UK LTD owns US LLC on NHR Portugal

[h123]

Hello everyone!

I’m currently non-resident of Canada and I’ve been traveling fulltime for the past 3 years. I’m looking to make my personal tax residency more clear.

I was thinking about using Portugal NHR with dividends from a UK LTD. This LTD would own my US LLC (disregarded). Since the LTD would be non-resident owned and my income would only come from my LLC, do you think it’s possible to have my dividends exempted for taxes in Portugal, UK and US?

I’d only spend 3 months a year in Portugal and would not receive any dividends while I’m there, only when I’d travel.

I have plan to stay perpetual traveler for the next decade and so any alternative would be appreciated.

thank you

 

[LoveMyLife]

If UK LTD will own a US LLC, than all profits from US LLC will be transfered to UK LTD. Transfered profits are not dividends. It will be in the UK considered as income from partnership. And it will be taxed in the UK as a regular income of UK LTD.

Maybe it can make a sense to use LLP instead of LTD. And why are you considering US LLC?

Where are you clients? What is your business?

 

[h123]

If UK LTD will own a US LLC, than all profits from US LLC will be transfered to UK LTD. Transfered profits are not dividends. It will be in the UK considered as income from partnership. And it will be taxed in the UK as a regular income of UK LTD.

Maybe it can make a sense to use LLP instead of LTD. And why are you considering US LLC?

Where are you clients? What is your business?

All my clients are in the US. It’s easier for me to get consulting contracts. From what I understood, a LLP is a pass-through entity like a LLC and I cannot hold income inside of it. Maybe in the future, I may want to lower my dividends and reinvest the profits.

 

[Fred]

All my clients are in the US. It’s easier for me to get consulting contracts. From what I understood, a LLP is a pass-through entity like a LLC and I cannot hold income inside of it. Maybe in the future, I may want to lower my dividends and reinvest the profits.

In this case you could take a look at a Incorporation in the UAE as well. Tax free and the Company grants you a residence visa if setup correctly. Additional plus - it's outside europe - no public company registers as well as requirement to keep the residence you only have to stay in the UAE for 24 hours every 180 days. Interactive Brokers still works with UAE companies if they have a real physical bank account in the UAE.

 

[h123]

In this case you could take a look at a Incorporation in the UAE as well. Tax free and the Company grants you a residence visa if setup correctly. Additional plus - it's outside europe - no public company registers as well as requirement to keep the residence you only have to stay in the UAE for 24 hours every 180 days. Interactive Brokers still works with UAE companies if they have a real physical bank account in the UAE.

It's quite expensive to incorporate in UAE. Probably 15x more than uk

 

[h123]

If UK LTD will own a US LLC, than all profits from US LLC will be transfered to UK LTD. Transfered profits are not dividends. It will be in the UK considered as income from partnership. And it will be taxed in the UK as a regular income of UK LTD.

Maybe it can make a sense to use LLP instead of LTD. And why are you considering US LLC?

Where are you clients? What is your business?

Sorry, I didn't read the first line. What would be a good setup instead? Maybe using a shell company in UK ?

 

[Fred]

It's quite expensive to incorporate in UAE. Probably 15x more than uk

Even if not more.

Of course it's always a number game.

Currently we have many clients from the stock market as well as from the Bitcoin space. They don't think twice and start a reliable long lasting steup in the UAE because they simply gain the setup costs over night with such events like ysesterday when Tesla turned into Bitcoin.

 

[h123]

Even if not more.

Of course it's always a number game.

Currently we have many clients from the stock market as well as from the Bitcoin space. They don't think twice and start a reliable long lasting steup in the UAE because they simply gain the setup costs over night with such events like ysesterday when Tesla turned into Bitcoin.

How much it generally cost? I've seen $6k-8k to incorporate in uae for what cost me $200 in the US to open a LLC.

 

[Fred]

How much it generally cost? I've seen $6k-8k to incorporate in uae for what cost me $200 in the US to open a LLC.

If you go for higher reputation in Dubai it's 8k$ that's right.

You can't compare this two setups. The Dubai way grants you a residence visa and a one stop solution Company, Residence and Banking in one zero tax country.

US LLC is good if you already have a UAE setup and just need an additional setup to satisfy merchant accounts like PayPal that are from the US.

All the US LLC setups I see have a Mercury Bank or TransferWise account and as soon as there is some turnover coming in or the business start running better they stack cash on Mercury and TransferWise and can't sleep well at night because they fear random blocks of TransferWise or Mercury.

Maybe you never had lost money in the past with Choice Bank, Loyal Bank or even Satabank within the EU but the customers we have care about havin a real bank with Branchs they can walk in by person.

If you are talking about making 2-3k a month and don't have any 6figures to store or invest. Go for the US LLC.

 

[h123]

If you go for higher reputation in Dubai it's 8k$ that's right.

You can't compare this two setups. The Dubai way grants you a residence visa and a one stop solution Company, Residence and Banking in one zero tax country.

US LLC is good if you already have a UAE setup and just need an additional setup to satisfy merchant accounts like PayPal that are from the US.

All the US LLC setups I see have a Mercury Bank or TransferWise account and as soon as there is some turnover coming in or the business start running better they stack cash on Mercury and TransferWise and can't sleep well at night because they fear random blocks of TransferWise or Mercury.

Maybe you never had lost money in the past with Choice Bank, Loyal Bank or even Satabank within the EU but the customers we have care about havin a real bank with Branchs they can walk in by person.

If you are talking about making 2-3k a month and don't have any 6figures to store or invest. Go for the US LLC.

Thanks for the info. I'm more concerned about how I'd maintain my personal tax residency in UAE if I only spend couple of weeks there every year. I'm not a big fan of the lifestyle in Dubai. I prefer living in Portugal and keep traveling around Europe.

 

[Fred]

Thanks for the info. I'm more concerned about how I'd maintain my personal tax residency in UAE if I only spend couple of weeks there every year. I'm not a big fan of the lifestyle in Dubai. I prefer living in Portugal and keep traveling around Europe.

From the UAE side it's not a problem. You have to be in Dubai every 180 days for 24 hours to keep the residence visa active. As we are gona open your bank accounts in UAE with the residence visa the banks will consider you as a resident in UAE as well therefore no CRS reporting. It's the perfect setup if you are traveling around and want to have a reliable llongterm setup. It's a good workaround for all digital nomads that facing huge problems when it comes to banks.

 

[h123]

From the UAE side it's not a problem. You have to be in Dubai every 180 days for 24 hours to keep the residence visa active. As we are gona open your bank accounts in UAE with the residence visa the banks will consider you as a resident in UAE as well therefore no CRS reporting. It's the perfect setup if you are traveling around and want to have a reliable llongterm setup. It's a good workaround for all digital nomads that facing huge problems when it comes to banks.

Ok, I'm thinking about it. I'll reach out to you if I end up choosing dubai. I'm also considering Georgia HNWI

 

[Zaki]

@Fred I have a Q about Freezones UAE(100%)
is it necessary to create substance?

 

[Fred]

@Fred I have a Q about Freezones UAE(100%)
is it necessary to create substance?

If you go with the right bank and business authority you don't have any additional costs beside of the business license.

The guidance to the right business authorities and banks is our job and consultancy.

 

[LoveMyLife]

All my clients are in the US. It’s easier for me to get consulting contracts. From what I understood, a LLP is a pass-through entity like a LLC and I cannot hold income inside of it. Maybe in the future, I may want to lower my dividends and reinvest the profits.

You are not exactly sure. Just official profit as a taxable base is passed through. This look through is for taxation purposes only. You can hold any assets, including money, within LLC and LLP. You do not have to move it there and back at all. If US LLC has a profit, it is transfered for taxation to LLP and that is trasfered for taxation to you as a Portugal non dom. But it is not transfer of funds. It is just transfer of profit / tax base. This is not the same.

Your problem can be elsewehre. If you have US LLC and the most of this company has US clients, this profit will be considered like to be a US sourced and therefore, you will have to have US ITIN and pay US personal income tax on all of this profit.

If you do not want to pay taxes in the USA, you will have to invoice your US customers from non US entity. So, the best structure for you will be Canadian LLP + UK LLP + You as Portugal non dom resident.
Canadian LLPs having a clients in the USA only are not taxed in the USA nor Canada. UK LLP not having any clients in the UK will be not taxed in the UK. And all profits will be transfered to you on a paper. Whereas it is profit which did not flow through US entity, it will be not taxable in the USA.

 

[RDuke]

I´m in a similar situation. Currently Portugal NHR resident thinking about a good setup to cash out crypto profits and creating a reliable structure to hold more assets in the future, diversifying investiments with low taxation and security.

As we know non profesional crypto trades are free tax in Portugal (not filled in IRS) but I would like to cash out via dividends to get a real tax history and records.

I´m thinking about a New Mexico LLC as a investiment vehicle, and that LLC owned by an UK LTD (owned and managed by me from Portugal)

I know about CFC rules and effective manage rule but looks like with the special status NHR residents can get dividends with no problem in Portugal (some lawers consulted).

By the way NM US LLC nor UK LTD will hav real activiy, only hold assets, investiments, etc... so the way would be pass through the income from US LLC to UK LTD and UK LTD to person with dividends (0% tax to NHR from UK)

I´m afraid about 5472 and 1120 forms in USA due to pass income from LLC to LTD could be considered reportable operation (I think so) and I´m not very comortable with that report.... any sugestion would be nice

Best regards

 

[startfleetio]

I´m in a similar situation. Currently Portugal NHR resident thinking about a good setup to cash out crypto profits and creating a reliable structure to hold more assets in the future, diversifying investiments with low taxation and security.

As we know non profesional crypto trades are free tax in Portugal (not filled in IRS) but I would like to cash out via dividends to get a real tax history and records.

I´m thinking about a New Mexico LLC as a investiment vehicle, and that LLC owned by an UK LTD (owned and managed by me from Portugal)

I know about CFC rules and effective manage rule but looks like with the special status NHR residents can get dividends with no problem in Portugal (some lawers consulted).

By the way NM US LLC nor UK LTD will hav real activiy, only hold assets, investiments, etc... so the way would be pass through the income from US LLC to UK LTD and UK LTD to person with dividends (0% tax to NHR from UK)

I´m afraid about 5472 and 1120 forms in USA due to pass income from LLC to LTD could be considered reportable operation (I think so) and I´m not very comortable with that report.... any sugestion would be nice

Best regards

Drawings from the US LLC to the UK LTD is definitely reportable income. But why would you feel uncomfortable with that?

 

[saponaire]

Why would you need the LLC? Can you not just do LTD?