Best management location for US LLC

[JustAnotherNomad]

It seems like US LLCs (and similar entities with no clear corporate tax residency) can be problematic.
This can cause problems like:
* The tax authority in the member's residency country could claim there is a PE / it is managed from there
* For payments to such an entity, the tax authority in the payer's country could claim it is transparent and the payment should be treated as a payment to the member (in his country of tax residency), or it could be treated as non-deductible due to unclear tax residency status

I would guess that these issues can be avoided by having a director in a country that doesn't really care about this (zero-tax country/country without PE rules). Is that true?
What would be the ideal country to have such a director based in?

 

[daniels27]

I think there are several categories of countries.

Pitcairn and Sark are safe as they do not tax anybody. Monaco has often been discussed, but there are voices which say otherwise
https://monentreprise.gouv.mc/en/th...x/other-taxes-and-duties/corporate-income-tax
It says that if over 25% of your revenue is foreign, you are subject to 25% of tax.

Then, there are those without a real PE concept, I think the Middle East has been discussed here many times.

And then there are plenty that do not care effectively. I would say pretty much all in South America and Africa. Many of these countries have like territorial taxation, either officially like Zimbabwe, sometimes inofficially but still like everybody agrees on it like Peru, etc.

 

[JustAnotherNomad]

I think with Pircairn, Sark etc. the question would be if those can be considered as tax havens, like Panama. That could also lead to issues.
South America and Africa could be interesting, since there would often even be tax treaties.
But then what if the tax authority in the payer's country wants to see proof of establishment? Could that lead to PE issues after all?

 

[daniels27]

I think with Pircairn, Sark etc. the question would be if those can be considered as tax havens, like Panama. That could also lead to issues.

South America and Africa could be interesting, since there would often even be tax treaties.

Not that many. Only Egypt, Morocco, South Africa, Tunisia, Venezuela.
https://taxsummaries.pwc.com/united-states/corporate/withholding-taxes
https://www.irs.gov/individuals/international-taxpayers/tax-treaty-tables

But then what if the tax authority in the payer's country wants to see proof of establishment? Could that lead to PE issues after all?

Most of them won't tax the profits. But the bigger problem is then that you may be subject to WHT when taking out the money from there. And there aren't many countries without WHT on dividends.

 

[JustAnotherNomad]

Not that many. Only Egypt, Morocco, South Africa, Tunisia, Venezuela.
https://taxsummaries.pwc.com/united-states/corporate/withholding-taxes
https://www.irs.gov/individuals/international-taxpayers/tax-treaty-tables

Without ECI, there should be no tax on the US side.
https://www.irs.gov/individuals/international-taxpayers/tax-treaty-tables

Most of them won't tax the profits. But the bigger problem is then that you may be subject to WHT when taking out the money from there. And there aren't many countries without WHT on dividends.

You mean in the country where the director would be located? Then we're back to the original question.
But why would they have WHT if there is no tax to begin with?

 

[daniels27]

Without ECI, there should be no tax on the US side.
https://www.irs.gov/individuals/international-taxpayers/tax-treaty-tables

Yes. Having a treaty is advantageous as it eliminates the FBA etc. questions on which there is no firm answer
https://www.offshorecorptalk.com/th...ltd-no-vat-lower-tax.45187/page-2#post-315286

You mean in the country where the director would be located? Then we're back to the original question.
But why would they have WHT if there is no tax to begin with?

Sorry, I mean the following. In the place you have the director, you could ideally open a real company. This would then also eliminate the personal income question discussed here:
https://www.offshorecorptalk.com/th...ts-in-2026-where-people-will-go-to-now.46945/
If you then have a company that owns the US LLC, you would then have to pay wiyhholding tax on the distributed dividends. Now, there are people willing to leave the cash in the company etc. but there are also reasons not to do.

Skipping that company would probably come back to the PE uncertainity.

 

[A1988]

MALTA works seamlessly with US LLC. No tax if money not remitted. It's considered a non dom company since it's incorporated outside of Malta even if managed from Malta.

 

[daniels27]

MALTA works seamlessly with US LLC. No tax if money not remitted. It's considered a non dom company since it's incorporated outside of Malta even if managed from Malta.

Are you currently using this? How much are you paying for the director?

 

[MarkusCostigan]

MALTA works seamlessly with US LLC. No tax if money not remitted. It's considered a non dom company since it's incorporated outside of Malta even if managed from Malta.

Yes but in theory the LLC does not have to be managed from Malta. It should also be said that the US and Malta have a tax treaty.

Perhaps it would be useful to understand if it were possible to open only a branch for the LLC in Malta (not a company), manage it from Malta and then request the famous 6/7 refund (from the branch). ?

 

[JustAnotherNomad]

Yes. Having a treaty is advantageous as it eliminates the FBA etc. questions on which there is no firm answer
https://www.offshorecorptalk.com/th...ltd-no-vat-lower-tax.45187/page-2#post-315286

Ok, then you can avoid US WHT, but you would still have to pay US CIT.
Ideally one would be able to avoid the US CIT anyway.

Also, no, there cannot be WHT. That is only possible if the US LLC was seen as opaque by the US, but it wouldn't be. You can choose this ("check the box").
https://www.offshorecorptalk.com/th...ltd-no-vat-lower-tax.45187/page-2#post-315286

Sorry, I mean the following. In the place you have the director, you could ideally open a real company. This would then also eliminate the personal income question discussed here:
https://www.offshorecorptalk.com/th...ts-in-2026-where-people-will-go-to-now.46945/
If you then have a company that owns the US LLC, you would then have to pay wiyhholding tax on the distributed dividends. Now, there are people willing to leave the cash in the company etc. but there are also reasons not to do.

You mean to have a foreign company own the US LLC? Then you would risk branch profit tax on top, which would be the equivalent of WHT.
You can avoid this risk by owning it as an individual.

Skipping that company would probably come back to the PE uncertainity.

Where? It should be clear on the US side, the US wouldn't care.

 

[JustAnotherNomad]

MALTA works seamlessly with US LLC. No tax if money not remitted. It's considered a non dom company since it's incorporated outside of Malta even if managed from Malta.

Is there a court ruling for this?

 

[JustAnotherNomad]

Yes but in theory the LLC does not have to be managed from Malta. It should also be said that the US and Malta have a tax treaty.

Sounds perfect.

Perhaps it would be useful to understand if it were possible to open only a branch for the LLC in Malta (not a company), manage it from Malta and then request the famous 6/7 refund (from the branch). ?

But then you would have to pay CIT in Malta. Which could be OK, but then why bother with the US LLC in the first place?

 

[daniels27]

But then you would have to pay CIT in Malta. Which could be OK, but then why bother with the US LLC in the first place?

Can you get around the audit with a branch?

I mean like in Hong Kong where they have a mandatory audit, but you can just incorporate in the BVI and register your BVI company locally and then you are out of the audit. Everything else still stays like a local company, just that you can submit unaudited statements.

 

[MarkusCostigan]

Sounds perfect.



But then you would have to pay CIT in Malta. Which could be OK, but then why bother with the US LLC in the first place?

I would say many advantages:

1. Non-public LLC information (info, UBO, various balance sheets). In Malta, apart from the fact that the balance sheets are public, even the UBO, although today a request must be made, is easy to find out (a journalist can make a request for example), request does not necessarily have to come from an authority.

2. You can count on US professionalism for everything. People respond quickly, lots of competition in all sectors, you always find a solution, fast.
In Malta everything is overpriced, people respond after weeks, to finish a very simple thing you need 10x the time, important bureaucracy. The Maltese tend to extract as much money as possible from you. As a non-Maltese you are always seen as a chicken to be plucked. Be wary of anyone who says otherwise.

3. Managing a US LLC + Maltese Branch probably costs less than managing a single Maltese LTD.

Negative aspects:

Even the branch (Overseas company) (although it is not a real company like a subsidiary for example) needs audited balance sheets and constant vat return.
Some say that if the country of origin where the company is incorporated DOES NOT REQUIRE audits, it does not need to be filed.
It's probably worth asking.

 

[daniels27]

Even the branch (although it is not a real company like a subsidiary for example) needs audited balance sheets and constant vat return.

Ok, then better have a US LLC and just a director in Malta if you want to avoid the 2k and 1 week on the audit.

 

[MarkusCostigan]

Ok, then better have a US LLC and just a director in Malta if you want to avoid the 2k and 1 week on the audit.

Yes of course if you do 5 transactions per month maybe the price is that.

Try to do thousands of transactions per month with various tier prices + company expenses.

1000 euros only for the audit only when you turn the handle of the accountant's office.

 

[JustAnotherNomad]

Ok, then better have a US LLC and just a director in Malta if you want to avoid the 2k and 1 week on the audit.

Agree, this sounds like the best option indeed.

But how robust is this? Are there court rulings about this in Malta? Can you get an advance ruling?

 

[A1988]

Malta treats US LLC as non dom company, you can manage the company from Malta and pay for what you remit to malta. Malta does not apply CFC until 750k Euros euros. Also, there is clarification at CFR website on it.

And yes, I am using it myself, you can always use shareholder loans which is treated as capital and not taxed in Malta even if remitted.

 

[JustAnotherNomad]

CFC rules probably shouldn't be an issue either, for that the shareholder would have to be a Maltese tax resident.
So if only the director is based in Malta, it should be fine?

How did you find out that this works? Did you get a formal ruling?

 

[A1988]

CFC rules probably shouldn't be an issue either, for that the shareholder would have to be a Maltese tax resident.
So if only the director is based in Malta, it should be fine?

How did you find out that this works? Did you get a formal ruling?

No formal ruling, it's clearly written on the CFR website. That's the Bible in Malta for taxes. Google non dom company Malta CFR and you will see it.

And by the way, I have confirmed it with my lawyer and how to work around it. Malta has lots of tax benefits but it does not want to shout and sell itself like dubai. You need a good law firm to get yourself around it. Keep the locals happy and you are good.