I moved to Madeira a year ago, and got my residency, self-employment and my NHR around October last year. This year I decided to open my LLC in America to make sure I can achieve a better tax-rate through dividends.
Am I in danger by doing this because I got my NHR before I opened the LLC?
Would love to know this because tax advisors on Madeira all say different things and it’s bugging my mind like hell.
Many thanks for your insight,
Dont know about Madeira but how are you going to take money from your LLC? It varies from state to state but in general you will be liable for US federal and state income tax and social services. And your LLC may be subject to corporation tax on top! Why not set up your company in a jurisdiction which doesnt tax dividends and has no corporation tax? There are several…
Foreign owned LLC is not liable for US federal or state income tax. And I would pay myself a small salary (which will be taxed in portugal) and the rest in dividends which would be 0% tax on with NHR.
Looking forward to the answers to come.
An LLC is certainly taxable in Florida!!! And I suggest you take good advice because if any US entity pays out a salary or dividend it is subject to tax, be in income tax or witholding tax. Otherwise there was nothing to stop Bill Gates relinquishing his US citizenship, getting citizenship in some dodgy West Indies island and then Microsoft not paying any tax…Also be aware that many European countries require companies totally owned by their nationals to report to their tax authorities. I also understand capital gains tax is still a liability with NHR.
This is all above my pay grade, but do please take advice from an accountant with expertise in BOTH jurisdictions. I have learned over the years that simply having an accountant in europe and a CPA in the US can lead to mistakes
Well, seems you know more than the four tax advisors I’ve talked to. Thanks for your input spam.
Foreign LLC is not taxable on USA you are right but after reading a lot of forums, I’m not sure if you can send your LLC’S capital as dividends, since the LLC is a pass through company and some countries consider it as personal income.
Could you please clarify I’m in the same situation and there is a lot of miss information.
It’s certainly possible to have a non-resident single-member US LLC (in any state) that pays no income tax in the US, the only US annual requirement being submitting in informational return to the IRS. That part you’ve got right @Ascendily.
However, you cannot pay dividends from such an LLC. You also don’t pay a salary to the owner. The payments to you are “owner draws”. This is the same as being self-employed and taking out money from your business. The overall profits of the business should generally be reported as self-employment income where you are tax resident. It doesn’t matter if you take the money out of the company’s bank account or not—for tax purposes you and the company are the same.
Unless you need either the limited liability or pseudo anonymity afforded by LLCs in certain states, you’re better off just registering as self-employed in Portugal (google “recibos verdes portugal”).
And no, you won’t pay 0% tax on your self-employment income from work performed in Portugal, even with NHR. Wrapping that as an LLC won’t change anything.
So what setup will work to get dividends from a foreign company? if you are living in Portugal and the foreign company has no substance my guess is that NHR is almost useless to get the 0% right ?
I have a single member US LLC for many years and everything @tkrunning says is correct.
I think you would have to open a US C-Corp in order to withdraw a small salary and benefit from any dividends distributions.