USA-Delaware-LLC

Basic taxes (briefly)

Personal tax 10-37%
Corporate tax (in detail) LLC is not taxable entity. Income (loss) is passed through to members, and members pay taxes as individuals.
Capital gains tax. Details
VAT. Details At the federal level, sales and use tax are not levied. However, such taxes are levied in most states as well as at the municipal level.
Other taxes Social contributions, Inheritance and gift taxes, Property taxes
Government fee
Stamp duty State level

International tax agreement

Tax treaties entered Australia, Austria, Bangladesh, Barbados, Belgium, Bulgaria, Canada, Chile, China, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea (Republic of), Latvia, Lithuania, Luxembourg, Malta, Mexico, Morocco, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom, Venezuela, Viet nam
   
Tax Exchange Information Agreement (TEIA) Antigua and Barbuda, Argentina, Aruba, Bahamas, Barbados, Bermuda, Brazil, Cayman Islands, Colombia, Costa Rica, Curaçao, Dominica, Dominican Republic, Gibraltar, Grenada, Guernsey, Guyana, Honduras, Isle of Man, Jamaica, Jersey, Liechtenstein, Marshall Islands, Mauritius, Mexico, Monaco, Netherlands Antilles, Panama, Peru, Saint Lucia, Sint Maarten, Trinidad and Tobago, Virgin Islands (British)


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TAXATION

General Info

For tax purposes all LLCs registered in Delaware shall –

  1. be classified as a partnership for federal income tax purposes;
  2. pay an annual tax, for the use of the State of Delaware, in the amount of $300 on the first day of June (otherwise LLC is subject to a fine of $200)

In other words, LLC is not taxable entity. Income (loss) is passed through to members, and members pay taxes as individuals. Members non-US residents are not liable for US income tax for income derived outside of the United States and passive income derived from the United States, such as interest income, dividend income and capital gains.
Therefore, non-US residents are not liable for any US income taxes, when their LLC conducts business outside of US. If an US LLC trades with US companies from outside of US, such LLC does not conduct business in US. Only presence of permanent establishments of the LLC in US, such as offices, warehouses, etc., allows to classify such LLC as a LLC conducting business in US.
Despite of the fact, that LLC is not taxable entity, under some conditions LLC needs to file annual income tax return with US tax authorities.

Personal Income Tax

All US citizens and residents, including resident aliens and citizens who reside outside the US, pay federal tax on their worldwide income. Nonresident aliens are taxed only on ECI and US-source non-ECI. The 50 states and the District of Columbia also collect income tax from nonresidents and individuals who reside in their territory.
Individuals generally must include nearly all gross income from whatever source derived in their taxable income (including their compensation for services (including all forms of remuneration and allowances), dividends, interest, royalties, rents, fees and commissions, gains from dealings in property and income from a partnership). Nonresident aliens exclude non- ECI in computing taxable income; however, they are subject to US tax on the gross amounts of such income, generally collected on receipt via withholding, if the income is from US sources and not from the sale or exchange of property.
Rates are progressive up to 39.6%.
Delaware collects a state income tax at progressive rate spread across tax brackets:
Tax Bracket (Single) Tax Bracket (Couple) Marginal Tax Rate
$2,000+ $2,000+ 2.20%
$5,000+ $5,000+ 3.90%
$10,000+ $10,000+ 4.80%
$20,000+ $20,000+ 5.20%
$25,000+ $25,000+ 5.55%
$60,000+ $60,000+ 6.60%

In addition to the regular income tax, individuals may be subject to the alternative minimum tax (AMT), which is triggered where an individual’s tentative AMT liability exceeds that individual’s regular income tax liability. The AMT is imposed at a rate of 26% on the taxable excess (AMT income minus an “exemption amount”) up to specified levels, and at a rate of 28% on the taxable excess above these levels. The exemption amounts for the individual AMT for 2013 were USD 80,800 for married taxpayers filing jointly and USD 51,900 for unmarried taxpayers) and will be automatically indexed for inflation thereafter.
The tax year is the calendar year, unless a fiscal year is elected. Any fiscal year must end on the last day of a calendar month.
Tax is deducted at source from employment income. Individual self-assessment tax returns are due by the 15th day of the fourth month following the end of the tax year (or the sixth month, in the case of certain nonresident aliens).

Corporate Tax

LLC is not taxable entity. Income (loss) is passed through to members, and members pay taxes as individuals.

Capital Gains Tax

The excess of net long-term capital gains (generally, gains from investments held for more than 12 months) over net short-term capital losses (net capital gains) generally is taxed at a maximum rate of 20%.

Dividends

The net capital gains rate (20%) also is applicable to dividends received from domestic corporations generally and from certain foreign corporations.

VAT

The US does not levy a federal value added tax or sales tax. Individual states levy sales tax at various rates, subject to state-set requirements.
Delaware has no sales tax, and does not allow cities or counties to assess any type of sales tax. Businesses are, taxed on their gross receipts as an alternative to sales tax, but this tax cannot be passed on to consumers. A 3.75% "document fee" is collected on all automobile sales, and occupational license taxes of up to 1.92% are also collected on certain business activity.

Withholding Tax

LLC are not subject to withholding tax in Delaware.

Stamp Duty

Stamp duty is not levied in the US, including Delaware.

Government Fee

Although Limited Liability Companies formed in the State of Delaware do not file an annual report, they are required to pay an annual tax of $300.00. Taxes for LLC are to be received no later than June 1st of each year.

Other Taxes and Duties

Real property tax Tax generally is imposed by the local governments at various rates. The median property tax in Delaware is $1,078.00 per year for a home worth the median value of $249,400.00. Counties in Delaware collect an average of 0.43% of a property's assessed fair market value as property tax per year.
Inheritance/estate tax For US citizens and residents, the estate tax is imposed, generally based on the assets of the deceased in excess of USD 5,340,000 (for 2014), and the heirs generally are not subject to income tax on the appreciation of the assets in the hands of the decedent. A gift tax is imposed on gifts made during a person’s life. The top rate for estate and gift taxes is 40%. For nonresident noncitizens, estate taxes are imposed only on property situated in the US in excess of USD 60,000. Gift taxes are imposed on any transfer in excess of a USD 13,000 annual exclusion. The US has estate and gift tax treaties in force with over a dozen countries.
Social security Social security taxes are comprised of old age, survivors and disability insurance (OASDI), and “hospital insurance” (also known as “Medicare”). The taxes generally are borne equally by the employer and the employee, with the employer responsible for remitting each employee’s portion to the federal government. The OASDI tax is imposed on the first USD 117,000 of wages, at the combined rate of 12.4%. The Medicare tax is imposed on total wages, at the combined rate of 2.9% (plus an additional 0.9% for wages above a certain threshold). The employer’s portion of social security taxes is deductible for income tax purposes.

Double Tax Agreements

The USA have exchange of information relationships with 88 jurisdictions through:

  • 60 DTC: Australia, Austria, Bangladesh, Barbados, Belgium, Bulgaria, Canada, Chile, China, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea (Republic of), Latvia, Lithuania, Luxembourg, Malta, Mexico, Morocco, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom, Venezuela, Viet nam.
  • 34 TIEAs: Antigua and Barbuda, Argentina, Aruba, Bahamas, Barbados, Bermuda, Brazil, Cayman Islands, Colombia, Costa Rica, Curaçao, Dominica, Dominican Republic, Gibraltar, Grenada, Guernsey, Guyana, Honduras, Isle of Man, Jamaica, Jersey, Liechtenstein, Marshall Islands, Mauritius, Mexico, Monaco, Netherlands Antilles, Panama, Peru, Saint Lucia, Sint Maarten, Trinidad and Tobago, Virgin Islands (British).

Foreign Exchange Control

While there are no general restrictions on remittances of profits, dividends, interest, royalties or fees to nonresidents, sanctions and embargoes apply to listed countries and entities, with restrictions on foreign payments, remittances and other types of contracts and trade transactions. Regulations are prescribed by the US Treasury, and Treasury’s Office of Foreign Assets Control maintains related lists. Extensive currency transaction reporting and recordkeeping requirements also apply.

ACCOUNTS

Financial Statements

LLC is not required to file financial statements.

Annual Return

LLC is not required to file annual return.

Tax Returns

Despite of the fact, that LLC is not taxable entity, under some conditions LLC needs to file annual income tax return with US tax authorities.
No income tax return required if:

  • LLC conducting a trade or business outside of the United States, and
  • All LLC's members are non-US residents for income tax purposes.

LLC is required to file federal annual income tax return with IRS if:

  • LLC conducting business in US, and
  • LLC has two or more members.

LLC conducting business in US and having only one member is not required to file income tax return. The income and expenses need to be reported on the member's individual tax return.

    Taxes of USA

    Min. rate for corporate tax No
    Capital gains tax Before 20%
    VAT ~ 3-10%
    Withholding tax 30%/30%/30%
    Exchange control No
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