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,
- Divorcing husband, both 50% owners of a Ltd business 301 7
- Annual Return for company for whom director/shareholder has died 62 2
- Paid too much !! 350 3
- New (non resident) client not filed in 20 years 194 2
- Sage Instant Accounts Complete De-install problem 114 3
- Credit against UK NI for NI paid to EEC Countries 239 1
- will this work for IHT 260 2
- Best software for small practice? 662 20
- Auto enrolment confusion 1,758 39
- I am 34 years old, am I too old to start a career in Accounting ? which is the best way to pursue it 309 7
- Taxfiler been down since mid-afternoon 257 5
- Anyone having problems with Taxfiler 511 17
- Gifting Shares to a Limited Company 151 1
- Company separation for Wholesale & Retail businesses 123 1
- Selling a VAT Qualifying vehicle at a loss 129 1
- Paying dividends to Ordinary shares with different nominal values 484 15
- 2012 13 HMRC QUERY 756 11
- Sports Sponsorship 183 1
- New Shareholder and Purchase of Own Share 291 17
- Opt To Tax Refund 218 2
- Self employed and HMRC Worldwide Subsistence Rates 770
- Interest paid - do new rules affect Tax Credits? 456
- Market Invoice (P2P invoice discounting) tax treatment 276
- DTA tie-breaker issue 263
- Tax on internet ad sharing income 251
- CGT for NOn UK residents 224
- Apprenticeship Levy 203
- What are the tax implications of overseas sales through a UK based company? 195
- Capital Gains personal representatives 184
- Just checking re PSA 178