US LLC + UAE Freezone Company - The Best Business Structure?

[@whocareswhoiam2day]

Withholding Tax Risks: Payments from the LLC to a foreign holding company (if the holding company is non-U.S.) could be subject to U.S. withholding tax (typically 30%) unless reduced by a tax treaty.

[@tuomaskiv]

no they're not, for US tax purposes LLCs are treated as pass-through entities, meaning the income is taxed at the owner level rather than at the entity level. LLC profit distributions are not classed as dividends by US tax law. This is unless the LLC has elected to be treated as a corporation (don't do that)

[@NaturalMentalHealthTreatments]

@@tuomaskiv I had that question. Advertising revenues and kindle book sales from Amazon US are subject to withholding tax if they are sent to me here in the UK But if I made them payable to a US LLC and my Dubai Freezone company owned the US LLS, would there be withholding tax?

[@whocareswhoiam2day]

@@NaturalMentalHealthTreatments Payments “passed through” the US LLC to the UAE parent company are still likely to be subject to US withholding tax if the payments are considered US-source income (e.g., payments from Amazon to the US LLC). • Without a Double Taxation Agreement (DTA) between the UAE and the US, the standard US withholding tax rate for payments such as dividends is generally 30%. For other types of income, specific rates and rules apply under US tax law.

[@tuomaskiv]

US withholding tax rate is determined based on the tax residence of the beneficial owner. having a US LLC as an intermediary doesn't affect the withholding tax in any way, it only depends on where you as the beneficial owner are tax resident.

[@lisavirginiaa]

Nice video. So informative 🔥😉

[@touirtouhassan3649]

Is your LLC subject to corporate taxes in this case ?

[@TheTesla84]

Insightful! What business activities did you pick for your UAE Holding LLC and which free zone?

[@NaturalMentalHealthTreatments]

Thanks, another very useful video. A constructive criticism: the audio setup is very unpleasant to listen to. The peaks of your voice are way to high and painfully harsh, I have to dial the volume down to low to compensate, and forget using earbuds. I noticed this in previous videos of yours but it’s getting worse. In your video editor there’ll be a way to limit audio peaks across the entire Final Cut.

[@tuomaskiv]

Thanks, can you show an example (timestamp) of these voice peaks (so I can tell my editor)? I didn't notice it myself.

[@NaturalMentalHealthTreatments]

@ It’s constantly happening, not a specific occasional thing. There’s a easy way limit audio peaking/audio peak volume across the whole track just ask your video editor to cap audio peaking so it doesn’t go to a harsh level. Again thanks for your videos, you showed me I don’t have to be a millionaire to benefit from moving to Dubai; my projected earning are only going to be £100 k for year one of my new business rising to 2-4 x that in the coming years. The tax differences between Dubai and the UK are huge, well worth the move, even on this level of income. The other very important thing I learned is the about uk governments proposal for an exit tax, which would completely lock me into the uk. Ideally I wouldn’t have moved until I passed £200k but to avoid getting trapped I’m gonna have to move sooner. My business finances won’t be ready to move before the next April budget changes, but I should escape before the Autumn budget. So fingers crossed they won’t start the exit tax in April🤞 PS there’s a crazy nonsense “psychotic “ comment to this video you might want to delete/block.

[@tuomaskiv]

Okay thanks! And good luck, hope you can make the move soon!

[@kingacuper3697]

Do you have any promo code for doola for Total Compliance Max?

[@tuomaskiv]

The promo code is DOOLATUOMAS10 - is it not working on total compliance max? If there's an issue you can email me at [e-mail]

[@nickstekovic7244]

What's the point now since Stripe banned digital products. Which payment processor are you using?

[@tuomaskiv]

no they haven't banned digital products

[@nickstekovic7244]

@@tuomaskiv What do you mean they haven't It's in the new "restricted" policy for any digital products. I had 2 Stripe UAE accounts that were legit for more than 3 years and both were put on pause because of that. No chargebacks at all. I tried disputing they constantly said it's a digital product and that is in our "restricted" area. If you're a recent Stripe account holder it's won't happen to you now but down the road 100%.

[@ywueeee]

does this work out well for crypto/forex traders to open accounts and then use good US banking?

[@chrisbroomheadcoaching]

Are the payments getting rejected on stripe, or as a bank transfer?

[@tuomaskiv]

Stripe

[@TRY-e6h]

hey bro i have a lot of youtube channels and i make money through ad revenue and i pay 30% us withholding tax if i go to Dubai and set up this structure did it will work for my business and i lower my taxes ?

[@tuomaskiv]

You would still have to pay 30% withholding as a UAE resident (regardless of which business structure you have)

[@whocareswhoiam2day]

thanks! where do you setup UAE Holding for US LLC? its avalible only difc and adg (abu dhabi) and cost a lot especial after 5 year...license like $30K/y

[@tuomaskiv]

you just have a regular UAE company, any company can own shares - book a call from the description

[@whocareswhoiam2day]

@@tuomaskiv yes, freezone uae company is for trading or service activity can hold shares of other company, but holding is not quality actvity for service/trading company, so all shares, capital gains get from holding is come as revenue with regular corp tax 9%, only real holding companies from dfic and agd have zero corp tax on holding.

[@whocareswhoiam2day]

@@tuomaskiv regular company ( like trading or service) when you receive capital gain or dividend is taxable event. Only holding company (activity) in difc and adg are with 0% corp tax.

[@whocareswhoiam2day]

@@tuomaskiv own yes, but if there dividend or capital gain there will be corp as income of 9% only natural persons are tax free on dividend, interest, capital gain. and quality activity companies like holding companies.. in difc and adg zones only.

[@tuomaskiv]

In UAE tax law, dividends from shareholdings from subsidiaries that are UAE resident are tax free

[@nicolailee915]

What's the best to pay yourself from the US company? UAE company invoices the US company or can you just transfer money to yourself personally and declare it as self-employment income for the US company?

[@tuomaskiv]

Simpler is to pay out dividends to UAE company & then pay yourself via UAE company. Or if you own the LLC directly personally then you just pay out salary/dividends t yourself

[@nicolailee915]

@@tuomaskiv but dividends are subject to 30% withhold for US companies if you pay it personally. I think you can just pay it straight as a profit share out of the US company to yourself since it taxed as a pass through if your UAE company doesn't own it.

[@tuomaskiv]

No they're not, for US tax purposes, US LLCs don't pay dividends, they pay distributions and withholding tax does not apply.

[@nicolailee915]

@@tuomaskiv makes sense - i guess paying distributions straight to personal bank acc in uae is the strat

[@luca5380]

is the most tax efficient way is running the company through US LLC and then paying yourself personally to your personal bank so you pay 0% personal tax? or is the US LLC liable to the 9% from UAE if not a small business regardless?

[@tuomaskiv]

watch from 5:28 The US LLC is liable for UAE corporate tax according to the same rules as a UAE company if you manage & control it from the UAE

[@luca5380]

okay makes sense, so if you had multiple US LLCs under the 9% threshold would that work or would it be calculated as the combined net income from the LLCs and anything above is 9%?

[@joristube]

@@tuomaskiv if operating the us llc from the uae, where / how do I need to register that entity for VAT/CIT purposes? And how much would that cost approx

[@luca5380]

?

[@tuomaskiv]

With multiple businesses they are calculated as the combined total, I can't remember the wording from the law but basically it's written so it prevents you from having multiple businesses just to stay below the threshold. If you have genuinely separate businesses it may be counted based on each individual business.

[@zakross]

Are you a Mainland, Freezone or Offshore Holding company in UAE?

[@tuomaskiv]

freezone

[@sonny8085]

Just something to be aware of, but a US LLC does not pay out dividends, because it has members and not shareholders. LLCs profits are paid out in "distributions", which is different and may be something that catches up with you in the future if you are declaring it as dividends to the UAE tax authority.

[@tuomaskiv]

For UAE law purposes a US LLC is the same as any other business. A profit distribution & dividend are the same thing in terms of UAE tax law (it's a distribution of the company's profit to its shareholders).

[@sonny8085]

@tuomaskiv OK, if you're sure. Personally I would look at using a US LLC and getting an Emirates ID through Dubai's Virtual Worker (digital nomad) visa. There is no corporate tax in either case and cheaper to set up, but strictly speaking you're not supposed to have UAE sourced income. However if your payment processing is in the US anyway, then who knows 🤷‍♂️

[@whocareswhoiam2day]

@@sonny8085 Pass-Through Income: If your U.S. LLC is treated as a pass-through entity (e.g., a disregarded entity or partnership) for U.S. tax purposes, the income flows directly to you. In this case, the income retains its character (e.g., business income, interest) and is considered foreign source income. and if this is business income, it's need to be taxed 9% in UAE.

[@akashsxo]

@@sonny8085sounds good,so you will be hiring yourself in US LLC and giving a $5K/month salary so as to qualify for Nomad Visa ?

[@sonny8085]

@akashsxo indeed, or whatever the salary requirement is. Just a point to note, but it is (very) difficult to apply for a credit card locally in this scenario, so if you are currently already an employee within the UAE, get what credit cards you want first before becoming a digital nomad.

[@Kushal-v8b]

Dubai Better than Bangkok

[@gideonkpami5646]

I disagree

[@AnonYmous-vo5gu]

Hi Tuomas, another great video. Messaged you on Instagram to meet up here in Dubai if you’re around the next couple of weeks?