Citizens of countries other than the United States are often concerned with the tax consequences of owning an entity such as a limited liability company. A Delaware LLC that (1) carries on no business in the U.S., (2) derives no income from any sources within the U.S. and (3) has not elected to be treated for tax purposes as a corporation does not need to file a U.S. tax return or a Delaware tax return.
Under the current IRS "check-the-box" rules, a Delaware LLC that does not affirmatively elect to be treated for tax purposes as a corporation will be treated for federal tax purposes as a partnership. It will be treated as a partnership for Delaware tax purposes as well.
Under current Treasury Regulations, a partnership that carries on no business in the U.S. and derives no income from any source within the U.S. does not need to file a tax return. Delaware law currently provides that a partnership need file a return only if it has income from sources within the State of Delaware.
If the LLC has only one member, then for federal tax purposes the LLC is disregarded, and the sole member is taxed as a sole proprietor. Current Treasury Regulations provide that a nonresident alien who is not engaged in a U.S. business and who does not derive any income from any source within the U.S. does not have to file a tax return. Similarly, Delaware law currently provides that a nonresident alien having no income from sources within the State of Delaware does not have to file a Delaware return.
http://www.delawarecorp.com/choosing_your_de_entity.htm
Taxation of Foreign Members
Foreign individual members are subject to a 39.6 % withholding tax on their allocable shares of trade or business income earned by the LLC, whether or not the LLC income is distributed. Foreign corporate members are likewise subject to a 35% withholding tax (although foreign corporations may be subject to the branch profits tax if the LLC is engaged in a trade or business).
However, the withholding tax rate is different for gain from the disposition of real property and certain other types of income. And, the withholding tax rate may be reduced by treaty.
Quarterly estimated withholding taxes are reported on IRS Form 8813, and additional amounts due after the close of the year are reported on Form 8804. The LLC must send each foreign member a statement showing the amount of withheld taxes on Form 8805.
http://www.corporateservicecenter.com/LLC/foreign_owned_llcs.htm
