Setup for non-US traders that want to invest and trade in the US: US LLC owned by an offshore corp

D

Daal

Given the recent compliance crackdowns on US brokerage accounts from offshore companies, I was thinking of a setup that would be more resistant to these issues. If anyone know more about the costs and compliance costs of US LLCs, they can perhaps comment on the setup.
But the idea is to own an offshore company (100% ownership, fully declared to the government of where the person lives, with no laws being broken), then open a US LLC owned by that offshore entity. The US LLC would then open the US brokerage accounts that would be used to trade (and trading is not considered Effectively Connect Income, https://www.irs.gov/individuals/international-taxpayers/effectively-connected-income-eci). Due pass-through taxation, the tax bill would go to the offshore company which would be tax free in all likelihood (the remittances from the offshore company to the person would, of course, be taxed. Though, those payments can probably be postponed which is the reason why its better to own the US LLC via the offshore entity rather than personally)

But the main advantage of this setup is that is becoming harder and harder to open US brokerage accounts for foreign companies, in a few years, its possible that it will no longer be even allowed (except if you have $10M+ and call Goldman sachs or something). I dont think these problems exist when it comes to US LLCs.
Issues:
1) US LLCs apparently have to file annual accounts, how much would that cost for a trading business? Is there any way to simplify such accounts?
2)There are a number of forms that need to be filed, do any of them require professional help? What would be the costs associated with that?
3)Some US law that I'm not considering might make this structure non-viable
 
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As a pass-through US LLC you have to file a few tax forms otherwise IRS fines you 25k per year but it's nothing major accountant fees wise. The biggest problem I found was that most retail brokers don't accept a foreign owned LLC even if it's registered in a US state with an EIN from IRS. They require at least one partner to be US resident.
 
otctrade said:
They require at least one partner to be US resident.
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If you can find a US resident who is willing to be a member of the LLC, with a very small ownership percentage, and minimal compensation, then you may not need the offshore entity.

You may be able to find an accountant who would be willing to take on this role, particularly if you are adequately compensating the accountant to prepare the annual tax return for the LLC.

You may message me privately to discuss further. I may be able to refer you to someone.

BMK
 
Daal said:
Given the recent compliance crackdowns on US brokerage accounts from offshore companies, I was thinking of a setup that would be more resistant to these issues. If anyone know more about the costs and compliance costs of US LLCs, they can perhaps comment on the setup.
But the idea is to own an offshore company (100% ownership, fully declared to the government of where the person lives, with no laws being broken), then open a US LLC owned by that offshore entity. The US LLC would then open the US brokerage accounts that would be used to trade (and trading is not considered Effectively Connect Income, https://www.irs.gov/individuals/international-taxpayers/effectively-connected-income-eci). Due pass-through taxation, the tax bill would go to the offshore company which would be tax free in all likelihood (the remittances from the offshore company to the person would, of course, be taxed. Though, those payments can probably be postponed which is the reason why its better to own the US LLC via the offshore entity rather than personally)

But the main advantage of this setup is that is becoming harder and harder to open US brokerage accounts for foreign companies, in a few years, its possible that it will no longer be even allowed (except if you have $10M+ and call Goldman sachs or something). I dont think these problems exist when it comes to US LLCs.
Issues:
1) US LLCs apparently have to file annual accounts, how much would that cost for a trading business? Is there any way to simplify such accounts?
2)There are a number of forms that need to be filed, do any of them require professional help? What would be the costs associated with that?
3)Some US law that I'm not considering might make this structure non-viable
More...

What you are recommending is unnecessarily complicated. As @Robert Morse stated, as a citizen of Brazil, you should be perfectly fine. Should you decide you want a company, a simple BVI corporation, would be the ideal solution, for a brokerage account.

There is NO need for a USA-Based LLC!!! Unless, you want to purchase real estate, or an actual business, based PHYSICALLY in the USA. For USA real estate, you can can even use an offshore entity. The simplest way, is always the best way...

At $5M, you can get GS Prime, and REDI ;)
 
ChipShotTrader said:
What you are recommending is unnecessarily complicated. As @Robert Morse stated, as a citizen of Brazil, you should be perfectly fine. Should you decide you want a company, a simple BVI corporation, would be the ideal solution, for a brokerage account.

There is NO need for a USA-Based LLC!!! Unless, you want to purchase real estate, or an actual business, based PHYSICALLY in the USA. For USA real estate, you can can even use an offshore entity. The simplest way, is always the best way...

At $5M, you can get GS Prime, and REDI ;)
More...
MANY brokers dont accept offshore companies for new accounts (TDAmeritrade, Cobra, Etrade, etc), every year it just gets worse. This setup is future proof, i think
 
Daal - I understand your concerns. However, based on your desire to keep Brazil as your country of tax residence, I do not see an advantage to your plan. On the current list of Sanctioned and High-Risk countries, Brazil does not appear. And if someone were from a country on that list, a US-based company would not override your ID and residence as the primary applicant or an owner. We examine each foreign and domestic application on its own merit, but Brazil at this time would not be a reason to reject you. IMO adding a US-based entity with no real office or residence, would only complicate the approval process and your tax status, as you would then be subject to filing US taxes, even if the net result is or is not a pass-through.
 
Robert Morse said:
Daal - I understand your concerns. However, based on your desire to keep Brazil as your country of tax residence, I do not see an advantage to your plan. On the current list of Sanctioned and High-Risk countries, Brazil does not appear. And if someone were from a country on that list, a US-based company would not override your ID and residence as the primary applicant or an owner. We examine each foreign and domestic application on its own merit, but Brazil at this time would not be a reason to reject you. IMO adding a US-based entity with no real office or residence, would only complicate the approval process and your tax status, as you would then be subject to filing US taxes, even if the net result is or is not a pass-through.
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You talking about a personal account? That is impossible for Brazilians, that Brazil tax laws makes you report every single winning trade you have as well it taxes you on GROSS gains, that is you cant deduct losses from gains. An non-Brazil company is an absolute must for trading outside Brazil.
 
Daal said:
You talking about a personal account? That is impossible for Brazilians, that Brazil tax laws makes you report every single winning trade you have as well it taxes you on GROSS gains, that is you cant deduct losses from gains. An non-Brazil company is an absolute must for trading outside Brazil.
More...

Good to know that about Brazil. Then you must go the corporate way, with a BVI company. If you are concerned about being mentioned in the BVI incorporation documents, as a Brazilian citizen, then simply use Nominee Directors. And that solves the problem...
 
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