Privacy focused legal structure for foreign owned US WY LLC

daniels27 said:

Let's do one by one.

Why would there be withholding taxes when getting paid from the US clients? What are the payments for?

Thanks! The payments will be for affiliate commissions

daniels27 said:

Do they qualify as royalties under US law?

In the standard contracts of these US clients royalties are not mentioned, the payments are described as earnings based on revenue generated from the marketing activities

daniels27 said:

Have you ever checked with a lawyer whether these are royalties (which are subject to withholding tax)?

No I have not done that but usually EU companies sign these contracts together with W-8BENE and pay taxes in their own jurisdiction. Switzerland is not part of EU so I will check it if i go this route but i think most likely it is going to be not taxed. So it would be interesting to discuss how Switzerland setup would work.

Last edited: Jan 19, 2025

daniels27 said:

Ok, so there is no withholding tax on the US side? I would recommend you to be sure about this first, as this has a big influence over the choice of the jurisdiction.

Thanks I will check it out and then i will update this chat here as well

Island Insider said:

Thanks I will check it out and then i will update this chat here as well

I checked with an attorney and he said that it should be treated as business profits, because royalties typically involve payments for the use of intellectual property rights.

He also mentioned I should choose a jurisdiction that has double taxation treaty with US, like Switzerland.

He also mentioned that the nominee director structure should be carefully documented to avoid creating a US trade or business nexus through agency relationships

Thanks for pointing Malta out as I understand this would require non dom tax residency there and this is something interesting for me to think about.

Country of Georgia is also a great cheap option, but i am thinking as W-8BEN-E form is asking for the name of organization that is the beneficial owner the Georgian company. This might effect the tax relationship with US (if its a non treaty jurisdiction that would be the holding company)?

In general I think I have to make some compromises and I prioritize shareholder privacy so Switzerland sounds like the most solid option. I am a little bit worried about depositing 22,000 USD as minimum share capital when registering as I have no experience working with nominee directors before. But I am not sure if there are any other similar options like Switzerland.