cards leverage for supply purchases.

I am from Europe, most specifically from France and I was thinking about moving and change tax residency to Dubai in order to apply the following structure :
Me (100%-21%=79% of business profit) > Dubai offshore (0% income tax) > US LLC (21% fed tax)

If I understand right, I will have to :
1) create an offshore company in Dubai, open a bank account
2) apply for a resident visa in Dubai
3) create a US LLC under the Dubai offshore company (it will act as Holding). I would need confirmation that this is actually possible
4) move to Dubai
5) Run the business under the US LLC, pay 21% fed taxes, transfer the remaining profit to the offshore company, pay myself

So I wanted get your opinion regarding the above, also :

For this specific case, am I actually looking to create an offshore company or a freelance company in Dubai?
Overall, is it an appropriate structure ?

If I am missing anything that comes to your mind please feel free to let us know

Thank you very much!

 

[Fred]

"create a US LLC under the Dubai offshore company (it will act as Holding). I would need confirmation that this is actually possible"

Yes that works - at least Mercury is fine with it.

 

[OffshorePhantom]

I do not understand why you want to create a US LCC as a C-corp (and pay 21% CIT - also a CPA is required in this case); my suggestion is to create it as a disregarded entity that is considered pass-through for tax purposes and use the UAE company as sole-member of the LLC so that you can transfer the profit of the LLC tax-free to the UAE company or to yourself.

 

[rexooor]

Hello,

thanks for your answers guys

"create a US LLC under the Dubai offshore company (it will act as Holding). I would need confirmation that this is actually possible"

Yes that works - at least Mercury is fine with it.

What's Mercury?
And how can i do so? I tried to see if i could do it myself on Atlas (Stripe) but there was not an option where i could put an foreign company as a owner. It was only asking for First and Last name of the owner

I do not understand why you want to create a US LCC as a C-corp (and pay 21% CIT - also a CPA is required in this case); my suggestion is to create it as a disregarded entity that is considered pass-through for tax purposes and use the UAE company as sole-member of the LLC so that you can transfer the profit of the LLC tax-free to the UAE company or to yourself.

Because unfortunately it seems that the IRS could consider that the Foreign company would be engaged in a business in the US, since the whole business process is 100% american, I also thought i could do so but it seems the IRS in this specific case could think this way

 

[OffshorePhantom]

Do you have a permanent establishment in the US or do you have some dependent agent in the USA?

Maybe this resource could be useful: U.S. and Foreign-Sourced Income | MIT VPF.

 

[rexooor]

Do you have a permanent establishment in the US or do you have some dependent agent in the USA?

Maybe this resource could be useful: U.S. and Foreign-Sourced Income | MIT VPF.

I believe my business is "actively engaged un a business in the us" and could be considered with having its tax residency within the US (so the Dubai offshore would) not on the fact that it has an office in the US, or dependent agents which is not the case, but based on the fact that the whole business cycle could be considered 100% US dependant : buy supply with us CC (so US financing) and sell to US marketplaces, This needs confirmation (Effectively Connected Income (ECI) | Internal Revenue Service)

This is actually why I am asking which would be the best Dubai company (offshore or Freezone) for this case and if it would be better off starting a freezone company that would own the LLC (and rent an office so i could 100% say that the foreign company is operating from abroad since its being operated within an office in Dubai) or if an offshore company is enough (i dont plan to do any business within UAE) but if the IRS considers I am engaged within the US then I would be subject to that 21%

 

[rexooor]

Anyone know someone i could contact regarding the above? thank you!

 

[overseasceo]

Also wanting help with this and combining it with the Cyprus structure.

 

[CaptK]

Single member LLC in Nevada, as a non resident alien can be in just your name. Nevada has no state taxes.
You don’t need to make the foreign company the owner.

Mercury Bank and Signature Bank are the ones to go to.

It would be better to finance the operation with a non US entity. So the stock is bought with a non US card and payments sent to a non US account.

Set up the UAE FZ first and the the US after.

 

[joffreylol]

Single member LLC in Nevada, as a non resident alien can be in just your name. Nevada has no state taxes.
You don’t need to make the foreign company the owner.

This is interesting. Do you mean that in Nevada you can name your LLC your first name and last name without LLC? So it looks like you are using personal account? This is confusing to me but the reason I ask is that I've heard that a lot of countries (including UAE) don't like when you use personal account for business purposes. If the above is correct with Nevada LLC maybe it can work with banks? I'm really not sure, just thinking about this idea.

 

[CaptK]

Banks will not like you using your personal account for business.
It will state LLC but I know I’m the UK you do have to alway state your account is a Limited/LLP.

If you are a UK resident you can have a sole trader account which can be John Smith trading as John Smith Business. So the account name will read John Smith.

 

[fanban]

OP how did you made it possible for you to relocate to the US with your business.. I believe it is ultra difficult even for a EU citizen?