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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I am opening an LLC in the BVI - investing in US early stage

This answer was rated:

I am opening an LLC in the BVI - investing in US early stage companies. We are all US or UK citizens .. any tax implications we need to be aware of?

MyVirtualCPA :

Thank you for your question, and thanks for using JustAnswer.com

MyVirtualCPA :

A BVI LLC is treated as a foreign corporation for US Tax purposes.

MyVirtualCPA :

This would not have the same treatment as a domestic LLC.

MyVirtualCPA :

Simply investing in companies is not considered a business activity, therefore the income from this is "not effectively connected" and therefore any earnings - such as dividends - are subject to 30% withholdings

Customer:

and capital gains tax?

MyVirtualCPA :

No, you are subject to 30% tax on all your earnings -this rate is double what your capital gains rate would be if you were a US LLC with US members

MyVirtualCPA :

If you were a US LLC with US members, there would be capital gains tax and dividend income taxed like we are normally taxed here

MyVirtualCPA :

But, as a foreign corporation you're taxed 30%

MyVirtualCPA :

and then, the US owners would be taxed again on any distribution they received from the BVI LLC

MyVirtualCPA :

the UK members would not have any US tax obligation

Customer:

ok

Customer:

thanks

MyVirtualCPA :

You're welcome

MyVirtualCPA :

Is there anything else that I can assist you with today?

Customer:

not at this time .. might follow up shortly as i review this with more detial

Megan C and 3 other Finance Specialists are ready to help you
Jeffrey,

Thanks for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you. I also appreciate your direct request. You can continue requesting me in the future.

Thanks!