Delaware LLC + holding company + EU sole proprietorship

[Brace]

Thanks!

The IRS will in fact report it to your country of residency as reported on the form 5472 as a foreign-owned LLC.
Also for opening a brokerage account in the US a tax id of the authorized person opening the account is required. A foreign tax id, in case of a non-ETBUS LLC.
The indication that this reporting is going on is that the EU dropped the threat to put the US on a non-cooperative jurisdiction list back in 2019.

So the only solution seems to be to have two tax residencies, two tax ids, without the 2 jurisdictions knowing about each other. Ideally under 2 different citizenships. One back home, one outside the EU, where you declare the LLC. Within the EU, tax residency informations seem to be shared now: https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/tax/lu-dac6-eu-exchange-information.pdf

Is it legal? Probably not, since you have an obligation to report all your companies and assets held abroad in your home country. Is it discoverable? Probably not, unless you keep receiving money from abroad and have no source of income back home.

As far as I understand

Once you cease to be a tax resident of your home country it is the end of the story, specially if you dont have any more accounts or assets or personal income from there, you dont even have to file tax there anymore. you just keep renewing your id card and passport and visiting for less that 183 days a year thats the ony relationship wth that country.

You can have a Wise or Revolut account which are european and have an american USD bank account trough them and no tax number is asked for personal account, for business you would use the LLC EIN numbers

I didnt know about form 5472 but it seems to be where one discloses all the draws one makes from the LLC to our personal accounts, is this correct?

In the case of still having european tax residency and using the EU tax number on the form and the IRS reports it, basically that is a killer, it garantees that the european tax authority knows about all the money that you are receiving and will tax your personal income, if not also the corporate income if they can claim POEM/PE.

If the new low territorial tax country where you are now a tax resident is notified about you owning a foreign LLC what do they care? Foreign personal income is not taxed, and the only way they can get some money is IF and WHEN they can build a case of POEM which is very unlikely because it takes resouces they dont have and they need a way to substantiate proof that you actually operate the LLC from their territory, and all this defeats the purpose of them having created this territorial taxation in the first place to motivate foreigners to reside there, not in their best interest, they wont go after you I guess...

But now i am even more confused because of this form 5472.
It seems to be the way they found that no foreign resident gets away without paying tax at least in his home country. kind of a reverse FATCA.

 

[gnud]

If you own a single-member pass-through LLC you’re obliged to fill this form too, every year, regardless of it you pay yourself draws or do any payments outside the US.

As far as I understand

Once you cease to be a tax resident of your home country it is the end of the story, specially if you dont have any more accounts or assets or personal income from there, you dont even have to file tax there anymore. you just keep renewing your id card and passport and visiting for less that 183 days a year thats the ony relationship wth that country.

You can have a Wise or Revolut account which are european and have an american USD bank account trough them and no tax number is asked for personal account, for business you would use the LLC EIN numbers

I didnt know about form 5472 but it seems to be where one discloses all the draws one makes from the LLC to our personal accounts, is this correct?

In the case of still having european tax residency and using the EU tax number on the form and the IRS reports it, basically that is a killer, it garantees that the european tax authority knows about all the money that you are receiving and will tax your personal income, if not also the corporate income if they can claim POEM/PE.

If the new low territorial tax country where you are now a tax resident is notified about you owning a foreign LLC what do they care? Foreign personal income is not taxed, and the only way they can get some money is IF and WHEN they can build a case of POEM which is very unlikely because it takes resouces they dont have and they need a way to substantiate proof that you actually operate the LLC from their territory, and all this defeats the purpose of them having created this territorial taxation in the first place to motivate foreigners to reside there, not in their best interest, they wont go after you I guess...

But now i am even more confused because of this form 5472.
It seems to be the way they found that no foreign resident gets away without paying tax at least in his home country. kind of a

Yes. Even though the US is not part of the CRS, it still exchanges information.

If a bank allows you to open a bank account by some lucky chance, it will not be reported because it can’t be, US banks just don’t collect information about tax ids. But an LLC or a brokerage account are.

Also don’t think that if your LLC is not listed in any public register you can’t be uncovered. Tax authorities don’t use public registers between them. That’s one of the reasons why the form 5472 exists.

And if you keep using a bank card of the LLC back home, eventually it will be flagged as a card used by a resident and your tax authorities will request information from the IRS about the warm body holding the card through the John Doe summons.

 

[GPT]

“Within the EU, tax residency informations seem to be shared now: https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/tax/lu-dac6-eu-exchange-information.pdf”

You bet your a*s on that info is shared. In fact this sharing goes way beyond the EU and is based on oecd agreements. Only exception is US which is one way traffic. They collect but don’t (or very rarely) share.

 

[gnud]

An LLC nowadays is really only good to hide yourself from the public and to access US services.

If you find a country that does not give a s**t about what the US is reporting to them and is easy to officially move to let me know.

Only the UAE comes to mind. I don’t have a 1M for Monaco, yet.

Not sure how is it in the Balkans like Montenegro or Serbia.

 

[Brace]

For my education
Apart from payment processors what kind of US services does having an LLC will help you with?
For financial services you always need a personal credit score established, which a foreign doesnt have let alone a personal SSN or ITIN. Are there any other benefits?

I also got the ideia somehow that LLC´s are frowned upon by european entreprise clients and they dont accept to be invoiced by an US LLC etc
Any toughs on this?

Thats why i mentioned Paraguay, I do believe you wont have problems there. georgia is easier to move to and manouvre but riskier of getting noticed.

 

[gnud]

For my education
Apart from payment processors what kind of US services does having an LLC will help you with?
For financial services you always need a personal credit score established, which a foreign doesnt have let alone a personal SSN or ITIN. Are there any other benefits?

I also got the ideia somehow that LLC´s are frowned upon by european entreprise clients and they dont accept to be invoiced by an US LLC etc
Any toughs on this?

Thats why i mentioned Paraguay, I do believe you wont have problems there. georgia is easier to move to and manouvre but riskier of getting noticed.

US brokers. To get around the idiotic EU restrictions (like not being allowed to buy ETFs), and to get the best features (in the EU brokers are very basic, because the average citizen is a financial moron who keeps money in a checking / savings account). All money earned are reinvested.

I only have US clients, Europoors can’t afford me, they spend half of what they earn to sponsor lazy good-for-nothings and line corrupt politicians’ pockets through public projects.

Also when new services show up they will always be available in the US first. It was like that with the app store, stripe, etc.

 

[GPT]

US brokers. To get around the idiotic EU restrictions (like not being allowed to buy ETFs), and to get the best features (in the EU brokers are very basic, because the average citizen is a financial moron who keeps money in a checking / savings account). All money earned are reinvested.

I only have US clients, Europoors can’t afford me, they spend half of what they earn to sponsor lazy good-for-nothings and line corrupt politicians’ pockets through public projects.

Also when new services show up they will always be available in the US first. It was like that with the app store, stripe, etc.

Let’s not forget the US forex brokers that don’t allow you to have within the same currency pairs opposite trades. On different timeframes and or different strategies they can make perfect sense. European brokers allow you to do that.

 

[gnud]

Let’s not forget the US forex brokers that don’t allow you to have within the same currency pairs opposite trades. On different timeframes and or different strategies they can make perfect sense. European brokers allow you to do that.

The EU decided, for our own good, that leverage in forex is limited to max 30:1 .

In Germany, the clever heads in charge decided that losses on trading derivatives (including CFDs, which is most brokers) are deductible only up to 20k, but gains are taxed in full, so you can end up paying more in tax than you earn.

For trading a decentralized market like forex I definitely wouldn't choose any broker in the EU, with made up restrictions and reporting.

 

[GPT]

The EU decided, for our own good, that leverage in forex is limited to max 30:1 .

In Germany, the clever heads in charge decided that losses on trading derivatives (including CFDs, which is most brokers) are deductible only up to 20k, but gains are taxed in full, so you can end up paying more in tax than you earn.

For trading a decentralized market like forex I definitely wouldn't choose any broker in the EU, with made up restrictions and reporting.

Not saying that Europe is perfect at all. Merely saying that I also wouldn’t want to have brokers exclusively falling under US schemes.

With everything; pick your battles.

 

[uplana]

For trading a decentralized market like forex I definitely wouldn't choose any broker in the EU, with made up restrictions and reporting.

where would you suggest then and what company to use for trading ?

 

[gnud]

Another reply from a Romanian lawyer. Case closed, a foreign company managed from Romania would really be subject to the standard CIT of 16% as a non-Romanian entity regardless of its revenue or if it's a subsidiary of a Romanian company.

You should ask this question as a test to lawyers in Romania to see if they're stupid or dishonest, you already know the correct answer.

 

[GPT]

Another reply from a Romanian lawyer. Case closed, a foreign company managed from Romania would really be subject to the standard CIT of 16% as a non-Romanian entity regardless of its revenue or if it's a subsidiary of a Romanian company.

View attachment 2950

You should ask this question as a test to lawyers in Romania to see if they're stupid or dishonest, you already know the correct answer.

This proofs yet again to always always always ask three different parties. The two that say more or less the same are likely right. If three answers do not satisfy you... Go for a fourth or fifth even..

 

[gnud]

where would you suggest then and what company to use for trading ?

I don't trade forex live yet, haven't ironed out my strategies yet. I like IC Markets, tight spreads, one-click trading interface, but it's Australian, their restrictions are even worse than in the EU, but I wouldn't be trading from Australia so not sure how that'd apply to me, their demo account has no restrictions. Any Swiss broker like dukascopy has no restrictions, just reporting, but then it's most likely not some scam. If I wanted to avoid reporting, I'd look somewhere in Taiwan, it's not participating in the CRS, and it's not a shithole like the rest of non-CRS countries.

 

[startfleetio]

Another reply from a Romanian lawyer. Case closed, a foreign company managed from Romania would really be subject to the standard CIT of 16% as a non-Romanian entity regardless of its revenue or if it's a subsidiary of a Romanian company.

View attachment 2950

You should ask this question as a test to lawyers in Romania to see if they're stupid or dishonest, you already know the correct answer.

Romania actually has pretty strict tax laws, CFCs, Exit Tax, and not to mention witholding taxes of 16% for services performed by non-residents.

 

[jayM]

It can notify country A all it wants if there won't be anything to be taxed.

Yeah I will verify if Romania really sees an LLC as an opaque entity. I've searched in Romanian with google translate and couldn't find anything. The Romanian tax advisors were surprised by the question too.

I haven't been visiting the forum for a long time, your thread came up in my inbox. Sorry to open old thread. How is it working with the setup?