Use a US LLC as a non-resident; non-US citizen; non-ETBUS to get paid as a consultant

[resident101]

Hi All,

I will work as a consultant for a company from LATAM, I am resident of an EU country, I have EU passport.

I need a way to issue invoices to get paid.

I have an LLC in the US. I want to optimize the tax I pay, in the country I am at right now, I would give half of my earnings to the state, no thanks.

Questions:

-If the LATAM pays the US entity, since the income is not earned in the US I don't have to pay tax on that, and I would have to declare this foreign income on my home tax filings here in the EU, is this correct?
-I know the above setup works well for amazon FBA etc, but what about consulting services? Is there any difference?
-Can I use my earnings from my US business bank account for personal spending? Since LLC is a pass-through entity in the US, it will be assumed that this money is like personal money, correct?

Thanks!

 

[Sols]

Hi All,

I will work as a consultant for a company from LATAM, I am resident of an EU country, I have EU passport.

I need a way to issue invoices to get paid.

I have an LLC in the US. I want to optimize the tax I pay, in the country I am at right now, I would give half of my earnings to the state, no thanks.

Stop living in a place whose taxes aren't convenient for you. That's the reality today.

If you have EU citizenship, relocation to Malta and Cyprus would be nice and easy.

-If the LATAM pays the US entity, since the income is not earned in the US I don't have to pay tax on that, and I would have to declare this foreign income on my home tax filings here in the EU, is this correct?

No, of course not. Your US LLC is tax resident in whichever EU country you live in. The income is attributable to you and/or the company has to pay corporate income tax as any other person or entity tax resident where you live.

-Can I use my earnings from my US business bank account for personal spending? Since LLC is a pass-through entity in the US, it will be assumed that this money is like personal money, correct?

Under US law, the the proceeds of an LLC are taxable as personal income.

But since you live in EU, you have to look into how a US LLC is taxed where you live. Sometimes they are considered passthrough entities (same as they are in US) and sometimes they are considered corporate entities that have to pay corporate income tax on their profits (same as any local company).

 

[resident101]

Thank you for your reply.

1. Well, I can't move countries just like that, so for now I have to stay where I am.
2. What I mean by not owing tax is that I owe no tax to the IRS. Then I have to declare my offshore income where I am right now.
3. Again, all my money activity would only take place in the US. I earn income on my business bank account and I use that money for personal expenses.

 

[Sols]

1. Well, I can't move countries just like that, so for now I have to stay where I am.

Then you have to pay taxes in accordance with local law.

2. What I mean by not owing tax is that I owe no tax to the IRS. Then I have to declare my offshore income where I am right now.
3. Again, all my money activity would only take place in the US. I earn income on my business bank account and I use that money for personal expenses.

In that case, you very likely have no tax burden in the US. But you'd have to look into how a US LLC is treated under your local laws. There is no well established exact equivalent to a US-style LLC anywhere in EU (especially single-member LLC), so it varies from one country to the next.