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I plan to form an LLC in the state Delaware
i am a French citizen based in Paris
& i will be the only owner of this llc operating from France with internet.
so, physically i am not on the Usa soil.
questions:
do i have to pay social secutity taxes as a non us resident ?
do i have to pay income tax for any revenue received from my llc?
How will you be able to register LLC in the U.S.? Is it going to be a proprietorship, partnership or a corporation?
Do you plan to work for LLC from remote. An LLC must file tax return and must pay minimum amount of franchise tax.
i am new to this forum but i'll try to be as clear as possible.
i am a french citizen based in Paris, France
i plan to form an llc in the state of Delaware for its many advantages.
i will be A single member LLC, where that sole member is a foreign person for U.S. tax purposes.
my business is conducted purely over the internet with no physical presence in the U.S.
Accordingly, any income earned is treated as earned directly by the foreign person.
Such income is not subject to U.S. taxation so long as the foreign person did not perform
his services or sales activity in the U.S.
questions:
1-which forms must i comply as a foreign person ( with no physical presence in the U.S.)
earning a us source income? if there is any?
Would the income earned be taxable in the U.S or require a return to be filed in the U.S.?
2- do i have to pay any social security tax?
Normally a non-resident exempt individual's income is not subject to Social Security and Medicare taxes.
thank you for your comment and recommendations.
Negev[/quote]
1) You probably will have to complete a Form W-8BEN for the company that is paying you, assuming that this company is a U.S.-based company. This form, when properly completed, will prevent the U.S.-based company from withholding taxes on their payments to you.
2) Because you are not physically located in the U.S., NO U.S. taxes are due.
1) You probably will have to complete a Form W-8BEN for the company that is paying you, assuming that this company is a U.S.-based company. This form, when properly completed, will prevent the U.S.-based company from withholding taxes on their payments to you.
2) Becuase you are not physically located in the U.S., NO U.S. taxes are due.
Thank you for this advice
what about social security taxes?
In general, U.S. social security and Medicare taxes
apply to payments of wages for services performed as an employee in the United States.
When I said "No U.S. taxes", that included Social Security and Medicare taxes.
Only U.S. citizens have to pay taxes on world-wide income. Since you are a French citizen, no U.S. taxes are due unless you earn the income while located within U.S. borders.
my business is conducted purely over the internet with no physical presence in the U.S.
If you work as an employee in the United States,
you must pay social security and Medicare taxes in most cases.
Your payments of these taxes contribute to your coverage under the U.S. social security system.
Social security coverage provides retirement benefits, survivors and disability benefits, and medical insurance
(Medi-care) benefits to individuals who meet certain eligibility requirements.
In general, U.S. social security and Medicare taxes
apply to payments of wages for services performed as an employee in the United States,
regardless of the citizenship or residence of
either the employee or the employer.
However, i must comply with these following forms:
Form-W-8BEN Certificate of Foreign Status of Beneficial Owner
Form ss4-Application for Employer Identification Number
Form 1042s Foreign person's US source income
MukatA, your question is a good one. It seems clear that as long as negev does not perform any services in the U.S. he/she does not owe any U.S. social security taxes. This would be the case under both U.S. tax law and under the totalization agreement between the U.S. and France.
Whether negev or his LLC owes U.S. "income" taxes is a bit more complicated. For income taxes, if no income tax treaty applied, the question would be whether negev is engaged in a U.S. trade or business (directly or through his US LLC) and if so, does he have U.S. source income. The first part, whether he is engaged in a U.S. trade or business, is a nebulous question and is based on various facts and circumstances. The fact that he/she has formed a U.S. LLC would be a factor leaning towards a U.S. trade or business. Other factors would also need to be looked at. The second part, the source of the income, requires more information as to the type of Internet business he/she engages in. If he/she is performing services, then the income is sourced to where the services are provided (France in his/her case). If sales of goods or other activites are occurring, then different sourcing rules apply.
Because negev is from France, he/she may be able to rely on the U.S.-France Income Tax Treaty to potentially avoid U.S. income taxes. Under the Treaty, business profits of his/her French business can only be taxed in the U.S. if he/she has a "permanent establishment" in the U.S. A permanent establishment is a fixed place of business through which the business of an enterprise is wholly or partly carried on. If he/she has a permanent establishment in the U.S., then the U.S. can tax the profits attributable to that business.
Does forming an LLC in the U.S. create a permanent establishment in the U.S.? Maybe not. If negev is relying on the treaty, then he/she must file Form 8833 to disclose the treaty-based return position. If he/she is not relying on the treaty and he/she doesn't file a U.S. income tax return, but it turns out that he/she should have filed a U.S. income tax return, the statute of limitations will remain open forever and U.S. source gross income (rather than net income) can be subject to U.S. tax (See Code § 874). It is not uncommon for "protective" U.S. income tax returns to be filed to mitigate these concerns.
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