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,
- Audit Exemption new rules 249 6
- Snotty HMRC letter - continued 421 14
- Expat working back in UK 54 1
- Property versus Trade in a Ltd Company 69 3
- Who owns SAGE Data? 364 7
- change of paye software 497 13
- When will Private Principal Residence Relief cut will start? 242 5
- Are bankruptcy restrictions order becoming more common? 158 2
- Which software for practice books? 456 19
- Several employments - large tax bill remaining 218 4
- CIS to 5/10/13 and HMRC Computer issue 522 2
- share capital calculation 234 14
- Dispensation pointless ? 175 3
- Renting property to yourself 448 12
- Concerned about RTI 2014 1,955 51
- RTI Student Loan Reconciliation 174 4
- Pension contributions limits 259 11
- pre letting expenses 126 1
- Ltd Company 155 4
- HMRC corporation tax software - how to enter negative expense 171 6
- Desperately seeking Susan, Sam or anyone with any other name 723
- Experience with Islamic investor following Sharia-compliant rules? 471
- Darwinpay Partnership Assessment 286
- How to format a stock book 250
- S464A Charge to tax: conferring benefit & BIK 206
- Foreign income on Self Assesment 202
- Tax efficient holding company structure 190
- Investment property company accounts template 184
- Outlook 2007 with business contact manager not loading on new laptop 178
- auto enrolment - calculation of first pension deduction 161