W9/W8 for an offshore (disregarded) LLC

[Asterion]

Ok, for anyone who might be interested.
As per the current functionality when you apply for a Paid App, App Store Connect assumes you are a US person if you have a US legal entity and asks you to fill in a form that is tantamount to a W9.
If so, write to the Finance/Tax department
(from Sign In - Apple choose Membership and Account, then Agreements and Contracts)
should be this form
https://developer.apple.com/contact/#!/topic/SC1101/subtopic/30008/solution/selectYou can't phone them, you must e-mail them through the site. In my case they wrote back on the 3rd business day after I wrote and confirmed that you fill in the W9 on the site as best as you can in order to move on your application. Then, you fill in manually a W8BEN that you will send back to them via email. They will use it to override the W9.

 

[name]

Ok, for anyone who might be interested.
As per the current functionality when you apply for a Paid App, App Store Connect assumes you are a US person if you have a US legal entity and asks you to fill in a form that is tantamount to a W9.
If so, write to the Finance/Tax department
(from Sign In - Apple choose Membership and Account, then Agreements and Contracts)
should be this form
https://developer.apple.com/contact/#!/topic/SC1101/subtopic/30008/solution/selectYou can't phone them, you must e-mail them through the site. In my case they wrote back on the 3rd business day after I wrote and confirmed that you fill in the W9 on the site as best as you can in order to move on your application. Then, you fill in manually a W8BEN that you will send back to them via email. They will use it to override the W9.

Is there a withholding tax for foreigners? What's the total tax on the income?

 

[Asterion]

Is there a withholding tax for foreigners? What's the total tax on the income?

No tax apart from the fee that Apple and Google impose for their services (the one that some years ago got reduced from 30% to 15% if your yearly revenue is below 1M I think). If your legal entity is a disregarded entity just like a single member LLC owned by a non-resident alien is, the income is just passed on to you as a person and you pay tax on it in your jurisdiction of tax residency.
BUT some jurisdictions have things such as resident non-domiciled schemes that do not tax foreign incomes in certain circumstances. So that can be one of the motivating factors. Plus the public-eye anonymity you get from certain US states for your LLC.

 

[Marzio]

No tax apart from the fee that Apple and Google impose for their services (the one that some years ago got reduced from 30% to 15% if your yearly revenue is below 1M I think). If your legal entity is a disregarded entity just like a single member LLC owned by a non-resident alien is, the income is just passed on to you as a person and you pay tax on it in your jurisdiction of tax residency.

This is true for Apple but not for Google.

https://community.ato.gov.au/s/question/a0J9s0000001IgHEAU/p00048111

 

[Asterion]

Wait, which parts of it are true for one but not the other?

 

[Marzio]

Wait, which parts of it are true for one but not the other?

The part that there's no tax apart from the Google fee is false because there's withholding tax in case of royalties payments.

 

[Asterion]

The part that there's no tax apart from the Google fee is false because there's withholding tax in case of royalties payments.

Correct, but the income I'd have from my app wouldn't be royalties?
I know it isn't for Apple, it's sales/commission
https://developer.apple.com/forums/thread/660025

 

[Marzio]

Correct, but the income I'd have from my app wouldn't be royalties?

It depends on how you intend to monetize your app.

Adsense income isn't considered royalties but in-app purchases falls under other copyright royalties.

 

[Asterion]

It depends on how you intend to monetize your app.

Adsense income isn't considered royalties but in-app purchases falls under other copyright royalties.

I see, that would be my case. Thanks for the heads up. I will keep this in mind, but I haven't been asked about it in the process so far. do I have to pay tax or those royalties myself/through the LLC? Or does Google keep the money and passes it over to the IRS?

 

[Marzio]

I haven't been asked about it in the process so far

Because to this point you probably didn't took the time to fill Google's payments info.

When you'll do, you'll reach this page.

The withholding rate for Motion Picture and Copyright Royalties will depend on the country of incorporation of your company or the country where you are tax resident if you are using a transparent entity.

 

[Asterion]

Thanks. That'd be a US LLC and UK resident, not domiciled. Really appreciate the inputs!

 

[Marzio]

I see what you are trying to achieve here, unfortunately for you the DTT between US and UK under article 4 specifically excludes from being considered UK resident any person that is liable to tax in the State in respect only of income from sources in that State and non-doms fall under this definition.

This means that you will not be able to claim a 0% withholding tax rate granted to UK residents.

 

[Asterion]

I was told by a reputable US tax advisor that I do not have US sourced income. My set up is such that I don't have a permanent establishment, nor staff nor any of the things that make that type of income connectable to the US.

 

[Marzio]

I was told by a reputable tax advisor that I do not have US sourced income. My set up is such that I don't have a permanent establishment, nor staff nor any of the things that make that type of income connectable to the US.

I'm not talking about this.

I'm talking about the fact that US will not consider you a UK resident because you are a non-dom so you can't claim treaty benefits for copyright royalties.

You will pay 30% withholding tax rate on that income.

 

[Asterion]

I can become dom if needed? I am a fully regular tax resident of the UK, otherwise... It's the first that I hear that the US care about the UK tax resident being non-dom or dom. In fact, two tax advisors confirmed my set up...

I can become dom if needed? I am a fully regular tax resident of the UK, otherwise... It's the first that I hear that the US care about the UK tax resident being non-dom or dom. In fact, two tax advisors confirmed my set up...

And, to be honest, I don't see the dom vs non-dom specification anywhere in the passage you have quoted?

 

[Marzio]

It's the first that I hear that the US care about the UK tax resident being non-dom or dom

US care about not letting someone game the system AKA not paying taxes.

US is the first country who started implementing limitation on benefits articles inside their double tax treaties.

You don't need tax advisors to understand what's written here.

This is the begining part of article 23

It says that you are entitled to the benefits of the convention if you are a resident individual.

You are indeed an individual resident in UK but article 4 (that i posted before) says that US considers you resident of a contracting state if you are liable to tax in that State.

Now tell me, are you as a non-dom liable to tax in that State?

No because only income that you remit in the country is taxable so US don't considers you a UK resident so you are not considered an individual entitled to the benefits of the convetion under article 23.

 

[Asterion]

"Now tell me, are you as a non-dom liable to tax in that State?"

No, but I am liable of tax for that income in the UK.
Look I appreciate the heads up, but I'll have to take it to a tax advisor in the UK. If you are right, what's the point of so many US non-resident aliens going for US LLCs?

 

[Marzio]

No, but I am liable of tax for that income in the UK.

And that's exactly who they are excluding from being considered resident.

Man i can't make it more clear than this.

Look I appreciate the heads up, but I'll have to take it to a tax advisor in the UK

I'm not intended to reply a UK tax advisor.

If you are right

That's what the law state and if you take the time to read it you will "get" what they are trying to achieve with those limitation on benefits.

They want you to pay taxes somewhere, that's the point.

what's the point of so many US non-resident aliens going for US LLCs?

The problem here is not that you are using a US LLC, US LLC is perfectly fine.

The problem is that you are non-dom and you pay taxes only on income that you remit in UK.

 

[CyprusLawyer101]

And that's exactly who they are excluding from being considered resident.

Man i can't make it more clear than this.

I'm not intended to reply a UK tax advisor.



That's what the law state and if you take the time to read it you will "get" what they are trying to achieve with those limitation on benefits.

They want you to pay taxes somewhere, that's the point.



The problem here is not that you are using a US LLC, US LLC is perfectly fine.

The problem is that you are non-dom and you pay taxes only on income that you remit in UK.

Income remmitted to the UK and UK sourced income are not the same. Income remmitted would apply to a tax resident while income sourced does not necessarily apply to a tax resident. If the person is a non dom in UK it means he is tax resident in UK with special provisions applying to non doms.

 

[Marzio]

Income remmitted to the UK and UK sourced income are not the same. Income remmitted would apply to a tax resident while income sourced does not necessarily apply to a tax resident. If the person is a non dom in UK it means he is tax resident in UK with special provisions applying to non doms.

Do you really think his case is different than this one?

https://www.euitalianinternationalt...x-treaty-benefits-italian-supreme-court-says/
Ok we are talking about Italy and not US but the article 4 between UK and IT is exactly the same.

Here's what i'm talking about