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What Are The Taxes For A Non-Resident Owner Of A US LLC? If a Foreigner owns an American Company do they need to Pay ANY Taxes in the US?

These are actually very common questions I get asked a lot. Even lawyers and accountants ask me whether Non-Americans need to pay US taxes when they open an American company. Is this something you should be worried about? How complicated this topic is? Today I'm going to answer all the possible questions you can have regarding this matter. Also, I'm going to point out some principles that can be used in other structures as well, so even if you're an American you could benefit from them.

If you want to save on TAXES you're in the right place!

In the US there is a variety of different companies, the most important two are the US LLC & C Corp

C Corp will always be taxable in the US, so if you're a foreigner you're better off forming an LLC company. If you own a single-member LLC in the US it is considered a disregarded entity, meaning that it doesn't exist for tax purposes. This is similar to being a sole trader or a sole proprietor.

Let's give an example. Let's say that I'm a dropshipper who is selling products all over the world. I'm based in Cyprus, and business is done completely online. If I set up a C Corp in the US it is very clear that the company will be taxable. But what if I have a US LLC? Will that company be taxable in my case? In order to be taxed in this case, I'd need to have a permanent establishment in the US. MY US LLC wouldn't be considered a permanent establishment. In my case, there is also a tax treaty between US and Cyprus. All this means that I am not liable to US taxes for my LLC.

But what if there's no tax treaty between the US and your country of residence? Are you liable to pay taxes in the US? Short answer - you don't have to be!
We'll need to dive into some definitions here, what we call ''effectively connected income'' and ''US trade or business''.
If you don't have people in the US - employees or full-time contractors, sometimes referred to as a dependent agent, you SHOULD NOT be taxable in the US.

Who are we and what do we do?

We are Offshore Citizen team. We help people become global: get a second passport, set up a second residency, pay less taxes, do banking abroad, etc.

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Author: Michael Rosmer

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