Tax implications for non-us citizen/resident trading through US-Based LLC

Q

QuantTraderX

Hello all,

I am a Belgian resident/citizen. I was planning to open an IB account through a US located Delaware LLC for which I will become the only owner. My main intention for doing this is to cut commissions/transaction costs since they seem to be a lot cheaper for us citizens/entities.

I was wondering what the tax implications are. From what I read, an LLC makes use of "pass-through taxation", implying that the income-tax will be payed by the owner of the LLC in his home country (Belgium and the US have a tax treaty in effect).

However, Afterwards, I read some confusing stuff about the fact that when the income is derived in the US there will be US income taxes on this income? With the setup that I have in mind, will the income actually be "derived" in the US or not? Can someone shed some light on the details?

thank you.
 
Nonresident aliens don't owe capital gains taxes unless they are in the US over 183 days. See http://greencompany.com/EducationCenter/Trader-Tax-Center/Non-Resident-Alien.shtml

Nonresidents are subject to tax withholding on dividends.

If you have a US entity it complicates things. The entity has a US tax ID number and the broker will treat it as a US taxpayer without doing dividend tax withholding.

While entities in the US generally have effectively connected income that is taxed, a trading company organized with a pass-through structure still passes through non-ECI income.

You need a good accountant to help you with the entity tax returns.
 
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