Trading in America
I'm currently researching the optimal business structure for a client seeking to break America. They have been in touch with a legal advisor over there and have had several suggestions put to them.
In general, the advisor has pushed the idea of an "LLC" (for all intent and purposes, it is an LLP equivalent). Under an LLC business profits are taxed on Partners as individuals. Individuals enjoy considerably lower tax rates than "alien" owned Corporations.
I agree with his suggestion. However, I have delved deeper. As may have already assumed, the individuals concerned will remain UK Resident. CTA taught me that, simply, UK Res. should be taxable on worldwide income; thus making the current LLC proposal inefficient as the individuals would be HRTP and possibly ARTP.
However, on reading the Double Tax Convention applicable between UK/US, Art. 7 suggests that Business Profits will be taxable ONLY in the Contracting State in which they arise. This is of course at odds with my previous paragraph stating UK Res. should be taxable on worldwide profits?
Can I rely on the statements contained in Art.7 of the DTC?
Would disclosure of the reliance on the exemption to double taxation be required on the UK SA100?
Some other points which may be of relevance:
- The trade is an extension of one undertaken through a UK Ltd. There
- The UK Ltd is currently a UK Marginal CT payer.
Any other points, recommendations, or cautions would be welcome.
Thanks for reading,
- Tips on meals 144 2
- Buy Samsung Galaxy Note 5 508 10
- Rental losses on jointly owned property 131 3
- Personal Tax 718 13
- Overpaid In Employers NI - RTI EYU for hundreds of employees 139 2
- Stumped - IHT 104 2
- Leaving the VAT FRS Scheme or trying to stay as long as possible? 405 6
- No PAYE Registration but need auto enrolment 468 11
- HMRC now overriding SA bank repayment details on tax returns 1,280 33
- Credit management tools 116 1
- property capital gains 121 1
- Write an article on latest tax changes for landlords. 771 20
- Incorporate to utilise dividend allowance next year? 380 7
- CGT and primary residence 163 1
- Marriage Allowance 255 3
- Private doctors - Ltd company vs partnership 1,148 12
- S455 and February year ends 314 7
- HMRC having technical difficulties 886 18
- Closing down loss-making company 451 5
- S.455 Tax again 285 3