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UK resident with clients in the US. What the best setup for a dual citizen?

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saintjohnny

New member
Hello all,

I've recently started a marketing consulting business with US clients exclusively and I am planning to move to the UK later this year. I also plan to take on UK clients in the future.

I was thinking that maybe a US LLC would suffice to do business with my US clients and then also have a UK Ltd to pay myself (and others) a salary and conduct business with my UK clients.

Can you recommend me a setup to optimize tax from the beginning? I expect my profits to be just a little north of $100k in my first year (2021)

I'm a dual citizen of Spain and the Dominican Republic if that helps. Thanks for your help.
 

mange38

Entrepreneur
Why mess with the IRS? If you're planning to move to the UK, forget it. Just trade with the UK Ltd and call it a day. Make sure you get a good accountant so you can deduct all kinds of expenses thu&¤#
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
Johnny if I'm not mistaken DR has a territorial tax system. US LLC will only help you with non US clients. UK LLP only works for non UK clients but if you intend to live here then it's not going to work.
LLP and LLC only work if you dont live nor have an office in that country.

I personally would stay well away from US LLC and take advantage of your DR citizenship by incorporating a company there and using a limited company as the marketing office of the DR company.

I will double check but that sounds similar to what I have done before for a client of mine but it was a few years back. Need to check how that works for CFC now.
 

saintjohnny

New member
Why mess with the IRS? If you're planning to move to the UK, forget it. Just trade with the UK Ltd and call it a day. Make sure you get a good accountant so you can deduct all kinds of expenses thu&¤#
Thanks for your answer. If I have an LLC I won't have to pay 20% UK corporate tax on my US earnings. Am I wrong?
Is it possible

Johnny if I'm not mistaken DR has a territorial tax system. US LLC will only help you with non US clients. UK LLP only works for non UK clients.
Hi, thanks for you answer. DR does not have a territorial tax system.
How would a UK LLP (or Ltd?) work with non-UK clients?
 

Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
Manage38 is right don't waste your time if moving to UK. You can reduce your taxes dramatically with just a UK limited if you know how. So speak to a good accountant. I think I have already explained how in the public forum or mentor group before.

No point dealing with IRS either unless its important to have a US facing company for your clients.

P.S UK resident non-dom scheme won't help you either.
 

saintjohnny

New member
Manage38 is right don't waste your time if moving to UK. You can reduce your taxes dramatically with just a UK limited if you know how. So speak to a good accountant. I think I have already explained how in the public forum or mentor group before.

No point dealing with IRS either unless its important to have a US facing company for your clients.

P.S UK resident non-dom scheme won't help you either.
Thanks for your response, Martin. I suppose there won't be any problem for my US clients to sign a contract and transact with a UK limited company.

My only concern was payment processing using Stripe and billing my clients in USD, but I can just set up US bank details with Transferwise or even use my own personal Bank of America account over in the US. Am I right?

Also, may you recommend an accountant in the UK that is familiar with internet-based businesses and the like?

Thanks again and have a great day.

Edit: I'm also concerned about the taxation of foreign income. I would have to pay 20% corporate tax on my USD proceeds, is that right?
 

Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
but I can just set up US bank details with Transferwise or even use my own personal Bank of America account over in the US. Am I right?
You took words out my mouth to just use TW. Dont know why you would want to use personal account for business as this will cause problems with bank surely?


Also, may you recommend an accountant in the UK that is familiar with internet-based businesses and the like?
Any good accountant will know about internet business.


Edit: I'm also concerned about the taxation of foreign income. I would have to pay 20% corporate tax on my USD proceeds, is that right?
Yes buy you can lower it to an overall 15% effective rate on lets say $100k in revenue and thats even after taking into consideration corporate and personal taxes together. Its all about making the right deductions.
 

JustAnotherNomad

Entrepreneur
Where your customers are or whether you have an “internet” or “brick and mortar” business is largely irrelevant. I don’t know where that belief comes from. It doesn’t even matter much where the business is incorporated.

What matters is where the business is managed and where the work is performed.
If you are going to live and work in the UK, you and your company are going to have to pay taxes in the UK.
Unless you move to a country with lower taxes, you can choose 2 out of 3 properties for your structure:
- cheap
- legal
- substantial tax savings

So talk to a UK accountant first and see what they can come up with. 15% of 100k isn’t very much. It probably won’t make much sense to pay for a different structure because if it’s legal, it would probably cost more than what you’d save in taxes.

Unless you need to have a US LLC for your American customers, definitely just stick with a structure that’s as simple as possible, i.e. UK Ltd. if you live in the UK.
 

saintjohnny

New member
You took words out my mouth to just use TW. Dont know why you would want to use personal account for business as this will cause problems with bank surely?

Any good accountant will know about internet business.

Yes buy you can lower it to an overall 15% effective rate on lets say $100k in revenue and thats even after taking into consideration corporate and personal taxes together. Its all about making the right deductions.
Got it. I will use USD bank details from TW. Thanks for your detailed explanation, it greatly appreciated.

Where your customers are or whether you have an “internet” or “brick and mortar” business is largely irrelevant. I don’t know where that belief comes from. It doesn’t even matter much where the business is incorporated.

What matters is where the business is managed and where the work is performed.
If you are going to live and work in the UK, you and your company are going to have to pay taxes in the UK.
Unless you move to a country with lower taxes, you can choose 2 out of 3 properties for your structure:
- cheap
- legal
- substantial tax savings

So talk to a UK accountant first and see what they can come up with. 15% of 100k isn’t very much. It probably won’t make much sense to pay for a different structure because if it’s legal, it would probably cost more than what you’d save in taxes.

Unless you need to have a US LLC for your American customers, definitely just stick with a structure that’s as simple as possible, i.e. UK Ltd. if you live in the UK.
Thank you for your answer. I will go ahead and open a UK Limited Company and run it with the help of an accountant.
 

JustAnotherNomad

Entrepreneur
I would simply the accountant first what they can come up with. If it’s 15% or so, I would say it’s worth it because you’ll have peace of mind, so you can concentrate on your business. You’ll know everything is legal, your life will be easy because banks and everyone you deal with will understand your structure.
If they say you’ll have to pay 40%, I’d probably look more into alternative ways to structure things. But as mentioned, unless you move, you can only pick 2 out of 3 options. Legal and substantial tax savings won’t be cheap, but at 100k+ in profits it might still be worth it, depending on how much you’d pay for taxes and accounting in the UK.
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
Do not transact nor pay money into your US account. UK company can work if you invoice correctly.
Thanks for your answer. If I have an LLC I won't have to pay 20% UK corporate tax on my US earnings. Am I wrong?
Is it possible


Hi, thanks for you answer. DR does not have a territorial tax system.
How would a UK LLP (or Ltd?) work with non-UK clients?
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
Do not transact nor pay money into your US account. UK company can work if you invoice correctly.
US derived business are due for WHT on an LLC as you provide a service.
Same as LLP, UK derived income, VAT is due and CT.

So essentially your US clients pay your UK LLP and UK clients pay your USLLC.
All other countries can pay in any currency they like.

TW will give you accounts in all the major currencies and proper details to route the payments.

If both the companies have the same name then it wont be an issue and when it comes to accounting you have seperate payments going to specific accounts.

Your problem is that you live in the UK and that mesns all your UK income is taxable. So to make it simple I would just pay your tax on the UK income and the US income is tax free.

I cant see any other way unless you move either the company or yourself somewhere more tax efficient. Romanian Micro company, Georgia company or UAE.

Im certain you can use the DR if you get a family member as your local director and set up an IBC. They franchise you the rights in the UK and take a 90/10 profit share. Or you set up LLP and have the DR company as the majority partner and you are the genral partner.
That allows you to be CFC efficient and still hold all the cards and mitigate your tax. I would ask my learned freinds @xzars and @Txaxandlxaxwxyxexr to chip in with their opinion.
 
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CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold

JustAnotherNomad

Entrepreneur
It doesn’t matter where his clients are. The only thing that matters is where he is. (Assuming he doesn’t have nexus in the US.)
So once he lives in the UK, he can work for US clients exclusively and would still not be paying any US taxes. Not even if he used a US LLC.
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
  • A Delaware Limited Liability Company (LLC) is a good vehicle for non-resident aliens to earn tax free income (not derived in the USA), utilizing a US business entity.
  • Members of a Delaware LLC are not liable for tax to the United States providing that:
    • The members are non-resident aliens.
    • The LLC does not employ US residents as permanent staff, or rely on a dedicated place of business within the United States.
    • The LLC does not undertake any business activity that is effectively connected with business or trade within the United States.
The IRS are very clear in their definition with regards to payment. Not one cent should come from the USA into his DE company.

I think he is over complicating things.
He is a DR national he can use that as the basis of his structure which will be the most efficient for him.
 
Last edited:
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