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,
- Corp Tax Refund 124 2
- Any Scottish members out there? 12,746 477
- Email hacker for hire ... 308 8
- Fees for Property Tax Return 482 15
- Sage Line50 Journal Entry Help! 153 11
- How to prove to HMRC that you was not self employed? 82 10
- Capital Gains Tax on title transfer 258 8
- IFRS and UK GAAP Adjustment Jrnls 47 2
- Donaldson V HMRC 172 1
- Audit partner? 231 6
- Losses on FHL Property 88 1
- SA302 for mortgage advisors 235 5
- Has anyone encountered this scenario 108 1
- corp tax software 962 13
- Does anyone use quotation software? 304 6
- Now Scotland has voted "No", when does England get to vote? 1,616 72
- Can't read my handwriting 550 12
- What code do you put expenses under such as tea & coffee? 691 15
- Is this fraud? 846 13
- how to start a career in accounting at 34? 414 4
- Raiders of the Lost Tax File 1,365
- Chartered Accountant in County Down N.Ireland 510
- National Insurance 401
- Non Resident 315
- Hands on experience of Digita 237
- Best way to take money from a business if you have unlimited EIS allowances? 216
- Employer's Helpline 185
- CIS paid under reg 9 174
- Does anyone use PS Financials accounting software out there? 144
- Commercial rental property - still Schedule A? 138