Us Llc non resident vs Uk limited non resident

[Obelix]

I want to open one of this companies and need any opinions, shareholder of the company will be my Cyprus LTD, ill do consulting online:

1 - Option Us LLC non resident:
a) Eu particular customers ill invoice without vat correct?
b) my idea is send profit on the end of the year to the shareholder as dividends( so usa will withold 5%)
c) 0% taxes to pay in us, cause not us customers, nothing phisical there.....

2 - Option Uk limited non resident:
a) Eu particular customers ill invoice without vat correct?
b) my idea send profits on the end of the year to the shareholder as dividens (uk will withold 0%)
c) is same as us llc non resident? i mean 0% taxes in uk? but i have to avoid to have uk customers right? any more conditions to not pay taxes in uk?

Any comments welcome, with advantages and disadvantages in both cases.

If i can, looks uk better for me uk as 0% in dividends and sure can send profit as dividends, in us llc have 5% dividends and even most people say i can send to Cyprus as dividens, but some people say as is pass through cant.

Thank you in advance

 

[alexx999]

I want to open one of this companies and need any opinions, shareholder of the company will be my Cyprus LTD, ill do consulting online:

1 - Option Us LLC non resident:
a) Eu particular customers ill invoice without vat correct?
b) my idea is send profit on the end of the year to the shareholder as dividends( so usa will withold 5%)
c) 0% taxes to pay in us, cause not us customers, nothing phisical there.....

2 - Option Uk limited non resident:
a) Eu particular customers ill invoice without vat correct?
b) my idea send profits on the end of the year to the shareholder as dividens (uk will withold 0%)
c) is same as us llc non resident? i mean 0% taxes in uk? but i have to avoid to have uk customers right? any more conditions to not pay taxes in uk?

Any comments welcome, with advantages and disadvantages in both cases.

If i can, looks uk better for me uk as 0% in dividends and sure can send profit as dividends, in us llc have 5% dividends and even most people say i can send to Cyprus as dividens, but some people say as is pass through cant.

With the UK LTD you'll need to pay taxes in the UK, you are probably confusing the UK LTD with a LLP, which is more or less similar to a US LLC (Transparent Company).


If your business is structured as a limited company, then you will need to pay corporation tax.
For the 2024/25 tax year, corporation tax rates are as follows:

• Profits under £50,000: You are charged at the small profits rate of 19%.
• Profits over £250,000: You are charged at the main rate of 25%.
• Profits between £50,000 and £250,000: You are charged at the 25% main rate, but can reduce the effective rate you pay through Marginal Relief (which operates on a sliding scale). You can calculate your Marginal Relief at gov.uk.
  
  There are two ways you can encounter income tax as a business:
  • as a sole trader, freelancer or self-employed business owner, as you will pay income tax on your own profits that are more than your personal allowance
  • as an employer, as every employee will pay income tax on their salary over their personal allowance, and have this deducted from their pay.
    
    If you are a sole trader, freelancer, or are self-employed, then you will need to pay your income tax via your self-assessment tax return.
    
    
  • Self-employed income tax rates are the same as for employees. The difference is that income tax will be charged on your trading profits, rather than a salary. For the 2024/25 tax year, the income tax rates are as follows for England, Wales and Northern Ireland:
    
    
    

    Band	Taxable income	Tax rate
    Personal allowance	Up to £12,570	0%
    Basic rate	£12,571 to £50,270	20%
    Higher rate	£50,271 to £125,140	40%
    Additional rate	Over £125,140	45%

  • 
    
  • As with income tax, there are two main ways you can encounter National Insurance as a business:
    
    • As a sole trader, freelancer or when self-employed: You will make Class 2 and Class 4 National Insurance contributions (NICs) until the end of the 2023/24 tax year. Class 2 NICs are a flat £3.45 a week, but will be abolished for self-employed people with profits of over £12,570 from 6 April 2024. Class 4 NICs, meanwhile, will drop from 9% to 8% on profits between £12,570 and £50,270 from 6 April 2024. The rate on profits over £50,270 is 2%. These payments are made through your self-assessment tax return.
    • As an employer: Alongside your employees’ own National Insurance contributions, you make NICs per employee, at a rate of 13.8% for income above the secondary threshold. That’s a salary of £758 to £4,189 a month. However, there are different rules for apprentices, employees under 21, veterans, and freeport workers.
      
      
      

    • VAT​

      VAT, or value added tax, is added to most goods and services you would sell as a VAT-registered business, and is typically charged at 20%. You can only charge VAT if you are a VAT-registered business.
      
      Once you have registered your business for VAT online via your Government Gateway account or your accountant or agent, you will have a number of responsibilities, including paying HMRC any VAT you owe. If you have charged more VAT to customers than you have paid in VAT to other businesses, you will need to pay the difference to HMRC.
      
      There is, however, a list of items that are eligible for a reduced rate of VAT, or ‘zero-rate’ items on which VAT is not charged. Examples of zero-rate items include books, children’s clothes, and most goods exported to outside the UK. A more comprehensive breakdown of reduced- and zero-rate items can be found here.
      
      As a business, you must register for VAT if your taxable turnover is greater than £85,000. You can still choose to become a VAT-registered business if your taxable turnover is below £85,000 – it just isn’t compulsory.
      
      To calculate your VAT taxable turnover, you need to add up the total of all the goods and services you have sold across a 12-month period, excluding any zero-rate items, and see if that total is greater than £85,000.
    • 
      
      
    • The dividends tax rate you pay is determined by your income tax band. To calculate your new income tax band, you need to add your total annual dividends to your base salary.
      
      • Basic rate (£12,571 to £50,270): If you are on the basic rate of income tax, any dividends over your allowance will be charged at a rate of 8.75%.
      • Higher rate (£50,271 to £125,140): Anyone on the higher rate of income tax will see dividends over the allowance charged at a rate of 33.75%.
      • Additional rate (over £125,140): If you pay the additional rate of income tax, your post-allowance dividends are taxed at a rate of 39.35%.
        
        
        
        
      • In order to cut your overall tax bill, you can deduct certain costs and expenses from your turnover to reduce your taxable profit. Tax-deductible expenses differ between sole traders and limited companies.
        
        For the self-employed expenses can include:
        
        • office costs, such as business rent and stationery
        • staff costs, including salary
        • travel costs, such as train tickets, or filling your fuel tank (but not for travel between home and work)
        • specific work clothing, such as uniforms and protective gear
        • advertising and marketing costs (but not entertaining clients or event hospitality)
        • legal and financial costs, such as accountants, solicitors and surveyors
        • banking charges, such as overdraft and credit card fees
        • certain training courses (but not those related to starting a business, or expanding into new areas)
          
          
          UK LTD is the most common company if your clients are from the EU.
          
          At the end of the day i think a US LLC would be better for you tax-wise, you'll be taxed based on Cyprus Taxation system which is way better than the UK IMO

 

[Obelix]

With the UK LTD you'll need to pay taxes in the UK, you are probably confusing the UK LTD with a LLP, which is more or less similar to a US LLC (Transparent Company).


If your business is structured as a limited company, then you will need to pay corporation tax.
For the 2024/25 tax year, corporation tax rates are as follows:

• Profits under £50,000: You are charged at the small profits rate of 19%.
• Profits over £250,000: You are charged at the main rate of 25%.
• Profits between £50,000 and £250,000: You are charged at the 25% main rate, but can reduce the effective rate you pay through Marginal Relief (which operates on a sliding scale). You can calculate your Marginal Relief at gov.uk.
  
  There are two ways you can encounter income tax as a business:
  • as a sole trader, freelancer or self-employed business owner, as you will pay income tax on your own profits that are more than your personal allowance
  • as an employer, as every employee will pay income tax on their salary over their personal allowance, and have this deducted from their pay.
    
    If you are a sole trader, freelancer, or are self-employed, then you will need to pay your income tax via your self-assessment tax return.
    
    
  • Self-employed income tax rates are the same as for employees. The difference is that income tax will be charged on your trading profits, rather than a salary. For the 2024/25 tax year, the income tax rates are as follows for England, Wales and Northern Ireland:
    
    
    

    Band	Taxable income	Tax rate
    Personal allowance	Up to £12,570	0%
    Basic rate	£12,571 to £50,270	20%
    Higher rate	£50,271 to £125,140	40%
    Additional rate	Over £125,140	45%

  • 
    
  • As with income tax, there are two main ways you can encounter National Insurance as a business:
    • As a sole trader, freelancer or when self-employed: You will make Class 2 and Class 4 National Insurance contributions (NICs) until the end of the 2023/24 tax year. Class 2 NICs are a flat £3.45 a week, but will be abolished for self-employed people with profits of over £12,570 from 6 April 2024. Class 4 NICs, meanwhile, will drop from 9% to 8% on profits between £12,570 and £50,270 from 6 April 2024. The rate on profits over £50,270 is 2%. These payments are made through your self-assessment tax return.
    • As an employer: Alongside your employees’ own National Insurance contributions, you make NICs per employee, at a rate of 13.8% for income above the secondary threshold. That’s a salary of £758 to £4,189 a month. However, there are different rules for apprentices, employees under 21, veterans, and freeport workers.
      
      
      

    • VAT​

      VAT, or value added tax, is added to most goods and services you would sell as a VAT-registered business, and is typically charged at 20%. You can only charge VAT if you are a VAT-registered business.
      
      Once you have registered your business for VAT online via your Government Gateway account or your accountant or agent, you will have a number of responsibilities, including paying HMRC any VAT you owe. If you have charged more VAT to customers than you have paid in VAT to other businesses, you will need to pay the difference to HMRC.
      
      There is, however, a list of items that are eligible for a reduced rate of VAT, or ‘zero-rate’ items on which VAT is not charged. Examples of zero-rate items include books, children’s clothes, and most goods exported to outside the UK. A more comprehensive breakdown of reduced- and zero-rate items can be found here.
      
      As a business, you must register for VAT if your taxable turnover is greater than £85,000. You can still choose to become a VAT-registered business if your taxable turnover is below £85,000 – it just isn’t compulsory.
      
      To calculate your VAT taxable turnover, you need to add up the total of all the goods and services you have sold across a 12-month period, excluding any zero-rate items, and see if that total is greater than £85,000.
    • 
      
      
    • The dividends tax rate you pay is determined by your income tax band. To calculate your new income tax band, you need to add your total annual dividends to your base salary.
      • Basic rate (£12,571 to £50,270): If you are on the basic rate of income tax, any dividends over your allowance will be charged at a rate of 8.75%.
      • Higher rate (£50,271 to £125,140): Anyone on the higher rate of income tax will see dividends over the allowance charged at a rate of 33.75%.
      • Additional rate (over £125,140): If you pay the additional rate of income tax, your post-allowance dividends are taxed at a rate of 39.35%.
        
        
        
        
      • In order to cut your overall tax bill, you can deduct certain costs and expenses from your turnover to reduce your taxable profit. Tax-deductible expenses differ between sole traders and limited companies.
        
        For the self-employed expenses can include:
        • office costs, such as business rent and stationery
        • staff costs, including salary
        • travel costs, such as train tickets, or filling your fuel tank (but not for travel between home and work)
        • specific work clothing, such as uniforms and protective gear
        • advertising and marketing costs (but not entertaining clients or event hospitality)
        • legal and financial costs, such as accountants, solicitors and surveyors
        • banking charges, such as overdraft and credit card fees
        • certain training courses (but not those related to starting a business, or expanding into new areas)
          
          
          UK LTD is the most common company if your clients are from the EU.
          
          At the end of the day i think a US LLC would be better for you tax-wise, you'll be taxed based on Cyprus Taxation system which is way better than the UK IMO

Thank you for your information, but i was wrong i mean Uk LLP non resident, in that way i have to not pay taxes in uk like us llc non resident, right?
and from my UK LLP i could send to the shareholder LTD Cypriot dividends with 0% withold

About vat, Us llc non resident for online consulting have to invoice vat to Eu customers?
And the Uk LLp non resident?

 

[alexx999]

Thank you for your information, but i was wrong i mean Uk LLP non resident, in that way i have to not pay taxes in uk like us llc non resident, right?
and from my UK LLP i could send to the shareholder LTD Cypriot dividends with 0% withold

About vat, Us llc non resident for online consulting have to invoice vat to Eu customers?
And the Uk LLp non resident?

Generally, a US LLC would not charge VAT to EU private (B2C) customers for consulting services. However, for digitally supplied services, VAT might be applicable under the MOSS scheme.
For B2B transactions, where the customer is a business, generally, the VAT is accounted for by the EU-based customer under the reverse charge mechanism, meaning the US LLC doesn't charge VAT, but the EU customer accounts for it in their VAT return.

Post-Brexit, UK businesses are treated as non-EU entities for VAT purposes. Therefore, a UK LLP would follow similar rules to those of a US LLC.
For B2C electronically supplied services, the UK LLP might need to register for VAT in the EU customer’s country or use the non-Union MOSS scheme.
In B2B transactions, VAT is generally handled by the EU customer under the reverse charge mechanism.

the LLC itself doesn't pay taxes, but the income is taxed on the owners' residency or company (under the cyprus LTD)

UK LLP doesn't withhold, but i know that depends on the nature of the LLP’s income and its distribution.

Thank you for your information, but i was wrong i mean Uk LLP non resident, in that way i have to not pay taxes in uk like us llc non resident, right?
and from my UK LLP i could send to the shareholder LTD Cypriot dividends with 0% withold

About vat, Us llc non resident for online consulting have to invoice vat to Eu customers?
And the Uk LLp non resident?

my question is.... why don't you use your cyprus company to do all the business? why do you need a transparent company in the middle?

 

[Don]

I want to open one of this companies and need any opinions, shareholder of the company will be my Cyprus LTD, ill do consulting online:

1 - Option Us LLC non resident:
a) Eu particular customers ill invoice without vat correct?
b) my idea is send profit on the end of the year to the shareholder as dividends( so usa will withold 5%)
c) 0% taxes to pay in us, cause not us customers, nothing phisical there.....

2 - Option Uk limited non resident:
a) Eu particular customers ill invoice without vat correct?
b) my idea send profits on the end of the year to the shareholder as dividens (uk will withold 0%)
c) is same as us llc non resident? i mean 0% taxes in uk? but i have to avoid to have uk customers right? any more conditions to not pay taxes in uk?

Any comments welcome, with advantages and disadvantages in both cases.

If i can, looks uk better for me uk as 0% in dividends and sure can send profit as dividends, in us llc have 5% dividends and even most people say i can send to Cyprus as dividens, but some people say as is pass through cant.

Thank you in advance

What exactly do you seek to achieve with these structures?
Why not just operate through your Cyprus entity?

 

[alexx999]

What exactly do you seek to achieve with these structures?
Why not just operate through your Cyprus entity?

exactly my question... I guess he thinks since "No Taxes in the UK or US because it's a transparent entity = no taxes elsewhere"

 

[Obelix]

Generally, a US LLC would not charge VAT to EU private (B2C) customers for consulting services. However, for digitally supplied services, VAT might be applicable under the MOSS scheme.
For B2B transactions, where the customer is a business, generally, the VAT is accounted for by the EU-based customer under the reverse charge mechanism, meaning the US LLC doesn't charge VAT, but the EU customer accounts for it in their VAT return.

Post-Brexit, UK businesses are treated as non-EU entities for VAT purposes. Therefore, a UK LLP would follow similar rules to those of a US LLC.
For B2C electronically supplied services, the UK LLP might need to register for VAT in the EU customer’s country or use the non-Union MOSS scheme.
In B2B transactions, VAT is generally handled by the EU customer under the reverse charge mechanism.

the LLC itself doesn't pay taxes, but the income is taxed on the owners' residency or company (under the cyprus LTD)

UK LLP doesn't withhold, but i know that depends on the nature of the LLP’s income and its distribution.


my question is.... why don't you use your cyprus company to do all the business? why do you need a transparent company in the middle?

Because is important for me not invoice with vat, and in case use the Cyprus company have to invoice with vat
And another thing, if i invoice with cyprus ltd have to pay in profits 12,5% and if i do with US LLC or UK LLP and send the profits to the shareholders as dividends , will not pay the 12,5% its what advisor told me in Cyprus

I would like to ask if someone know, US LLC non resident have to do invoices? i mean nobody ask for them, right? you have to have the register of the transactions, but you dont have to give on the papers of the goverment the invoices
UK LLP non resident is the same?

 

[Obelix]

I talked to so many website do formation on Us LLc and Uk LLp , most say theres not problem in send profits as dividends to the Cyprus ltd (will be the owner of the Llc or Llp), and as said Cyprus advisor said receive profits as dividends its so important.

But i found a couple of website said, dividends is not possible as LLC and LLP have no shareholders, they have members

Anyone know about this?
Thank you

 

[alexx999]

Because is important for me not invoice with vat, and in case use the Cyprus company have to invoice with vat
And another thing, if i invoice with cyprus ltd have to pay in profits 12,5% and if i do with US LLC or UK LLP and send the profits to the shareholders as dividends , will not pay the 12,5% its what advisor told me in Cyprus

I would like to ask if someone know, US LLC non resident have to do invoices? i mean nobody ask for them, right? you have to have the register of the transactions, but you dont have to give on the papers of the goverment the invoices
UK LLP non resident is the same?

If you are an European resident, serving Europeans I can ensure you that you need to pay VAT. In Cyprus, if not, you are committing VAT Fraud, I am not sure how this would work on the field but I am 100% sure it's illegal and with CFC Rules, CRS etc, it won't last long until they catch you...


You are already resident (I hope) in Cyprus, one of the most favorable tax system in europe and probably in the world, just pay what is due.

I am 100% sure what you want to achieve is illegal and can lead to severe consequences, you can just deduct VAT as an expense and reduce your tax burden so I don't see the problem....

Please, contact a professional in Cyprus

Because is important for me not invoice with vat, and in case use the Cyprus company have to invoice with vat
And another thing, if i invoice with cyprus ltd have to pay in profits 12,5% and if i do with US LLC or UK LLP and send the profits to the shareholders as dividends , will not pay the 12,5% its what advisor told me in Cyprus

I would like to ask if someone know, US LLC non resident have to do invoices? i mean nobody ask for them, right? you have to have the register of the transactions, but you dont have to give on the papers of the goverment the invoices
UK LLP non resident is the same?

If you are an European resident, serving Europeans I can ensure you that you need to pay VAT. In Cyprus, if not, you are committing VAT Fraud, I am not sure how this would work on the field but I am 100% sure it's illegal and with CFC Rules, CRS etc, it won't last long until they catch you...


You are already resident (I hope) in Cyprus, one of the most favorable tax system in europe and probably in the world, just pay what is due.

I am 100% sure what you want to achieve is illegal and can lead to severe consequences, you can just deduct VAT as an expense and reduce your tax burden so I don't see the problem....

Please, contact a professional in Cyprus

 

[Obelix]

If you are an European resident, serving Europeans I can ensure you that you need to pay VAT. In Cyprus, if not, you are committing VAT Fraud, I am not sure how this would work on the field but I am 100% sure it's illegal and with CFC Rules, CRS etc, it won't last long until they catch you...


You are already resident (I hope) in Cyprus, one of the most favorable tax system in europe and probably in the world, just pay what is due.

I am 100% sure what you want to achieve is illegal and can lead to severe consequences, you can just deduct VAT as an expense and reduce your tax burden so I don't see the problem....

Please, contact a professional in Cyprus


If you are an European resident, serving Europeans I can ensure you that you need to pay VAT. In Cyprus, if not, you are committing VAT Fraud, I am not sure how this would work on the field but I am 100% sure it's illegal and with CFC Rules, CRS etc, it won't last long until they catch you...


You are already resident (I hope) in Cyprus, one of the most favorable tax system in europe and probably in the world, just pay what is due.

I am 100% sure what you want to achieve is illegal and can lead to severe consequences, you can just deduct VAT as an expense and reduce your tax burden so I don't see the problem....

Please, contact a professional in Cyprus

Thank you so much for your help, about vat im not sure you are right

Whether a Cyprus LTD needs to invoice with VAT or without VAT for online consulting services to European citizens depends on the specific situation.

General rule:

A Cyprus LTD is generally subject to VAT in Cyprus if it provides services to customers located in Cyprus. However, there are certain exemptions from VAT, including the provision of services to non-residents.

Online consulting services:

Online consulting services are generally considered to be services provided remotely. This means that they are not subject to VAT in Cyprus if they are provided to non-residents.

Requirements to invoice without VAT:

To invoice without VAT for online consulting services to European citizens, a Cyprus LTD must ensure that the following conditions are met:

1. The LTD is established in Cyprus.
2. The customer is located in a European Union member state.
3. The services are provided remotely (e.g., via video conferencing).
4. The services are not subject to any specific VAT exemption or relief in Cyprus.

I said its consulting service online, in my understanding , if my customers are europeans not in cyprus (not companies) , and the work its online, you can read this, not vat on invoices, i think theres a limit per countrie, but im not agree with you

About vat ill ask my advisor this week will be easy to know.
But main problem to understand is, US LLC non resident and UK LLP non resident can send dividends to his owner if its Cypriot LTD, many people said yes, but some said not, as said owner are member and not shareholders

This its the main of my questions that i would like to know, thank you

 

[churumbelo]

A UK LLP does not have shareholders (and doesn't distribute dividends) but members.

 

[alexx999]

A UK LLP does not have shareholders (and doesn't distribute dividends) but members.

In theory it's the same with the US LLC but it depends how it's seen by his country of residency (cyprus), and for example in Italy the Profit of an LLC is seen as dividends/capital gains even tho technically they are not

 

[churumbelo]

In theory it's the same with the US LLC but it depends how it's seen by his country of residency (cyprus), and for example in Italy the Profit of an LLC is seen as dividends/capital gains even tho technically they are not

That's right. How the US or UK sees it VS the country of residency.

 

[Obelix]

Now in US someone told me, exactly is not dividends, but some people is declaring in Cyprus as dividends, but i dont know the true how can see it Cyrpus, cause if were dividends will have some withold in US, and in this way theres not withold

 

[Marzio]

Its what advisor told me in Cyprus

Change your advisor because he is giving you bad advice because LLC and LLP don't have shareholders but members so you can't receive dividends from those entities.

is not dividends, but some people is declaring in Cyprus as dividends

LLC or LLP are seen as transparent in Cyprus so any income your receive from those entities should be taxed at personal income rates. If some prople are declaring that income as dividends and Cyprus is closing eyes and you are comfortable with the fact that one day the tax agency could wake up, you can do the same.

 

[Obelix]

Change your advisor because he is giving you bad advice because LLC and LLP don't have shareholders but members so you can't receive dividends from those entities.



LLC or LLP are seen as transparent in Cyprus so any income your receive from those entities should be taxed at personal income rates. If some prople are declaring that income as dividends and Cyprus is closing eyes and you are comfortable with the fact that one day the tax agency could wake up, you can do the same.

Thank you for your help