UK LLP with US shareholder & US LLC

[coollemur]

Hi

Working on a new venture here and bringing on a partner, who is a “US person”.

Two branches - one US, one UK. One shareholder based in Dubai and another in Texas. Possibly a third based elsewhere depending on our negotiations, but got a few concerns specifically about having someone in US involved.

UK side an LLP makes sense to me, but what US tax liability would the LLP have? Management and control would be from UAE.

US side I guess there’s nothing better than just an LLC in a tax-free state. Can’t really see a way of getting out on federal side with a U.S. person on board. Disregarded status through single member LLC owned by UK LLP possible? I doubt it as the US person would probably make this impossible.

 

[Marzio]

what US tax liability would the LLP have?

US branch will pay his share of taxes based on the income generated by the branch.

 

[coollemur]

US branch will pay his share of taxes based on the income generated by the branch.

Based on shareholding of the US person or the total entity? By default, I think we’ll pay on total US income, which is what I’m trying to avoid. And I guess it’s the same thing for UK side. There would probably be some US liability even in the UK - not even about being US person but purely on tax residency.

 

[Marzio]

Based on shareholding of the US person or the total entity?

Is the US partner doing any work?

 

[coollemur]

Is the US partner doing any work?

Yeah. Basically running the branch in the US and also involved in UK side.

From an ownership perspective, we’re not sure yet if one branch should own the other, and we own the branch. Or if we should own the branches independently (making them independent companies instead of branches).

 

[Marzio]

From an ownership perspective, we’re not sure yet if one branch should own the other

I'm not sure you understand the word "branch" becaue a branch can't own another branch.

A branch is an extension of the same company.

So a US branch of company A is still company A with a US division.

The US division can't own Company A's UK division.

A branch doesn't have legal persoality like subsidiary for example.

 

[coollemur]

I'm not sure you understand the word "branch" becaue a branch can't own another branch.

A branch is an extension of the same company.

So a US branch of company A is still company A with a US division.

The US division can't own Company A's UK division.

A branch doesn't have legal persoality like subsidiary for example.

My apologies for the confusion on that. I meant “branch” in a more colloquial sense. Basically just two legal entities - don’t need to be connected, or may be connected, depending on what makes sense. Same owners either way.