US LLC + UK LTD + PE in a 3rd country

[gnud]

What are the tax implications if an UK LTD is holding an US LLC, the LLC is non-ETBUS, and both are managed from

a) 3rd country that doesn't have a tax treaty with the US and the UK

b) 3rd country that doesn't have a tax treaty with the US but has with the UK


In the case a) will the LLC be considered a tax resident of the UK when the 3rd country wouldn't consider it or the parent a tax resident? Will the US consider it a tax resident? Or will it remain untaxed on the US side and the UK wouldn't consider it a tax resident either? The LTD will remain a tax resident of the UK since there are no POEM rules defined. Will the 3rd country be able to claim any taxes?

In the case b) will the LLC remain untaxed in the US? The 3rd country will appropriate the LTD parent. Will the 3rd country be able to claim any taxes?


The aim is obviously to prevent any country from claiming the LLC as a tax resident, while remaining untaxed in the US. And terminating the pass-through tax obligation on the owner's side by the use of an UK company since LLCs are considered opaque by the HMRC.

 

[CaptK]

Very convoluted way of doing it, don't understand why you would do it like that.
LLC is a pass through so that fine.
UK LTD is taxable by definition in the UK but due to PE can be tax free.
Default tax lies in where the day to day business happens so either of your 2 countries.

If you terminate the the tax obligation in the LTD then you will be liable.
Need a bit more information to understand what sector you are in and where your customers are?

 

[gnud]

I meant by terminate that the tax obligation won’t “flow” to me personally anymore, it will end at the LTD.

I need an LLC because I want access to US brokers - they offer better tools, lower costs and no EU restrictions.

So now the question was what to do about the taxation on my end. Therefore it needs to be held by a company.

Why LTD? Because I need to indicate a beneficiary on W-8BEN-E forms, and a company in a less reputable jurisdiction wouldn’t look good.

Now what about the LTD’s taxation? Create a branch in a tax friendly country and manage it all from there.

I’ve checked with the HMRC and it would work as intended. The only taxation would happen in the branch office country.

I don’t want to have a company in my country of residency because of high taxes and a business-hostile administration. So I’ll keep my business dealings here to minimum.

My business is software development and proprietary trading. I can do it from anywhere.