Attachment of an LLC by the tax office, EU tax authority

LLC in the USA and seizure by European tax authorities

Is there such a thing as seizure of an LLC by the tax office? Many entrepreneurs see a Limited Liability Company (LLC) in the USA as a protective shield against seizures. But what does it look like when European tax authorities want to access the assets? This article sheds light on the complex reality of the seizability of a non-anonymous LLC.

Can the tax office seize an LLC?

The short answer is yes, under certain circumstances, the IRS can indeed garnish an LLC. However, the process is complex and depends on various factors.

Legal classification and attachability of an LLC

Legal entity with special features

Although a non-anonymous LLC is an independent legal entity, it is treated as a partnership in the internal relationship if it is correctly formed by EU citizens (if correctly formed). This classification has far-reaching consequences for the seizability of the shares by the Tax office. Since the owners and their shares are known in a non-anonymous LLC, potential seizure is made easier.

Attachability of the LLC shares

Company shares in a non-anonymous LLC can be seized by the tax office under certain circumstances. In a landmark ruling, the Federal Court of Justice (BGH) decided that shares in a British Limited Liability Partnership (LLP), which is similar to an LLC, can be seized by the tax authorities in accordance with the regulations for Partnerships are attachable. The transparency of a non-anonymous LLC makes it easier for creditors, including the IRS, to identify the attachable assets.

Object of the attachment in the case of an LLC

In the event of attachment by the tax office, it is not the LLC share itself that is attached, but the membership. This includes the debtor's share in the company as the entirety of the attachable shareholder rights. The attachable rights include in particular

• The right to the settlement assets
• The entitlement to profit distributions

Legal basis and international aspects of LLC attachment

Legal basis in Germany

The attachment is made possible by section 859 para. 1 sentence 1 ZPO. This section allows the tax office to seize a non-transferable share of the company's assets. In the case of a non-anonymous LLC, the allocation of the shares to the shareholders is clearly traceable, which facilitates the work of the tax office.

International jurisdiction for LLC attachments

In the case of foreign companies such as a US LLC, the international jurisdiction of German courts and authorities, including the tax office, must first be examined. This can raise complex legal issues and depends on various factors, such as the domicile of the company and the location of the assets. The transparency of a non-anonymous LLC can facilitate the determination of jurisdiction for the tax office.

Realization of the lien in the case of an LLC

The realization of the lien is governed by the law of the country in which the LLC was founded. In the case of a US LLC, US law would therefore apply. This can significantly complicate the enforcement of claims by European tax authorities, including the tax office, even if the LLC is not anonymous.

Conclusion: LLC and seizure protection

Although a non-anonymous LLC in the USA offers certain protective functionsit is not an insurmountable obstacle to seizures by European tax authorities or the tax office. The transparency of the ownership structure makes it easier for creditors to assert claims. Nevertheless, the legal complexity remains a challenge due to the different legal systems.

The need to consider different legal systems often makes seizure of an LLC by the tax office a challenge for all parties involved. Affected parties should therefore seek legal advice at an early stage in order to realistically assess their options and risks in connection with a possible seizure of their LLC shares by the tax office.

Further information:

• Information about Anonyme LLC
• Information about Normale LLC

FAQ: Attachment of an LLC by the tax office

1. can the German tax office seize an LLC?

Yes, under certain circumstances, the tax office can garnish an LLC. However, the process is complex and depends on various factors.

2. what exactly is seized in the case of an LLC?

Attachment is not about the LLC as a whole, but about the debtor's membership. The tax office attaches the company share as the entirety of the attachable rights, in particular the right to the settlement balance and the claim to profit distributions.

3. how does the seizure process work?

The process comprises several steps:

1. Examination of responsibility
2. Determination of assets
3. Issuing an attachment order
4. Service of the attachment on the debtor and LLC

4. what is the legal basis for the seizure of an LLC?

The legal basis can be found in Section 859 (1) sentence 1 of the German Code of Civil Procedure (ZPO), which allows the attachment of a non-transferable share of the company's assets.

5 What are the challenges of attaching an LLC?

The main challenges are:

• Clarification of international jurisdiction
• Dealing with different legal systems
• Access to assets with complex ownership structures

6. does an LLC offer complete protection against seizure by the tax authorities?

No, a LLC does not offer absolute protection from seizure. Although it makes access to assets more difficult, it does not make it impossible.

7 What should entrepreneurs with an LLC consider?

• An LLC does not fully protect against seizures
• The tax office has options for accessing the shares
• Early legal advice and fulfillment of financial obligations are advisable

8 How is an LLC legally classified?

An LLC is considered an independent legal entity, but is often treated as a partnership in the internal relationship, especially if it was founded by EU citizens.