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Index
Introduction
4
Why the U.S. company is once again at the top of our list
6
What are the U.S. tax implications of incorporating an LLC as a non-resident?
12
Advantages in the U.S.
14
Annual costs and bureaucracy
15
Goodwill / Offshore & Island vs. US GmbH
16
American corporate forms - LLC and C-Corporation
17
Who can create a foreign company?
18
When?
19
How much bureaucracy is there?
20
Foundation
22
Administration
23
Annual administrative expenses of the LLC
24
Acknowledgment
25
Disadvantages
26
Anonymity
27
Protection of assets and liabilities
28
Are there any requirements for invoices?
29
Obligation to notify the establishment of or participation in foreign companies
30
German-American Friendship Treaty
31
Anonymity
32
Number ON
33
Non-participation in the CRS
34
Delaware
35
Why are there so many U.S. companies registered in Delaware?
36
Special features for Wyoming, Delaware or Nevada
37
Florida as the best alternative
38
How do I open a bank account in the USA?
40
Private account
41
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Company account
42
Fintec
42
Traditional banks
42
Address specification
45
Company accounts in Europe
46
Accounts
47
Building solvency
48
US Credit Building
49
Federal corporate income tax
51
Income from investments
52
U.S. state corporate income tax.
53
Value Added Tax (VAT)
54
US LLC - Why do you need it, and can I benefit from it too?
55
Tax effect if the company has clients in the U.S.
58
How to withdraw money from your US LLC
59
Registration of a branch office, what for?
61
Combination Partnership and US LLC
64
Difference with the C corporation
66
What costs are involved in the foundation?
67
Future prospects
70
Other areas of application
71
Reversing profits
72
Investment in public deed
73
Who are American companies best suited to?
74
Giving substance
75
Frequently Asked Questions
76
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Introduction
Dear Global Citizen Explorer subscribers,
Hardly any other country polarizes the world as much as the United States of
America. Not only since Trump have there been ardent lovers in our community,
as well as people who would never set foot in the country.
At the same time, the United States of America, thanks to its 50 states plus
outlying territories, offers numerous jurisdictions in which, in the sense of the
flag theory, there are often great local differences. All of this is protected by
what remains the greatest military power in the Western world.
Although the Western media portrays the current president as the devil, he has
already accomplished many positive things for his citizens. Even the repeal of
the unfortunate U.S. citizenship tax was called for, but rejected by the
Democratic majority in the House of Representatives. However, at least his tax
reform has passed, and when it goes into effect soon it will bring numerous
benefits, especially for local entrepreneurs.
But the country also offers many opportunities for global entrepreneurs without
U.S. citizenship or a green card. In this issue of Global Citizen Explorer we want
to present some of them.
Stateless.ch is now represented locally with a small office in Miami, Florida.
Through our delivery addresses, we can order, configure and forward popular US
mobile plans like Google Fi or T-Mobile to Europe.
What is much more exciting, however, is that we can now offer company
formation, specifically Florida LLCs, after a one-time consultation. Thanks to our
local presence, we cooperate with
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some U.S. commercial banks where you can open a business account with
personal presence in the Miami area. The advantages are always
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The increasingly stringent international (OECD and EU) banking regulations
should not be underestimated. Since the US does not usually participate in
this, banking remains uncomplicated here, even for large sums.
Whether it's a simple LLC for notice protection, a simple tax-exempt corporation
for billing services or a start-up looking for investors: US corporations can be
used for almost anything. In this issue we explain all possible uses, background
and advantages.
But there's more: we have developed strategies on how you can get a good
credit rating through a U.S. company after a while and get loans on attractive
terms, even if you are a non-resident.
Since lending to non-residents or emigrants is a difficult undertaking in many
cases, this strategy offers a remedy.
But there's more: we can also provide you with an ITIN and a private account.
This allows you to personally apply for US credit cards. This opens up the wide
world of mileage optimization with U.S. credit cards, where hundreds of offers
with attractive sign-up mileage bonuses tempt you.
We will also address in this issue some U.S.-specific investments, such as tax
liens and deeds (up to 24% yield). In addition, we provide a brief overview of
current residency options. With smart structuring, even U.S. taxpayers pay
hardly any taxes, for example with a residence in Puerto Rico.
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Why the U.S. company is once again
so high on our list
In the early days of stateless.ch in 2015 and 2016, a US LLC was very popular.
Newcomers to perpetual travel were setting up LLCs because of their low and
uncomplicated incorporation and operating costs.
But they all had a problem. Thanks to the FATCA legislation, it was and is
extremely difficult for an LLC to obtain a business account outside the US. Due
to its status as a non-resident "excluded entity", it was also not possible to
obtain a US business account.
Thus, the LLC was used in connection with private accounts. Thanks to the
taxation at the tax domicile of the natural person, there are no tax problems in
this respect.
Since most banks do not tolerate the business use of private accounts, or only
up to a certain volume of business (see the January issue of CME for possible
solutions), often another solution had to be found to increase volumes. Often,
limited liability companies are deregistered, as without a reasonable business
account they do not function.
In 2017, the new filing rules (Form 5472) confused the market, causing a
significant drop in US incorporations. This was not so much due to the new
form, which can be completed in 5 minutes, but also to the emergence of good
alternatives such as the Canadian LP in the northern neighboring country. This is
still a very good alternative to the US LLC, especially if you have certain
reservations about the US.
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However, several factors have led us to focus more on the U.S. in general and
Florida in particular, especially for start-ups.
To begin with, we have reliably solved the vexing banking issue. Depending on
the purpose of the company, we can recommend several banks in the Miami
area where an account can be opened with personal presence in one visit.
Generally, the company only needs to have been in existence for fifteen days and
have an EIN number. With Transferwise Borderless and increasingly emerging
others
U.S. online banks now even offer remote opening options.
After intensive clarifications with local tax lawyers, we can also give a clean bill of
health in connection with the FBAR and Form 5472. Here we have conservatively
pointed out possible disadvantages in the past, as clear information could not be
obtained.
The FBAR filing means that you have to declare to the US all foreign assets
above $10,000 outside the US. However, this is not privately relevant for the
owner of the company, but only for the company itself. And due to the FATCA
legislation (US information exchange), the company hardly ever has a foreign
business account anyway.
Form 5472, on the other hand, is not relevant at all for LLC owners in most
cases. It only needs to be filled out if the LLC does business with its own
companies or related persons. However, there is hardly any reason to do so
because of the tax exemption as an excluded entity. In short, we can tell you
whether you have to file it or not - and if necessary, we can also take care of
the whole process.
For a long time, there has also been a widespread myth that an LLC
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The U.S. government had to avoid any U.S. entry at all costs,
otherwise, an American would have to
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the tax debt. However, this is only half true. In fact, owners of a U.S. LLC with the
proper residency can also settle with customers in the U.S. tax-free or sell
products there as long as they do not have so-called "nexus". If the LLC is a
letterbox company and dispenses with a local permanent establishment and
employees, this "nexus" is not triggered.
Therefore, all the potential drawbacks of the past - banking, FBAR, Form
5472 and U.S. income - have been eliminated after intensive scrutiny.
Moreover, with the current OECD and EU regulatory frenzy, US LLCs are likely
a very sustainable alternative in the long run.
For example, more and more jurisdictions - both offshore (British Overseas
Territories) and onshore (Cyprus and many others) - are now EU countries - have
introduced so-called substantive criteria. This means that it will be mandatory to
have a permanent establishment and hire local staff in order to operate the
company.
The U.S. -whose LLCs are also used by millions of Americans - will hardly
play along in this case. Mailbox companies will always be possible in the
USA, and they can also be registered anonymously. If most incorporation
companies around the world now require a passport, a bill of service
In the case of a US company, it is not necessary to submit any documents for
incorporation, a bank reference and a curriculum vitae. Controlling persons can
also be easily concealed in the commercial register; no one is talking about a
beneficial ownership transparency register, which is to be introduced in all EU
countries by 2021.
Banking is also little affected by international anti-money laundering and
information exchange regulations. The U.S. has its own strict legislation for
citizens and residents with close to
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FATCA exchange, but many turn a blind eye in their own country. The SIR
(automatic exchange of information) has only just been put in place, so to
speak.
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to consolidate its supremacy as the world's largest tax haven. All smaller tax
havens will be left out of the competition. Although signed up, the United States
does not apply the CRS and does not exchange corporate account data with other
countries. With more and more countries becoming part of the automatic
exchange of information and the increasing closure of loopholes, the U.S. is now a
sustainable alternative for financial privacy.
This is also related to the largely straightforward use of U.S. corporate accounts.
While in Europe every few thousand euros have to be accounted for, in the USA
there are hardly any questions from the banks about transactions. Here, large
sums of money can still be moved without complications. The Americans'
preference for checks, which is hardly still common in Europe, encourages this.
However, almost all US banks now also offer passable online banking. FinTech
alternatives, such as a company account at Transferwise Borderless, even
allow a US LLC to have a German IBAN along with account numbers from
other countries around the world, making it possible to settle accounts with
clients and partners locally at low cost.
The most popular payment providers, such as Paypal and Stripe, are not only
seamless, but also offer U.S. businesses some of the lowest commissions in the
world due to increased competition. In any case, a U.S. LLC can register with
almost any platform, whether it's Amazon FBA, for affiliate marketing or many
more business models. Of course, US LLC invoices are recognized, only in
Germany due to the German-American Friendship Treaty of 1953, which we
discussed in more detail in this issue.
With all the talk about LLCs, however, other forms of US corporations should not
be forgotten. US tax-paying corporations can also operate in a very optimized
way from the point of view of the taxpayer.
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tax view. In the U.S., for example, tax advisors, not managers, are liable for
incorrect tax returns. In practice
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Therefore, U.S. companies are virtually never audited. This, combined with the
already liberal legislation, often allows the operators of a corporation to live their
entire lives on company credit cards. Thus, personal expenses reduce the
company's taxable profits. Corporate taxes (up to 38%) and withholding taxes (up
to 30%), which on paper are high, are hardly applied, as virtually no profits are
made.
In short, LLCs and joint stock companies have many long-term advantages with no
real disadvantages. We offer you the complete service with company incorporation,
company address, company account, application for tax identification number, help
with filing documents and much more. On the following pages you will find detailed
information about the functioning of LLCs and joint stock companies.
What is the world's largest tax haven called? Google it: United States of
America.
At first glance, this may seem surprising, as the term "tax haven" is associated
with palm-fringed South Sea islands and mini-states in the far corners of the
world. However, given that the United States is the only developed country that is
not on the list of countries participating in the OECD's automated exchange of tax
data, it can perfectly well be called a tax haven. Since September 2017 (or as of
September 2018), all other developed countries and many countries previously
discredited as "tax havens" have been exchanging banking and tax data with each
other - with the goal of ensuring that any tax fugitives moving through these
countries are reported to their home tax office. (The list of countries that have
joined the agreement can be found here).
The United States has long had a reputation as the land of opportunity. The past
few decades have not changed this. Upon entering the country, immigration
officials have often undermined this reputation.
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reputation; but when doing business in the U.S., it is clear that they continue
to live up to this reputation.
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comply with the requirements of the law. This starts with the registration of a
company, which does not require an ID card, signature or notary.
The usual letters from the authorities requesting payments or information do
not arrive. Since the Paper Reduction Act, all U.S. paperwork needs a concrete
practical justification, which is supposed to relieve citizens and businesses.
Instead, after a few weeks, you receive the first financing offers and automatic
credit card approvals. To build up creditworthiness in the USA, a special
procedure must be followed. This is explained later in the article.
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What are the tax implications in
How to incorporate an LLC as a non-resident
in the U.S.A. ?
Despite the facts, the USA is not known as a tax haven and rather has the
reputation of being a high tax country. However, if you incorporate a
company as a non-resident and it is wholly owned by the founder (sole
proprietorship LLC) and there is no permanent establishment in the US, the
company is exempt from US taxation.
The tax procedure is a "pass-through taxation" procedure, which means that no
corporate income tax is levied and the tax liability is passed on to the
shareholder. The shareholder's tax liability depends exclusively on his residence:
if he lives in Europe, e.g. in Germany or Austria, he is subject to income tax at his
place of residence. If he is no longer registered in Europe, but is, for example, a
perpetual traveler or lives in Panama or Paraguay, or in countries where
residence tax does not apply, but only local income is taxed and foreign income is
disregarded, then the shareholder is exempt from taxation.
For company founders who continue to reside in Germany or Austria, there are
several ways to save tax. Firstly, only profits are taxed. If a company does not
make a profit, it is not taxed at all.
An LLC is considered a tax-exempt entity and is not required to file
a U.S. income tax return.
You will save yourself the trouble of filing an account and all that goes with it:
● Do not collect receipts
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● No entries in restaurant invoices or
justifications
● No lengthy communications with the tax advisor
● A simple declaration of income and expenses is sufficient.
As there is no obligation to file income tax returns, only a simple surplus
income account has to be kept and it is up to the owner to document income
and expenses so that no profit is made.
The second variant - if you make a profit - is to determine the ownership of the
company in such a way that the taxable person is a legal entity, e.g. an
association or a foundation. The tax liability is then transferred from the natural
person to the legal entity and you yourself remain tax-exempt. It is important
that everything is properly documented and legally clean.
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Advantages in the USA
●
●
●
●
●
●
●
●
Incorporation and closing of a company in the U.S. Simple and inexpensive
No capital stock
Without notary
No visa
No on-site visit
No signature
It is not necessary to present a passport
→ 100% online
● Possible suspension of activities, the company will not be shut down
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Annual costs and bureaucracy
●
●
●
●
●
●
almost no authority checks anything
Letters from unusual authorities
Commercial licenses or authorizations are unknown.
No social security
Low probability of tax audit
File a form only once a year (5472) or, for foreign accounts, the FBAR.
You can do it yourself or hire a certified public accountant (CPA) who charges
between $300 and $800 for it.
The latter assumes liability, which is why CPAs often carry insurance in the
millions for errors.
The allocation and deduction of expenses is generously possible, pre-tax
deductions are usually made through the so-called "per diems", which are fixed
as lump sums. Business trips, for example, are recognized as a lump sum:
$400/day, you just have to prove that you were on a trip. No tedious
compilation of individual receipts.
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Good reputation / Offshore & Island vs. US GmbH
If properly communicated, the new location represents a success story for
suppliers, customers and partners, rather than raising questions. Partner
involvement is immediate and simple, through the operating agreement or, in the
case of a corporation, through the issuance of stock or stock options.
While we often condemn U.S. impudence in asserting its interests around the
world, you can take advantage of it as a U.S. business owner.
At the international level, one can enforce one's rights in US courts or resort to
an arbitration court, which usually renders a binding and enforceable judgment
within a few months. Due to the position of the US and the long arm of this
"constitutional state", this often leads to a deterrence of the breaching
counterparty and an easier settlement/settlement.
The USA is a buyer's paradise and can enjoy better prices and conditions than in
Europe.
U.S. software is also often offered at lower prices for U.S. companies. Often,
USD/EUR prices are simply 1:1, which is an advantage at the current exchange
rate. The same is true for cloud service providers.
As a beneficiary, a US company receives the money paid by Paypal/Stripe within
2 days, i.e. faster than in Germany, and at
% cheaper (2.9% vs. 3.6%).
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U.S. corporate forms - LLC and CCorporation
Let's start with general information about the LLC: The abbreviation stands for
"Limited Liability Corporation" and can be compared to a German or Austrian
GmbH. Like the GmbH, no shares are issued, but an operating agreement
regulates the rights and obligations of the partners.
The LLC enjoys worldwide recognition among suppliers and business partners,
making it ideal for international business. In addition, the management of the
company itself is rather unadministrative. Compared to European companies,
only a fraction of the bureaucratic effort is required.
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Who can create a foreign company?
In principle, any person can create a foreign company from his place of
residence. The taxation of the company depends then, of course, on the
country in which one is registered or currently resides (residence taxation,
territorial taxation, non-domiciled status).
Similarly, there are countries where you can live tax-free. So it depends on
where you live.
What needs to be considered is how to structure this foreign company to be
recognized by the national authorities.
If you live in a country in Europe with high taxes and foreign tax laws and set up a
company abroad, you must meet certain criteria. A mailbox is not enough,
otherwise the company will be attributed to a person and you will be taxed on it.
It is also necessary to determine who the owner is: oneself, someone else, or
another person.
or a legal entity, such as a foundation or an association. Foundations
or partnerships are separate legal entities and therefore create opportunities to
structure the ownership of the foreign company in such a way that one does not
have to provide personal information about this foreign company to the
registration or tax authorities. In addition, you need to clarify who is the
managing director and who is the owner of the foreign company. You can
structure it in such a way that you control everything but do not own anything.
Partnership or foundation structures are suitable for this.
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When?
What is the best course of action if you want to start a business but already
know that in the long run you will be moving abroad?
The recommendation is to set up the company before moving. In this way, you
will be able to officially register the company as a foreign participation in this
still quiet preparatory phase and use the time effectively for preparatory tasks
(opening accounts, designing a website, etc.).
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How much bureaucracy is involved?
No identification, proof of address or signature of the founder is required to
register the company in the USA. All that is needed is the desired name of the
company and the name of the manager in order to register the company. It is a
legal requirement that an address and a "registered agent" be designated to
receive mail. This is where the stateless team can help.
As you can see, there is very little paperwork related to the incorporation itself.
Further on, you need an EIN (Employer Identification Number) or, alternatively,
an assignment number (a kind of social security tax number for the company).
With this number, accounts can already be opened, although there are also
banks that open accounts without an EIN. With TransferWise, for example, you
can overwrite the EIN field with nine such as "single member disregarded LLC".
The EIN is requested on a form (form SS-4) and the number is faxed to you after
a few weeks.
To speed up this process, the statelessness team collaborates with a U.S.
cooperation partner, through which the EIN can be applied for online as an
express application within a few days.
At the end of the year, you have to file form 5472 if you have transactions with
yourself - for example, if the company has granted a loan to the shareholder or
vice versa. You can fill it out yourself or have it done by a CPA (certified public
accountant - comparable to a tax advisor) and do it yourself the following year. If
you do not have such transactions because the money is spent within the
company and not distributed to individual shareholders, you do not need to fill
out this form. The same applies to the FBAR form: This is filled out when one
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Foreign bank accounts. Completion of the form is mandatory, but has no effect
on tax liability. If you do not have foreign bank accounts or brokerage accounts
abroad, you do not have to complete the form.
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Foundation
To incorporate a company it is not necessary to be present at the act or to
prove a share capital. This applies even to the incorporation of a
corporation, known as a C corporation in the USA.
Nor do you have to limit yourself to the sector in which you wish to develop
your activity. This information is for statistical purposes only. As a company, you
can operate everything "legally and lawfully".
If the company exists, business can be done on an international scale with a
good reputation.
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Administration
The administrative burden on the company depends on its tax status. If you do
not have an operating office in the U.S. and are not a U.S. citizen, you only have
to file form (5472) once at the end of the year.
There is no paperwork to do, as business trips and meals can be deducted as per
diem. No need to worry about receipts, labels or insignificant justifications.
Accounting for a U.S. company is subject to as few rules as most other contractual
arrangements.
If you want to keep clear accounting for yourself, you can automate this very
well, as US banks can be linked to services such as Xero or Quickbooks and the
posting of transactions can be fully automated once the system is set up
correctly.
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Annual administrative expenses of LLC
Apart from the aforementioned form 5472, there is really no bureaucratic
effort. Even form 5472 is not mandatory for everyone for the reasons already
described.
In the U.S., the authorities do not usually require you to file the necessary
forms. If you are required by law to complete certain forms, you must do so at
your own risk. There is no obligation to do so. It is advisable to hire a public
accountant to take care of these formalities. In that case, the public accountant
is also responsible for the presentation and correctness of the information.
There is no obligation to pay social security or minimum wage for the partner.
There are also usually no on-site inspections by the authorities, especially if it is a
"disregarded entity".
As mentioned above, it is a legal requirement to keep an accounting. However,
it is not necessary to file and can be done automatically through various online
service providers. Therefore, the accounting effort is reduced.
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Recognition
A US company can present itself as a success story in Europe. Unlike other
jurisdictions such as Estonia or Cyprus, here you don't get the impression that
you just want to save taxes.
Ultimately, a good image is more important to generate orders than losing
orders and customers for tax savings.
The motto "think big" also applies to U.S. banks. Here, larger transactions are
carried out more frequently, while customer control, unlike in Europe and the
German-speaking countries, is written small.
Million-dollar transfers? Hardly a problem.
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Disadvantages
A disadvantage can be that the educational pyramid is very broad at the base
and that the greatest competence cannot be expected from a bank advisor. This
means that you often have to deal with hotlines to regain access to online
banking that has been blocked, for example. That can sometimes take an hour on
the phone.
But once everything is set up, transfers are very straightforward. There is no
comparison with European compliance departments in places like Cyprus or
similar tax havens, which have come under international pressure.
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Anonymity
Total anonymity is also possible in the U.S. commercial register. Although
shareholders and shares are registered, they can also be legal entities. This
opens the door to a generous international design.
However, this step should only be taken when all account connections have
already been opened, otherwise it will involve considerable additional work.
The United States does not participate in the GRS information exchange.
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Liability and Asset Protection
The LLC offers good protection against liability for trespass because the
shareholder can only be held liable in certain exceptional cases. Therefore, there
is good asset protection. The greatest asset protection is that the manager is the
owner of a US company, but does not live in the US, but in Europe, for example,
so he is heavily shielded legally (against, for example, caveat associations). As a
simpler example, there is no obligation to have a US seal.
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Are there any requirements for invoices from ?
No, there are no legal requirements for invoicing in the USA. Templates can be
found on the Internet and are very flexible in design.
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Obligation to declare foundations or foundations
participations in foreign companies
If you have a direct participation in a U.S. LLC, you must declare this
participation in Germany. In that case, the company is treated for tax purposes
in Germany as if it were a German GmbH.
However, the obligation to declare incorporation or participation in foreign
companies, which is anchored in German tax law, does not apply if you do not
have an interest in the U.S. company. For example, the company belongs to a
foundation or a (foreign) partnership. Membership in a partnership, regardless of
where in the world it is located, is still not subject to reporting.
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German-American Friendship Treaty
A special aspect of the U.S.-German relationship is a treaty signed in 1954.
This treaty grants U.S. companies in the Federal Republic of Germany greater
rights than all other European companies.
This means that you can manage a US company without further requirements,
use it to its full extent and do so without having to prove that you have an
operational center of activity in the US.
Companies incorporated in the USA always have legal capacity in Germany,
irrespective of the place of effective management.
According to the judgment of the BGH of January 29, 2003 - VIII ZR 155/02, a
company founded in the USA has the capacity to sue and be sued under the
German-American Commercial Treaty of October 29, 1954, despite actually
having its administrative seat in Germany; in the USA.
Due to the rules of German international company law, this exception does not
even apply to EU companies. Only state treaties can deviate from it (cf. § 3 para. 2
sentence 1 EGBGB). Such a treaty exists between the Federal Republic of
Germany and the United States of America in the form of the Treaty of
Friendship, Commerce and Navigation of 29 October 1954.
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Anonymity
The advantage over the EU is that the details of the shareholders of a U.S.
company are not requested at the time of incorporation. The commercial
register only asks for the name and address of the company and a manager.
However, these can be replaced by a legal entity (worldwide almost without
restriction) and registered as such from the outset. The real identity of the
acting persons does not appear in the commercial register.
Therefore, any person can be registered as manager, e.g. a trustee or an
actual manager who also takes care of the administrative tasks, while one is
still authorized to sign on the bank account. Another variant is to appoint a
legal person as manager, e.g. a Swiss or Austrian association.
This raises the question of how you can demonstrate that you have an interest
in a company in the first place.
The proof that the company really belongs to oneself is one's own responsibility:
the ownership is not entered in the commercial register, but is recorded under
one's own responsibility. In the case of the LLC this is done in the "Operating
Agreement", which is printed, signed and filed, and in the case of the CCorporation one creates a share list or share book, or shares. For outsiders it is
difficult to check the accuracy of all this, as the filed document can later be
rewritten and, for example, the ownership changed. Since there is no register,
there is a high degree of flexibility.
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EIN Number
If a U.S. account is opened, a tax identification number must be requested.
At least one member of the management or a "responsible person" must be
identified to the U.S. authorities. This person can withdraw the same day the
EIN number is issued. In addition, this information is not published, so
privacy is preserved.
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Non-participation in CRS
The U.S. does not participate in the OECD's automatic exchange of
information, the so-called AEOI (CRS). Thus, foreign beneficial owners of a U.S.
company are particularly protected. Since Americans create international rules
rather than comply with foreign ones, this is unlikely to change in the future.
In no other country are there more shell companies than in the United States. So
many service providers and consultancies have set up shop in this environment
that an immensely strong lobby has emerged. Unlike the smaller countries, the
U.S. does not have to resort to the opaque curtain of the
U.S. corporate jurisdictions versus other countries.
The US has no interest in making its own financial center less attractive through
excessive transparency. While it wants to indict US tax evaders at all costs, it has
little motivation to support foreign tax authorities too strongly, given the billions
of foreign capital in the US.
This U.S. reluctance to share information allows non-U.S. taxpayers to legally
circumvent both FATCA and the OECS CRS information exchange for legitimate
reasons, such as privacy (as opposed to tax evasion).
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Delaware
Within the U.S., Delaware, contrary to its reputation, does not occupy a special
position. No U.S. state publishes a company's shareholder data in the
commercial register, and states other than Delaware also publish virtually no
address information.
Delaware is only the best known state in this regard.
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Why are there so many U.S. companies
registered in Delaware ?
On the one hand, the State is very old by U.S. standards and, therefore, can
draw on a great deal of precedent and judicial history.
Since the precedents (case law) apply in the U.S., this is an important
advantage.
When is a Delaware corporation suitable? Especially if you are looking for
venture capital investors in the U.S., as they prefer Delaware for its legal
certainty.
Otherwise, you tend to be more credible and have a better international image if
you set up a company in Florida or in a state where you have personal reasons to
enter more often.
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Special features for Wyoming, Delaware or Nevada
You can also form LLC or C Corporations in these states, but it is not necessary for
the "tax-exempt entity". You can incorporate in any state, but it is advisable to
choose a state that you visit frequently or with which you have good air
connections. If you want to conduct your business operations in Europe, you will
often need to demonstrate that you have substantial liabilities. This is certainly
easier if the U.S. company is registered in a state with which it has a relationship
or which is well suited to the company's history.
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Florida as the best alternative
The advantages many entrepreneurs cite for Florida are:
Florida is a popular vacation destination and travel hub. It is easily accessible
thanks to its cheap and direct flights from Europe. A two-day stopover in Florida
to visit the bank, shop and visit the beach on the way to Panama / the
Caribbean or any other sunny destination in South America, should be no
reason for complaint.
It is often more credible to demonstrate that you are expanding your business
by actually being there. This allows for a presentation as a success story, as
opposed to states with - mostly - cows.
With the rise of "know your customer" rules, it never hurts to stop by your
personal bank. Although in the U.S. it's common to do everything online and
through the hotline, a personal contact can often work wonders.
Since payment transactions in the USA are less complicated than in Europe and,
for example, bankers do not ask questions even for the largest transactions, many
founders prefer to open an account in the USA. This is because, although the
heavy bureaucracy of the banking system started in the U.S. and spread to all
other countries, in most cases U.S. banks process transactions without asking
questions. In addition, the US does not participate in the Common Reporting
Standard, which means that they do not provide account data to other foreign
authorities.
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Another advantage of an American account is that the creditworthiness or
credit score can be built through transactions made through the bank account.
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How does opening a bank account work?
in the U.S.?
Even if you want a nested structure to maintain anonymity, it is advisable to start
with a simple structure and then adapt it. First you set up as a natural person and
later introduce changes to the structure. Otherwise, it is complicated and costly
to open a bank account, for example. As long as the company does not yet have
an operational activity, these later changes have no effect on the tax liability.
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Private account
Opening a private account is relatively easy. There is a list of banks where you can
obtain a private account. All you have to do is open an account in your name
locally.
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Company account
Fintec
The easiest way to open a corporate account is through one of the many FinTech
companies. Paysera, Transferwise and Revolut can be opened without going in
person by uploading and verifying your company and identity documents online.
However, we do not recommend depositing large sums in FinTech banks because
the funds are not as protected as in regular banks. However, it can be used as a
payment account through which the amounts are subsequently transferred.
In terms of exchange rates and transfer fees, FinTechs also tend to be cheaper
than traditional banks.
Traditional banks
Opening an account in the U.S. requires the manager to appear in person. If you
want to open an account at a traditional local bank, you must be well prepared
and appear professional. The opening of the account is at the discretion of the
banker.
The documents required are usually a passport, a second identity document and
an extract from the commercial register, the articles of association and the
operating contract.
Here we already have extensive experience and can arrange a "hassle-free"
appointment with banks and branches.
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If you do not wish to go through this effort personally or open the account in
advance, there is the possibility to open the account through the stateless office
team and our on-site CPA. In this case, an authorized person is admitted to the
items and - once the account is opened - withdrawn again.
Here is the Advanced Opening in detail:
For this purpose, a nominee manager must be registered in the commercial
register. This nominee manager opens an account in the name of the company.
Once the account has been opened, the nominee manager resigns as manager
and gives access to the account to the client.
On the next visit to the U.S., the nominee must go to the branch with the
nominee manager to become an authorized signer on the signature sheet. After
that, the nominated manager will no longer be listed with the bank as an
authorized signatory.
Remote opening without personal appearance is becoming more and more
difficult, but in principle it is still possible.
We are currently in the review phase to test and verify the appropriate banks
and the simplest process.
Account management is possible online or through applications and Visa debit
cards are issued. With a few exceptions, accounts at traditional banks are held in
US dollars. At FinTech banks it is also possible to maintain an account in euros if
required.
A mailing address is usually required to open an account, as this is where debit
or credit cards are sent. The stateless persons office team offers several options
for an address here.
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Other authorities, such as insurance companies or other offices, which in
Europe usually automatically contact you for information, do not usually
contact you unless you request something yourself.
Utility bills are not required to open an account, but can be obtained from the
Stateless Office team if needed for other purposes.
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Direction indication
If you have to give the bank an address of the account holder when opening an
account, it also makes sense here to be listed as a natural person if possible.
Since only an address is requested, and not the "address of record" (there is no
such thing in the USA), here, in the sense of the flag theory, you do not give the
address of a country in which you are a resident, but the address of friends or
relatives where you can receive mail. In the U.S., this is usually a U.S. address.
Simply giving your address does not make you a taxpayer or resident. This is
generally true for all banks worldwide: it is always advisable to use an address
other than your home address. In principle, of course, you can also give your
residence address in Europe, but it is more advisable - for more freedom - to use a
different address.
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Company accounts in Europe
Alternatively, you can obtain commercial accounts for LLCs in European
banks if you present the "right" story. We have already done this
successfully in Austria.
However, it is advisable to go to a larger branch in a city accustomed to working
with foreign business clients.
If an international bank requires proof of address for opening, a U.S. consumer
bill is a good option.
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Accounts
In order to use the US accounts to their full extent, a US cell phone number is
required to receive TAN numbers and to be able to be called by the bank.
However, this is easily possible through a Google SIM ("Google Fi") or through a
cell phone contract with T-Mobile USA.
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Building solvency
Foreigners can also acquire creditworthiness in the U.S. by obtaining an ETIN
and following a procedure that ranges from applying for a secured credit card to
borrowing and repaying a consumer loan.
We are currently working on our own program for this purpose. Because a good,
tax-optimized turnover in the company can immediately be used to increase the
solvency and can be used for possible investments or to obtain attractive credit
cards.
The ITIN is the Individual Taxpayer Identification Number. This number is
useful for individuals, as it can be used to open a private bank account
(although it is also possible to do so without it). Possession of the number
does not give rise to tax liability.
It does not hurt to have the number, as you can use it for several purposes. For
example, for Paypal. The statelessness team works with tax agents and can help
you obtain the number.
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US Credit Building
The United States is the land of loans and financing. In no other country can you
raise so much capital in so little time if you do it the right way.
One of the basic prerequisites for this is to participate in the
credit history system. To do this, you need a Social Security Number (SSN) or,
if you are a foreign national without a U.S. work permit, an International
Taxpayer Identification Number (ITIN). We offer this service in conjunction
with an Internal Revenue Service (IRS) agent.
With this number and the right steps, you can build a good credit score in a
period of a few months up to 2 years. This is reflected in a number called Fico
Score in the USA (similar to the "Schufe Score" in Germany).
In small steps and with small consumer loans and collateral-backed financing,
which are repaid immediately, scoring is boosted.
The FICO score is a number between 375 and 900 points, the more points you
have the more credit you have accumulated.
You can obtain financing even with a low credit score, but you will pay a higher
interest rate.
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It is also worthwhile for European entrepreneurs to improve their Fico Score to
obtain attractive credit cards, or to invest accumulated profits in lucrative U.S.
real estate investments in the future, and leverage return on equity with good
financing.
In addition, the private credit score helps the company's credit score, which is
recorded according to a similar system but in a different database. Future
supplier credit and financing positively influences the company itself.
The formula by which the credit score is calculated is neither simple nor is it
publicly known with any accuracy. However, there are proven strategies that
help on a regular basis. In 2019, we will offer a step-by-step program to
increase your score as quickly as possible.
The credit rating can then be accessed through one of the three rating agencies
for a small fee to track its evolution.
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Corporate income tax at Federal level
In the U.S., a corporation pays corporate income tax on the profits of the
company. There is no business tax.
The top U.S. corporate tax rate was until recently one of the highest in the
developed world. However, in 2018, tax rates were drastically reduced.
Corporate taxes are levied by the federal and state governments. The federal
corporate tax rate is 21%.
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Benefits from equity interests in
A territorial tax system similar to that of the EU applies in the USA. Profits of
foreign subsidiaries are no longer taxed in the USA if they are distributed to the
US parent company.
Gains derived from the sale of foreign holdings are also exempt from
taxation in the U.S. parent if properly structured.
Foreign profits of a U.S. company with foreign customers (i.e., customers who
are not U.S. residents) are only taxed at around 13% if structured correctly.
Example: A company A in Texas sells applications to customers in the EU. Profits
from these sales are only taxed in the US at approximately 13%.
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U.S. corporate income tax state level
They depend on the state. There are states that do not charge taxes, such as:
●
●
●
●
●
●
Nevada
Ohio
South Dakota
Washington
Texas
Wyoming
Ohio, Texas, Nevada and Washington have no corporate income tax on
corporate profits, but do have a sales tax rate (gross receipts tax). In Texas, it
amounts to 0.331%, with a $1.1 million exemption.
In the other states, tax rates range from 4.5% to 12%. They are not always paid on
total gross profits. In Florida, for example, there is an exemption amount of
$50,000. In other states, federal corporate income tax may be included as a cost
in the settlement.
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Value Added Tax (Sales Tax)
Each state levies a sales tax, but it is only partially comparable to the valueadded tax. It does not tax services, but only the purchase of goods. Shipments to
another state (mail order) are exempt from tax.
There is no compensation between input tax and sales tax. However, a reseller
does not have to pay sales tax (similar to the EU reverse charge). The application
of sales tax depends on the concept of "nexus", which describes the local
presence in a state.
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US LLC - What do you need it for?
benefit from it as well ?
What is a U.S. LLC?
A US (United States) LLC (Limited Liability Company) is a form of corporation
roughly equivalent to a GmbH under German or Austrian law. Each of the 50
federal states has its own LLC with specific characteristics. Therefore, the
following text is not applicable to all LLCs, but gives an overview of the basic
possibilities, advantages and disadvantages.
The first thing to mention is the price: for incorporation costs that can be in the
3-digit range, you get a company with exclusion of liability. The pure fees for a
German GmbH are considerably higher. In Germany, moreover, you need a share
capital of
25,000, which is not required in the USA.
Invoices from a US LLC are easily recognized in the US, EU and many other
jurisdictions. In addition, with a US LLC you can easily obtain bank accounts;
both in the US and a SEPA account in the EUR zone.
Many LLCs are "fiscally transparent". This means that, although legally there is
a partnership with exclusion of liability, the tax is "passed through" at the
personal level. If the partners are not personally liable for U.S. taxes, they do
not have to pay U.S. taxes. In the U.S., such a partnership is referred to as an
"excluded entity" for tax purposes. An assessment
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as a corporation may be explicitly requested, but it is primarily of interest
to U.S. citizens or, failing that, to U.S. taxpayers. Therefore, we will not go
into further detail here.
The consequence of tax transparency is that all income must be declared in the
respective "normal" income tax return of the partners. If one lives in Germany
or Austria, the income must be taxed there. In addition, the foreign tax laws
"CFC Rules" ensure that all foreign companies must be declared. The companies
are then taxed in the country as if they were domestic limited liability
companies. It can be seen that for this purpose the construction makes little
sense from a tax point of view.
In principle, the LLC can choose between being classified as a partnership
(Partnerschaftsgesellschaft) or as a corporation for tax purposes. 99% of LLCs
can be classified as a partnership. In that case, the LLC does not pay taxes, but
taxes are borne by the partners.
An LLC with only one member ("SRL unipersonal") is a so-called
"disregarded entity". It is registered for tax purposes, but does not file a tax
return.
Tax Free LLC
In the case of a tax-exempt LLC, a simple income and expense statement is
required by law, but is not required to be filed and is not subject to audit.
Advantages with residence in D/AT:
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A U.S. LLC is a simple and inexpensive company to form as a "start-up" if
you have few resources but have a good business idea.
If you want to own real estate, in many cases it is advisable not to own it
personally. In this case, a U.S. LLC offers several advantages as a property
owner.
Advantages without residence in D/AT:
The members of an LLC can remain anonymous. As long as they comply with
their tax obligations, or do not have to comply with them in any country, this is
not illegal.
For dropshipping and FBA, the LLC is very suitable, since the corresponding
companies or the companies where the advertising is placed (Amazon,
Facebook, Google, etc.) are based in the USA anyway. Often you also get better
conditions with the various payment providers (e.g. Stripe), since the place of
jurisdiction is always the USA.
It is also possible to earn points or miles if the advertising is paid for by credit
card. In this way, you can earn miles in the medium term and use them, for
example, for award flights. In Europe, this is only possible to a limited extent.
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Tax effect if the company has customers in the United
States.
USA
As long as you do not maintain a permanent establishment in the US, there
is no problem with the LLC to also serve US clients. Our tax consulting
partner "OnlineTaxMan" has published the following article on this topic
https://onlinetaxman.com/us- llc-tax-haven-for-foreigners/
. The prerequisite is that it does not have a permanent representative or an
operational office.
In the case of the C corporation, the tax effect is not so clear and it is currently
not possible to make a definitive statement in this respect.
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How to withdraw money from your U.S. LLC
Unlike a corporation, a partnership must distribute at the end of the fiscal year
for tax purposes. It is then taxed to the partners. This applies even if the profit
remains in the company's corporate account.
Unlike corporations, partnerships generally cannot avoid a distribution of profits
subject to personal taxation by investing, for example, in real estate.
Since a "non-taxable foreign-owned sole proprietorship LLC" does not have to
file income tax returns and is not audited, it is relatively easy to calculate the
profit towards zero through costs or provisions.
When must a German branch be registered?
The LLC has full legal capacity immediately after its entry in the commercial
register, even if no German branch has (yet) been registered.
If the LLC has a branch office in Germany, it must be entered in the Commercial
Register (which is kept at the locally competent District Court / Register Court)
in accordance with Section 13e of the German Commercial Code (HGB). The
exact moment to speak of such a "branch" is not regulated by law.
In the evaluation, the case law focuses particularly on the degree of
organization.
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In practice, a branch in the sense of commercial law will always exist if an
individual entrepreneur with a corresponding activity profile needs a
business license.
Consequently, a pure property LLC, which only owns assets and manages them
to a small extent, but does not perform any business operations beyond that,
does not have to register in the commercial register. An example of this is an LLC
that, for example, owns real estate or simply acts as the owner of a farm.
Internet domains.
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Registration of a branch office, what for?
If a German branch has to be registered in the Commercial Register, the
entrepreneur cannot avoid using trustees to maintain anonymity.
However, this does not apply if a branch of the LLC is to be registered in the
German Commercial Register: For this purpose, a resolution of the shareholders
stating the names of the shareholders must be filed with the Commercial
Register.
Therefore, the anonymity of the partners of an LLC with a German branch
can only be preserved through a trustee partner.
The LLC becomes a tax trap if it is not recognized as a company by the tax
authorities in its country of residence. This is a real problem for taxpayers in
Germany.
The Federal Ministry of Finance has published a checklist for determining
whether an LLC is to be classified as a corporation or partnership. It is as
follows (letter of the BMF in this respect dated 19.03.2004 (BStBl. I 2004 p.
411):
● Management: If the managers of the LLC do not have to be
members at the same time: Indication of a joint-stock company
● Liability: Limited to the company's assets: Indication of
a joint-stock company
● Transferability of shares: Free transferability: indicator
for a corporation.
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● Distribution of profits: by annual resolution of the shareholders:
Indication of a public company
● Raising capital: If shareholders have to make a contribution:
Indication of a corporation
● Duration of the company, if unlimited: Indication of a jointstock company
● Distribution of profits according to equity interest:
Indication of a joint-stock company
If the LLC is classified as a corporation, corporate income tax, business tax and
final withholding tax on distributed profits will accrue in Germany and the tax
paid in the USA will be credited.
However, since almost all of this data is only visible in the non-public
partnership contract (operating contract), which is not subject to a notarial
requirement but is simply a contract with a signature, there is considerable
leeway in deciding which version of this contract is valid.
Depending on the content of the operating agreement, it is treated as a
corporation or a partnership for tax purposes in Germany.
For both variants, you will receive a model contract from us after training - so
you are free to choose how the LLC is presented.
However, if a foreign holding company, foreign partnership or foundation is
identified in the operating agreement, the income of the company is not added
to that of the individual (regardless of whether the shareholder does not appear
in any records).
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Based on this principle and proper procedures, this trap can be elegantly
avoided.
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Combination Association and US LLC
With the combination "partnership" and "US LLC" social problems can be solved
on a non-profit basis, namely:
Your old-age pension and that of your family.
The ideal form of non-profit company is the partnership. Properly structured,
you alone have sole control of this association, as well as power of attorney over
the bank account. In order for this association to pursue its idealistic purpose
and solve social problems, it must make a profit. To this end, it owns shares in
companies.
Three variants of how you can finance your livelihood in Germany in the future:
Solution 1: You become an employee and managing director of the association
that owns the U.S. company. This brings insurance benefits, such as access to the
Swiss minimum wage pension system.
Solution 2: You become an employee and managing director of the U.S. company.
This company only pays wage tax and social security contributions in Germany.
Profits do not accrue to the US company. If they did, they would have to be taxed
in the US at a flat rate in the case of a "C-corporation". Not in the case of a "Tax
Free LLC".
Solution 3: You continue to work as a freelancer and invoice your services to the
US company in the future. Of course, in the future you only declare this invoice
to the IRS.
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If you are smart, you will charge the US company all the costs (expenses) that
you can deduct from your income tax. Plus a certain amount you need to live on
and from which you pay any income tax.
In this way, you may not earn more than the basic tax-free amount in the future.
In this case, he lives tax free.
It is important to manage it in such a way that all expenses that are not (fully)
deductible, such as car expenses, rent, etc., are covered by the association or
the U.S. company.
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Difference with C Corporation
A C Corporation is a corporation and is as easy to form as an LLC. The
difference with the LLC is that in the "Articles of Incorporation" of the C
Corporation it is possible (but not mandatory) to include a supervisory
board. The rest is the same as in Europe: the shareholders elect the
supervisory board and the supervisory board appoints the management
board. This can also be done by a single person.
A C corporation, unlike an LLC, is not a "pass-through entity" and therefore must
pay corporate income tax. However, there are several ways to keep the benefit
as low as possible. Filing a corporate income tax return is mandatory.
The S.A. is, of course, suitable if you want to involve investors. Unlike in Europe,
the SRL and the SA do not have to deposit share capital. This means that you can
register a company with a certain share capital, but you do not have to pay up
anything. Issuing shares is easy: you can print the certificates yourself.
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What are the costs of the foundation?
Start-up costs amount to about 2,200 euros. Then there are the running costs,
such as the cost of management and US office structures.
There are several ways to provide your U.S. company with a business address.
Basically, this is possible in varying degrees, from a post office box to a separate
office with employees.
We are less likely to recommend a legal mailbox, as this makes it impossible or
at least more difficult to open an account or use fintechs.
Therefore, we focus exclusively on the following options:
Option 1: Virtual office
The cheapest option, equipped with an ordinary postal address, is a virtual
office. Here mail is accepted, scanned and, if necessary, physically forwarded.
Option 2: Shared-use office
At such an address there is a real office. Mail is forwarded here as well, but it is
also possible to use a meeting room and to take advantage of services in the
form of employees working for the customer on request. The number of
companies registered at such an address is significantly lower than at a virtual
office.
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Option 3: Own office with real business practice
An actual own office, where at least one own place of business is permanently
available. However, this is not advisable because U.S. companies with an
operating permanent establishment are excluded from the tax exemption.
See also the U.S. term "nexus" (not to be confused with the term nexus
relating to border control procedures).
To combine the advantages of a U.S. LLC with your own employees, you can set
up an office abroad. For example, in the Philippines, Colombia or another
country, with inexpensive employees carrying correspondence and appearing on
behalf of the company. This gives the company a substantial image, while
administrative tasks can be delegated very cheaply. English-speaking employees
are realistically from €400/month, and correspondingly cheaper on a part-time
basis. The similarly created stateless office in Medellin can help in the
organization.
● Formation expenses US LLC 2180
● Annual fee depending on the office package 1400
● Trust Service 950
As trustees we only choose persons who are not registered with German
companies. This excludes the appearance of a mailbox company.
Optional support and coaching during the first months. The emergence and use
of the new US LLC is explained in detail and on the basis of individual case
studies.
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Another package is the US LLC with a partnership as owner in order not to hold
a foreign interest personally. Formation € 3100 and monthly service fee all
inclusive € 250 /month. If structured correctly, it is often possible to avoid the
addition tax.
The credit creation package is not yet well defined. The product is in the
planning stage and will cost between 200 and 400 euros per month. And the
expense will be amortized in any case, as access to cheap capital will be
available in the long term.
You can apply for a company incorporation directly with us using the form on
our website.
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Future prospects
Strategically, when creating a business and a company, it is necessary to take
into account the future perspective and not only the immediate advantages.
The U.S. is a good option, as a company incorporated there with a viable
balance sheet is one of the fastest to sell worldwide if this is a possible exit
scenario for the founder.
It is also the easiest place to raise venture capital for a fast-growing company.
Large Internet companies are impressive proof of this.
However, if you were to move to the U.S. permanently, you would lose your taxexempt status, but you can use your business history to obtain a green card
more easily.
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More information Scope of application
Outside of normal operating business activities, asset protection of a U.S. LLC
can also be used.
In most countries it is possible to acquire property in the name of a U.S. company.
Local authorities are much more cautious with the properties of such companies,
especially with regard to expropriation.
For example, a German "infrastructure tax" is most likely to be judged by the US
authorities as an expropriation, so local authorities are likely to simply give such
a property a wide berth.
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Reversing the benefits of
The question of what to do with the profits is often raised. However, once
outside Europe, one immediately thinks of U.S. instruments such as tax liens
or tax deeds:
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Tax deed Investing
This is an American concept that may seem strange to Europeans, but it is
standard procedure in the United States: the state wants its property tax, no
matter what.
If someone is now unable to pay, the real estate tax is announced as unpaid.
Now everyone can pay the real estate tax "first come, first served" or take
over the payer.
You must now pay back the tax with a hefty interest rate (12-24%) over time. If
he does not pay back the money, you get a greatly reduced right of first refusal
on the property, or even the fabulous interest.
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Who are the companies most suitable for
American ?
With these companies, one can acquire or own assets around the world, for
example in South America, and then transfer them with shares without triggering
transfer tax or transferring ownership.
In addition, as a U.S. company abroad, it is better protected from the authorities
there, as it is less likely to be attacked as a foreign company.
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Giving substance
To provide content for a U.S. company, it is common to hire a few freelancers
on the southern continent to act on behalf of the company and carry
correspondence.
English-speaking staff with overseas experience in Europe, the U.S. and even
Americans who prefer to live in South America abound, and cost a fraction of what
they would in Europe.
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Frequently Asked Questions
Which to choose: LLC or C Corporation?
It is relatively easy to change from one form of enterprise to another and vice
versa, i.e. the decision for one form of enterprise is not permanent and can be
changed.
If I am not a "sole proprietorship excluded entity", can I have a partner and still
be tax exempt?
Yes, it is possible. You can also have more than one partner, the only difference
is that you have to file a tax return.
It is still possible to be exempt from taxation, as it is taxed through the
individual, but you have to file a tax return. It is also possible to give someone a
stake in the company internally, but this is not visible externally.
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