Delaware LLC as partner of an UK LLP

[Isedo]

Hi folks, we are selling digital products worldwide and we have an LLC in Delaware. Is it possible to make the LLC as a partner of an UK LLP?

Since the LLC is owned by non US residents, how will the LLP will pay taxes?

I know that the UK LLP, when done by UK non residents is not subject to tax in the UK and each partner will be liable to pay taxes in its own country.

Since we will be one of the partners with the LLC, each of us will be liable to pay the taxes from the LLC income and not the LLP one, is this correct? Any advice on this would be very helpful.

 

[hurokjj]

Hi folks, we are selling digital products worldwide and we have an LLC in Delaware. Is it possible to make the LLC as a partner of an UK LLP?

Since the LLC is owned by non US residents, how will the LLP will pay taxes?

I know that the UK LLP, when done by UK non residents is not subject to tax in the UK and each partner will be liable to pay taxes in its own country.

Since we will be one of the partners with the LLC, each of us will be liable to pay the taxes from the LLC income and not the LLP one, is this correct? Any advice on this would be very helpful.

My dad said it’s not worth it to form an LLC until I generate a million in revenue. I’m a sole proprietor now. I couldn’t come up with a valid argument. What do you guys think?

 

[eteb3]

A UK LLP can have any legal person as a member (what you’re calling a partner).

So, yes: your Delaware LLC can be a member of a UK LLP.

UK LLPs are fiscally transparent, so the income derived by the LLC would be taxed under Delaware rules afaict.

The relevant text of the tax treaty is below. (I found this post looking for an answer to a similar question, so if you think I’ve got this wrong, I’d be glad to know.)

8. An item of income, profit or gain derived through a person that is fiscally transparent under the laws of either Contracting State shall be considered to be derived by a resident of a Contracting State to the extent that the item is treated for the purposes of the taxation law of such Contracting State as the income, profit or gain of a resident.

Do bear in mind that, unlike an LLC, an LLP cannot have only one member. If for some reason it falls into that situation, after six months it will be taxed as a corporation - so (among other things), it will cease to be fiscally transparent.

 

[hurokjj]

A UK LLP can have any legal person as a member (what you’re calling a partner).

So, yes: your Delaware LLC can be a member of a UK LLP.

UK LLPs are fiscally transparent, so the income derived by the LLC would be taxed under Delaware rules afaict.

The relevant text of the tax treaty is below. (I found this post looking for an answer to a similar question, so if you think I’ve got this wrong, I’d be glad to know.)



Do bear in mind that, unlike an LLC, an LLP cannot have only one member. If for some reason it falls into that situation, after six months it will be taxed as a corporation - so (among other things), it will cease to be fiscally transparent.

thank you so much for your suggestion