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Megan C
Megan C , Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16539
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

Resolved Question:

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?
Submitted: 3 years ago.
Category: Finance
Expert:  Megan C replied 3 years ago.

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 other Finance Specialists are ready to help you
Expert:  Megan C replied 3 years ago.
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!