What is a non-domestic LLC?

1. definition and basics

A non-domestic LLC (Limited Liability Company) is a US company form with limited liability. Non-Dom LLC is also called Exempt LLC or Tax-Exempt LLC. It is similar to a non-domestic Ltd (IBC) and is registered in a country where neither the owner is domiciled nor the business activities primarily take place. This structure combines the Liability protection of a corporation with the tax treatment of a partnership.

2. types of LLC formation

There are three main types of LLC formation in the USA:

1. Normal LLC formationStandard process with public listing of owners and managers, (e.g. in DelawareNew Mexico).
2. Anonymous LLC formation: Possible in some states (e.g. Wyoming, Nevada). Provides increased privacy by not listing owner names in public records.
3. Non-Domestic LLC formationIncorporation in a country in which neither the owner is resident nor the company is principally active.

3. important facts about non-domestic LLCs and non-dom LLCs

Non-Domestic LLCs, often referred to as Non Dom LLCs, are an extremely popular choice for international entrepreneurs looking to do business in the US. Below are some key facts about this flexible business form:

• Flexibility and structureNon-domestic LLCs or non-dom LLCs not only offer great flexibility in terms of corporate structure, but also with regard to taxation. This allows entrepreneurs to optimally adapt their business activities to their needs.
• State election and foundationAlthough the Non-Domestic LLC does not exist at the federal level, founders still have the option to choose between different states to choose. In particular, Delaware, Wyoming and Nevada due to its business-friendly laws.
• Tax identificationNon Dom LLCs also generally require an Employer Identification Number (EIN) from the IRS. This applies even if they have no employees in the US, as the EIN is required for various administrative purposes.
• Bank details: To create a Open a US bank accountFor non-domestic LLCs, a physical presence in the USA is often necessary. However, some financial institutions also offer offshore accounts specifically for non-dom LLCs, which can make it easier to open an account.
• Virtual presenceMany non-domestic LLCs use virtual office addresses to establish a US presence without having to be physically present. This is particularly advantageous for international entrepreneurs who want to establish a non-dom Form an LLC would like to.
• Tax aspects: Payments from US clients in non-domestic LLCs may be subject to withholding tax. unless a valid tax treaty is in place. It is therefore important for owners of a Non Dom LLC to familiarize themselves with the relevant tax regulations.
• Transparency and regulationDespite the privacy benefits, non-domestic LLCs are subject to increasingly stringent transparency requirements. This is particularly true in the context of anti-money laundering regulations, which is why owners of a non-dom LLC should always stay informed.

4. advantages of a non-domestic LLC

1. Tax advantages
   • Tax exemption for non-US income
   • Taxation in the country of the director as private income
2. Flexibility
   • Independence of residence
   • More flexible corporate structure
3. Protection and anonymity
   • Limited liability
   • Greater anonymity for owners
   • No automatic data exchange with the EU and other countries for US company accounts (CRS, FATCA)
4. International aspects
   • No control of VAT transfers to EU countries
   • Worldwide recognition and trust

5. LLC basic knowledge

5.1 Legal status and recognition

• StatusCan function as a non-domestic company
• RecognitionInternationally recognized, local regulations may differ
• Legal statusSeparate legal entity

5.2 Structural aspects

• StructureAt least one managing member required
• Foundation: Also possible by foreigners, usually "Registered Agent" required
• CapitalNo minimum share capital required

5.3 Financial and administrative aspects

• Duties: Proper accounting required
• Costs: Incorporation costs vary by state, franchise fees
• Taxestreated as a pass-through entity (only the owner is taxed), unless a different treatment is chosen

6 LLC types

There are different structures of LLCs:

1. Single-Member LLC:
   • Only one owner who holds all the shares (the best choice for an anonymous LLC)
2. Multi-Member LLC:
   • Several owners (members) share the shares (is often recognized as a partnership in Germany)
3. Member-Managed LLC:
   • All members are involved in the day-to-day management of the company
4. Manager-Managed LLC:
   • Appointed managers (may or may not be members) run the day-to-day business
5. Series LLC:
   • Enables the creation of separate "series" within a single LLC
   • Each series has its own assets and liabilities
   • Only available in some states

7. tax regulations

• Income taxIncome is allocated to the individual members
• Social security contributionsNone, as only for employees resident in the USA

6. frequently asked questions (FAQs)

1. Foundation possible in every federal state? Yes, requirements and fees vary.
2. Tax obligations? No US tax liability for non-US income (from non-ETBUS income).
3. Registered Agent required? Yes, in most states.
4. Guarantee of anonymity? Due to corporate structure and lack of disclosure requirements. US bank accounts are not subject to CRS and FATCA agreement.
5. Advantages over other types of company? Flexible structure, limited liability, tax advantages, greater anonymity.
6. Requirements for foreign owners? Compliance with local regulations, registered agent, consideration of domestic tax obligations.

7. conclusion

The Formation of a non-domestic LLC in the USA offers non-US citizens an attractive way to structure their business activities and benefit from various advantages. Although there is no federal option for non-domestic LLCs, some states such as Delaware, Nevada, Wyoming, New Mexico and Florida allow the formation of LLCs by foreign persons. However, Florida offers less favorable conditions.