US LLC + Cyprus residency

[CyprusLaw]

OK good to know. Does this also apply to BVI etc, that income is taxable in Cyprus if not in BVI?

No - this has to do with US LLCs being transparent entities and therefore their income in the US not being considered as corporate income. The important thing is not the fact that it is not taxable but the fact that it is not considered as corporate income at the US level.

 

[dziter]

In Cyprus US LLC payments are deemed as follows:

- if the US LLC is subject itself to corporation tax in its resident country then it is considered as a corporation for Cyprus tax purposes and therefore payments to the Cyprus shareholder would be deemed as dividends; whilst
- if the US LLC is not subject to corporation tax in its resident country then the income deriving from such the US LLC is considered as income for Cyprus tax purposes

So, if we speak about:
- CY LTD owns a US LLC OR Partnership between CY LTD and US LLC
- All the entities are managed from Cyprus

Can you confirm that:
- US LLC or Partnership will be taxed at 12.5% (PE in Cyprus)
- US LLC can distribute profits to the CY LTD and then the CY LTD can distribute them as dividends (2.65%) to shareholders.

To sum up: How Cyprus treats a US LLC owns by a local entity and not directly by an individual?

 

[JustAnotherNomad]

I think the question is how it will be handled on the US side.
From my experience, tax advice in the US quickly becomes very, very expensive. And the rules for when you should pay tax in the US are not always very clear, and they can vary from state to state (California sounds terrible).
I would really think twice if you absolutely have to incorporate in the US - maybe start with a European company and switch to US later once you see it makes sense?
There are also incubators in other countries like Canada - maybe you end up joining such a program, and then it would be better to have a Canadian company?
Since you're located in Europe, it may also be easier to find European investors - and they probably won't care if you have a European or US company.

 

[dziter]

To be clear why we are speaking about US in this setup:
The 'investor part' requires a US entity. They will invest only if the asset is owned by a US entity.
We do not have flexibility here and it's not any investor, we do want to proceed that way. That's why we are trying to find a solution here.

 

[ecommerceoffshore]

I live in Cyprus and having this problem too. Can you not simply just have a 0 tax offshore shell company as 100% owner of the US LLC, whereby the shell company pays tax free dividends to the Cypriot non dom tax resident to achieve 0% tax (plus 2.65% up to the cap)?