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Foreign-based Limited Liability Companies (LLCs) subject to U.S. taxation

Guidelines for determining tax obligations of a U.S.-formed LLC owned by nonresident aliens, helping to dispel confusion amidst inconsistent information from the IRS. This article solely focuses on LLCs created by foreign nationals within America...

, and Administrator

2025 August 17 . 11:49 PM

3 min read

Foreign LLCs owned by non-US entities facing taxation in the United States

Foreign-based Limited Liability Companies (LLCs) subject to U.S. taxation

For non-resident aliens looking to establish a business in the United States, there are several favourable locations to consider. This article will focus on two such states: Nevada and Georgia, both known for their business-friendly environments.

Nevada: A Tax-Friendly Haven for Businesses

Nevada stands out as a favourable location for business formation due to its lack of corporate income tax and personal income tax. This makes it an attractive destination for companies seeking to minimise their tax liabilities.

Georgia: Another Excellent Choice for Business Owners

Georgia also offers an appealing environment for starting and operating a business, even for nonresidents. Similar to Nevada, Georgia does not impose a corporate income tax, making it another tax-friendly option.

Delaware: Navigating Tax Obligations for Online Businesses

Delaware is a popular choice for company registration due to its robust legal system and flexible corporate laws. However, it's essential to understand the tax implications for businesses maintaining a website in the United States.

A Delaware company that operates only a website without a physical presence or substantial business activities in Delaware typically avoids Delaware corporate income tax. However, the company is required to pay an annual franchise tax and comply with Delaware corporation filing requirements. The franchise tax can be significant for large corporations, with a maximum tax of up to $250,000. Additionally, a gross receipts tax may apply based on activities sourced in Delaware.

It's important to note that maintaining a website in Delaware does not automatically constitute "doing business in Delaware." Business income derived from personal services is determined by the location where the services are performed.

IRS Publication 519: A Useful Resource for Non-Resident Aliens

For non-resident aliens considering forming an LLC in the United States, the IRS Publication 519, U.S. Tax Guide for Aliens, may be a valuable resource. This guide provides essential information on filing taxes, understanding tax obligations, and navigating the U.S. tax system.

Banking and Business Operations

U.S. companies and U.S. bank accounts can be used by both foreign and domestic clients, including non-resident aliens. This flexibility allows businesses to operate smoothly within the U.S. market.

Other Considerations

The sale of real property is taxed based on the location of the property, while the sale of personal property does not have a specific determining factor mentioned in the source of income. The benefits of incorporating in Nevada apply to both C corporations and pass-through entities. IP royalties (patents, copyrights, etc.) are taxed based on where the intellectual property is used. Interest is taxed based on the residence of the payer. The specifics regarding the taxation of the sale of personal property and the seller's tax home are not provided in the given information.

It's also worth noting that if the company's website is used to do business or generate income in other U.S. states, those states may impose additional tax obligations depending on nexus rules. The Delaware tax rules do not exempt the company from tax filing responsibilities or physical presence rules elsewhere.

In conclusion, when considering forming a business in the United States, non-resident aliens have several favourable locations to choose from, including Nevada and Georgia. Delaware offers a robust legal system and flexible corporate laws, but it's crucial to understand the tax implications for businesses maintaining a website in the United States. The IRS Publication 519 can be a valuable resource for non-resident aliens navigating the U.S. tax system.

For non-resident aliens, both Nevada and Georgia are business-friendly environments, offering incentives such as low or no corporate income tax, making them attractive choices for business formation within the United States.
In addition to Nevada and Georgia, Delaware is also a popular choice for business incorporation due to its robust legal system and flexible corporate laws, although it's essential to consider the tax liabilities and filing requirements, particularly for online businesses.