Portugal tax resident under NHR + US LLC

[disagree23]

For the same reason you are looking for a manager outside PT.

What do you think will happen if you somebody will manage a US LLC from Germany? Or France? Or Spain? Or UK? or [put any EU country here]

Yes, it make sense. At the same time, if PT IRS ask you to provide this kind of proof, and you prove your LLC is managed from Germany, usually a tax agency does not inform that country's IRS of this.
But yeah, your take makes totally sense.

Would it be possible for you to send me a DM?

 

[Marzio]

if PT IRS ask you to provide this kind of proof, and you prove your LLC is managed from Germany, usually a tax agency does not inform that country's IRS of this.

If you are afraid of this then go for Cyprus LTD so that you have some all the proofi you need in case PT tax agency will ask questions.

Would it be possible for you to send me a DM?

I try to keep everything in public forums so that other will benefits from my genius

 

[disagree23]

If you are afraid of this then go for Cyprus LTD so that you have some all the proofi you need in case PT tax agency will ask questions.

I'm not that afraid of this honestly... was just answering to the "problem" you exposed in that case. But in this way it should be "ok".

I try to keep everything in public forums so that other will benefits from my genius

Then, what if I find a person/friend/close connection in one of those tax-friendly countries you were saying? I could also find some kind of friend and do a management agreement between him/her and my LLC. Then I think there should be some way to "create" all the things you need to prove this management from him/her?

 

[Marzio]

Then I think there should be some way to "create" all the things you need to prove this management from him/her?

I guess your US LLC doesn't have an operating agreement.

You should draft one stating that your friend will be the manager of the company.

The real question is "will PT accept this"?

The answer is, in theory yes but in reality nobody knows because as i said in my first post Portugal doesn't go after non residents.

That's why nobody bother with hiring managers, because nobody know if it's something that could actually help in case of an audit.

If you want to make things by the book and be prepared even in case of a very unlikely audit but still pay 0% tax then use a Singapore non resident company managed from Malta.

Why Malta?

Read about resident non domiciled companies.

The Singapore company will not be tax resident in Singapore but resident in Malta because of management and control but if you don't remit anything in Malta, Malta will not tax you.

Portugal will se dividends coming from a Singapore company and you'll receive dividends tax free under NHR.

Both solutions work, obviously the running costs for the resident non domiciled solution are higher because you need one nominee director in Singapore because it's required by the law and one in Malta.

With the US LLC there's only you managing the company directly.

Finally you could also mix both structures making the Singapore non resident company the single member of your US LLC so that all the US LLC income will flow through the Singapore company managed from Malta and you'll get diviends out.

 

[MarkusCostigan]

I guess your US LLC doesn't have an operating agreement.

You should draft one stating that your friend will be the manager of the company.

The real question is "will PT accept this"?

The answer is, in theory yes but in reality nobody knows because as i said in my first post Portugal doesn't go after non residents.

That's why nobody bother with hiring managers, because nobody know if it's something that could actually help in case of an audit.

If you want to make things by the book and be prepared even in case of a very unlikely audit but still pay 0% tax then use a Singapore non resident company managed from Malta.

Why Malta?

Read about resident non domiciled companies.

The Singapore company will not be tax resident in Singapore but resident in Malta because of management and control but if you don't remit anything in Malta, Malta will not tax you.

Portugal will se dividends coming from a Singapore company and you'll receive dividends tax free under NHR.

Both solutions work, obviously the running costs for the resident non domiciled solution are higher because you need one nominee director in Singapore because it's required by the law and one in Malta.

With the US LLC there's only you managing the company directly.

Finally you could also mix both structures making the Singapore non resident company the single member of your US LLC so that all the US LLC income will flow through the Singapore company managed from Malta and you'll get diviends out.

So will the US LLC be held (sole member) by a non-resident Singapore LTD managed from Malta as a resident but non-domiciled company?

Could the fact that the US and Singapore do not have a tax treaty be a problem for POEM etc or does the tax treaty follow the UBO/Management (Malta)?

 

[Marzio]

So will the US LLC be held (sole member) by a non-resident Singapore LTD managed from Malta as a resident but non-domiciled company?

Yes

Could the fact that the US and Singapore do not have a tax treaty be a problem for POEM etc or does the tax treaty follow the UBO/Management (Malta)?

The company is not tax resident in Singapore, it's resident in Malta

 

[Speedrunner]

Yes



The company is not tax resident in Singapore, it's resident in Malta

Wouldn't the running costs of such a complex structure be so high as to render the structure ineffective unless you're literally making 7 figs annually?

Also, how does social security payments in PT tie into the mix?

 

[Marzio]

Wouldn't the running costs of such a complex structure be so high as to render the structure ineffective unless you're literally making 7 figs annually?

Achieving 0% taxation legally while living in first world country will not come for free, obviously.

It's all about risk vs reward.

Also, how does social security payments in PT tie into the mix?

Dividends are income from capital so no social secury payments are due.

 

[Speedrunner]

Achieving 0% taxation legally while living in first world country will not come for free, obviously.

It's all about risk vs reward.



Dividends are income from capital so no social secury payments are due.

Under case 2360/2016 (the famous ruling), the income was classified as "rendimentos de capitais", meaning "investment income". Would that require social security payments?

 

[Marzio]

Investment income is any money received from an investment, including interest payments, dividends, capital gains and other profits.

Socual security contributions are required when you are self-employed or employed by the company and receive a salary.

 

[Speedrunner]

Investment income is any money received from an investment, including interest payments, dividends, capital gains and other profits.

Socual security contributions are required when you are self-employed or employed by the company and receive a salary.

I see, thank you.

I've got a follow-up question regarding the US LLC.

Essentially the US LLC-NHR structure is not very compliant due to substance and PE issues. The iffy ruling on top of which this structure lies states that US deems the LLC transparent for tax purposes while PT deems it opaque, such that both countries have a right to tax it.

If this LLC is providing services to a non-US customer, but that customer, when billed, pays the LLC from their American bank account, that is not considered US-sourced income, correct? Since the key point is where the work was performed, not where the bank from which the money came is sitting.

But, to PT you say "This is a US entity, and the work is performed outside the PT. Look, I even travel to the States to conduct board meetings, have an address, and all these different measures to help establish substance. and I spend >3-4 months abroad every year for PE's sake".
Wouldn't that dictate then that the work was performed in the US then, from the US' perspective?

 

[Marzio]

Look we both know what you are doing.

You are working from PT and looking for some loophole to get away with it.

If you go and read the ruling, the LLC was taxed as a partnership and they found that it wasnt managed or directed from Portugal.

"They found" means that it was factually true.

You can't get away by telling stories about you flying to US conductig board meetings.

The followup question will be "oh really, can you please tell us who are the members of the board"?

At that point will be game over plus fatality for you.

Either you onboard a second fake member for your US LLC stating that he is doing the work or hire a manager for your LLC in a jurisdiction like Panama or any other jurisdiction that's tax free like Monaco or simply doesn't care about your offshore affairs.

Your options depending on your risk tolerance are:

1. high risk tolerance: Manage your US LLC from PT and don't give a f**k about taxes, Andrew Tate style.

2. medium risk tolerance: Hire a manager for your US LLC

4. low to none risk tolerance: Singapore company managed from Malta

 

[Don]

While i don't fully agree with the rest of your plan, forming a C-Corp as a non resident is not something that i would do personally.

What do you think about trust holding ownership of a US SMLLC?

 

[Speedrunner]

Look we both know what you are doing.

You are working from PT and looking for some loophole to get away with it.

If you go and read the ruling, the LLC was taxed as a partnership and they found that it wasnt managed or directed from Portugal.

"They found" means that it was factually true.

You can't get away by telling stories about you flying to US conductig board meetings.

The followup question will be "oh really, can you please tell us who are the members of the board"?

At that point will be game over plus fatality for you.

Either you onboard a second fake member for your US LLC stating that he is doing the work or hire a manager for your LLC in a jurisdiction like Panama or any other jurisdiction that's tax free like Monaco or simply doesn't care about your offshore affairs.

Your options depending on your risk tolerance are:

1. high risk tolerance: Manage your US LLC from PT and don't give a f**k about taxes, Andrew Tate style.

2. medium risk tolerance: Hire a manager for your US LLC

4. low to none risk tolerance: Singapore company managed from Malta

I was always more of a Scorpion person myself.

In your opinion, where does a Cypriot entity instead of a US SMLLC fit into your risk tolerance curve?

 

[Marzio]

What do you think about trust holding ownership of a US SMLLC?

I think trust has its place but i don't see it fit in this discussion.

where does a Cypriot entity instead of a US SMLLC fit into your risk tolerance curve?

I'd say it's low to none risk since it's very clear where company is tax resident and there's a resident director so management is clearly outside PT.

 

[Speedrunner]

I think trust has its place but i don't see it fit in this discussion.



I'd say it's low to none risk since it's very clear where company is tax resident and there's a resident director so management is clearly outside PT.

Thank you. I'm curious why Liechtenstein isn't brought up more often in these discussions regarding NHR and tax planning. What does Cyprus for example have that Liechtenstein doesn't? The CIT and dividend tax are the same, Liechtenstein has supposedly good banks and also other vehicles to explore later on (trust-based structures and so on)

As an aside, I appreciate all your comments throughout the post.

 

[Marzio]

Simply because i don't know much about Liechtenstein, it's even difficult to write. I had to copy paste from Wikipedia.

I think it's best used when tax planning with Switzerland because of their beneficial tax treaty.