bypass 30 percent withholding tax for royalties

[FrustratedMan]

US tax treaties are structured in a way that to access the benefits of the treaty UBO has the be tax resident of the country used to claim the treaty.

How would Georgia work then?

 

[Marzio]

How would Georgia work then?

Not with Georgia, because these are old Soviet Union tax treaties that didn't have LoB clauses yet.

The only thing i'd like to add is that RIGHT NOW the US-USSR treaty is unidirectional so US still obeys to the old USSR treaty (which includes Georgia).

The problem is that Georgia doen't recognize that treaty as valid from its part since the treaty is with USSR and not with Georgia so when they will decide to negotiate a new treaty with US you can forget about not having LoB in the treaty and having 0% WHT on royalties.

This is exactly what happened to Kazakhstan when renegotiated a new treaty with US.

Now they have 10% US WHT on royalties.

If you want to exploit that loophole you have to physically move to Georgia because Georgia has 0% US WHT on royalties AND foreign sourced income is tax free (for natural persons).

By moving there you can enjoy your royalties tax free but since you said that the treaty country must be UK for some reason I assume this strategy isn't a viable solution for you.

 

[FrustratedMan]

By moving there you can enjoy your royalties tax free but since you said that the treaty country must be UK for some reason I assume this strategy isn't a viable solution for you.

I'm willing to look for other options.

The problem is that Georgia doen't recognize that treaty as valid from its part since the treaty is with USSR and not with Georgia so when they will decide to negotiate a new treaty with US you can forget about not having LoB in the treaty and having 0% WHT on royalties.

But that's for the future, correct?

If I don't move there and open a company there as a non-resident will that still be doable, as in getting rid of the 30 percent withholding tax?

 

[Marzio]

I'm willing to look for other options.

There are none.

If I don't move there and open a company there as a non-resident will that still be doable, as in getting rid of the 30 percent withholding tax?

Sure, but what's the point? You will have to pay Georgian CIT on those royalties upon dividend distribution which right now is 15% plus 5% Georgian WHT on dividends.

Just pay 19% in UK.

 

[Xshore]

Just pay 19% in UK.

How can that be? I thought you confirmed that a UK ltd owned by a non resident can't avoid the 30% withholding tax, and will also pay the 19/25% UK tax, but that can get a deduction from the 30% paid in the US. So the total tax would be 30%.

 

[Marzio]

I thought you confirmed that a UK ltd owned by a non resident can't avoid the 30% withholding tax

Yes, that's correct.

When i said "just pay 19%" i assumed that UK company would qualify for treaty benefits so the US WHT on royalties would be zero.

If the UK company wouldn't qualify for treaty benefits what i said before stands.

When i factored in the 5% Georgian WHT on dividends for some reason i assumed dividends would be send to UK but unless OP shares more about why UK has to be the treaty country and where he is tax resident i could only speculate.

 

[alpakiwi]

Where would you bank?

Depends on the average balance he plans to have in the bank, if @FrustratedMan gives more details I can recommend

 

[FrustratedMan]

Yes, that's correct.

When i said "just pay 19%" i assumed that UK company would qualify for treaty benefits so the US WHT on royalties would be zero.

If the UK company wouldn't qualify for treaty benefits what i said before stands.

When i factored in the 5% Georgian WHT on dividends for some reason i assumed dividends would be send to UK but unless OP shares more about why UK has to be the treaty country and where he is tax resident i could only speculate.

Do you know if a HK ltd with a Latvian ubo and resident will have to pay 30 percent in withholding taxes or Latvia’s rate of 10 percent?

 

[JustAnotherNomad]

Do you know if a HK ltd with a Latvian ubo and resident will have to pay 30 percent in withholding taxes or Latvia’s rate of 10 percent?

What is the tax residency of the HK Ltd.?