5 ms·

A very nice product it seems. But people should be aware that having a US business, bank account and so on makes you a "US person" in the eyes of the US governm

by eis 11y ago

A very nice product it seems. But people should be aware that having a US business, bank account and so on makes you a "US person" in the eyes of the US government which comes with downsides. If you recently tried to open a bank account somewhere you might have seen the form you have to fill out which tries to discover if you are indeed such a "US person". I don't know exactly what the result apart from probably the bank refusing to take you as a customer is since I am careful to not become such a "US person". Nowerdays it's becoming increasingly a better idea to incorporate in a different country than the US if you can, especially for online businesses including privacy, tax and ease of doing business.

patio11 11y ago
A US corporation is a US person. The owners of it are not, unless they are citizens or LPRs. Feel free to check with your lawyer or the IRS. https://www.irs.gov/Individuals/International-Taxpayers/Classification-of-Taxpayers-for-U.S.-Tax-Purposes https://www.irs.gov/Individuals/International-Taxpayers/Clas...
- bcg1 11y ago
  It is of course possible (likely?) that the policy could be expanded at any time... so perhaps maintaining a maximum distance is indeed a prudent policy for those currently outside the grips of the US tax feeders.
- eis 11y ago
  For banking purposes you can already be befined as a US person by just having a US phone number, mailing address or generate some brokerage gains from any US business.
  - gexla 11y ago
    You don't have a U.S. phone number, mailing address, etc. You only own shares in the business. Though you may also be an employee and hold other positions within the company. You aren't anymore a U.S. person by owning shares of the corporation you setup than you would be a U.S. person by owning shares in Microsoft.
- vsl 11y ago
  Owning a US company is exactly the kind of "relation to US" (the phrasing banks use here, not "US person") that will trigger the consequences described by other commenters.
LyndsySimon 11y ago
Citation, please? I'm very aware that US citizenship comes with legal hurdles when dealing with foreign banks, especially in Europe - but I'm not aware of any such issues with non-US citizens merely owning a US business entity.
- eis 11y ago
  I am not a legal expert but this is from the application form of Citibank: 7) US PERSON CERTIFICATION: I/We certify under penalties of perjury that (Please tick one box) (i) I am/We are not a U.S. Person (as defined below) ... “U.S. Person” as used by the Bank means any of the following: ... (ii) a United States resident; meaning: ... d. an individual with a U.S. mailing address or U.S. telephone number. Make of that what you will.
  - lstamour 11y ago
    IANAL. That said, here's my armchair, never-done-it analysis from Canada: That is what a W8 form is for. So if you have an individual account with a US bank, the bank knows you aren't a US resident, meaning you don't actually reside in the US. Now, as someone non-American but connected to a company doing business, that's another W8 or W9 form. But even then, while you might have reporting obligations to the IRS as an individual (I'm not sure) your company definitely would, as in all scenarios, a US based company is considered a "US person" even if it has foreign shareholders. That you pay taxes on the company should reduce the need to pay taxes as an individual. If you reside in the US more than 50% (IIRC) of a year, you become a US resident even if you don't have a special visa or citizenship. If you don't actually live that long in the US it's easy to argue that you're not connected to the US, but you will likely have to self-report that. It might be a question of how you get paid too. If you set up a subsidiary C-Corp where dividends go back to the parent company, you'll pay taxes on the profits and taxes at home, but as mentioned elsewhere, you shouldn't pay more tax than your rate in both countries, whichever is higher. This is the cost of doing business -- taxes. Alternatively, you could work remotely for the company, thus taking profits before they are subject to tax. This is a more complicated structure and you might end up paying more taxes, it depends on the income brackets at your local jurisdiction. The reason you consult is not because US law is complicated but because most legal systems internationally do not have easy ways of dealing with US company income for taxation. LLCs can be especially interesting internationally, because their tax obligations can change based on how they declare themselves on the IRS form.
csomar 11y ago
What's a "US person"?
- eis 11y ago
  I'd have to copy a whole page of various things that make you fall into that definition. Citizens and residents obviously are such US persons but there are others like having a US phone number. See my comment above.
  - lstamour 11y ago
    Again, IANAL, and I'm Canadian with a US bank account but yet to "do business" in the US (just having an expense account does not qualify in most/all jurisdictions): Having a US phone number does not make you a US resident -- but having a US bank account means proving to the IRS and your bank that they should not withhold any taxes on your personal account. Having a US phone number does not in any way on its own require you to fill out IRS forms. Having a bank account does because your assets could be frozen, hence W8 and W9. Having a company in the US means potential tax returns, because now you're officially doing business federally and also at a state level for your company. Even then, you are NOT a US resident personally, unless you physically reside within the US more than X% of the year. There are also many different tax treaties under which your W8 forms can provide exemptions, though some declarations might still require annual filing to declare you're not a resident, or pay taxes on dividends. Your US company is considered a US person, however.
    - germanier 11y ago
      Sure, that is correct in theory. In practice most European banks won't touch you with a ten-foot pole if they even just suspect you might need to fulfill US reporting obligations. Therefore they use a much broader definition This is not only about tax but all the cost associated in dealing with all the forms which makes you an expensive customer.
      - lstamour 11y ago
jamiethompson 11y ago
As a US Person, many European banks will either decline your business or only offer you a very expensive special US Person bank account. It's because of the ridiculous requirements the US places on them regarding tax reporting.
nickpp 11y ago
Do you have some links on reading material about this? I would really appreciate it.

by eis 11y ago

patio11 11y ago

A US corporation is a US person. The owners of it are not, unless they are citizens or LPRs. Feel free to check with your lawyer or the IRS. https://www.irs.gov/Individuals/International-Taxpayers/Classification-of-Taxpayers-for-U.S.-Tax-Purposes https://www.irs.gov/Individuals/International-Taxpayers/Clas...

bcg1 11y ago
It is of course possible (likely?) that the policy could be expanded at any time... so perhaps maintaining a maximum distance is indeed a prudent policy for those currently outside the grips of the US tax feeders.
eis 11y ago
For banking purposes you can already be befined as a US person by just having a US phone number, mailing address or generate some brokerage gains from any US business.
- gexla 11y ago
  You don't have a U.S. phone number, mailing address, etc. You only own shares in the business. Though you may also be an employee and hold other positions within the company. You aren't anymore a U.S. person by owning shares of the corporation you setup than you would be a U.S. person by owning shares in Microsoft.
vsl 11y ago
Owning a US company is exactly the kind of "relation to US" (the phrasing banks use here, not "US person") that will trigger the consequences described by other commenters.

LyndsySimon 11y ago

Citation, please? I'm very aware that US citizenship comes with legal hurdles when dealing with foreign banks, especially in Europe - but I'm not aware of any such issues with non-US citizens merely owning a US business entity.

eis 11y ago
I am not a legal expert but this is from the application form of Citibank: 7) US PERSON CERTIFICATION: I/We certify under penalties of perjury that (Please tick one box) (i) I am/We are not a U.S. Person (as defined below) ... “U.S. Person” as used by the Bank means any of the following: ... (ii) a United States resident; meaning: ... d. an individual with a U.S. mailing address or U.S. telephone number. Make of that what you will.
- lstamour 11y ago
  IANAL. That said, here's my armchair, never-done-it analysis from Canada: That is what a W8 form is for. So if you have an individual account with a US bank, the bank knows you aren't a US resident, meaning you don't actually reside in the US. Now, as someone non-American but connected to a company doing business, that's another W8 or W9 form. But even then, while you might have reporting obligations to the IRS as an individual (I'm not sure) your company definitely would, as in all scenarios, a US based company is considered a "US person" even if it has foreign shareholders. That you pay taxes on the company should reduce the need to pay taxes as an individual. If you reside in the US more than 50% (IIRC) of a year, you become a US resident even if you don't have a special visa or citizenship. If you don't actually live that long in the US it's easy to argue that you're not connected to the US, but you will likely have to self-report that. It might be a question of how you get paid too. If you set up a subsidiary C-Corp where dividends go back to the parent company, you'll pay taxes on the profits and taxes at home, but as mentioned elsewhere, you shouldn't pay more tax than your rate in both countries, whichever is higher. This is the cost of doing business -- taxes. Alternatively, you could work remotely for the company, thus taking profits before they are subject to tax. This is a more complicated structure and you might end up paying more taxes, it depends on the income brackets at your local jurisdiction. The reason you consult is not because US law is complicated but because most legal systems internationally do not have easy ways of dealing with US company income for taxation. LLCs can be especially interesting internationally, because their tax obligations can change based on how they declare themselves on the IRS form.

csomar 11y ago

What's a "US person"?

eis 11y ago
I'd have to copy a whole page of various things that make you fall into that definition. Citizens and residents obviously are such US persons but there are others like having a US phone number. See my comment above.
- lstamour 11y ago
  Again, IANAL, and I'm Canadian with a US bank account but yet to "do business" in the US (just having an expense account does not qualify in most/all jurisdictions): Having a US phone number does not make you a US resident -- but having a US bank account means proving to the IRS and your bank that they should not withhold any taxes on your personal account. Having a US phone number does not in any way on its own require you to fill out IRS forms. Having a bank account does because your assets could be frozen, hence W8 and W9. Having a company in the US means potential tax returns, because now you're officially doing business federally and also at a state level for your company. Even then, you are NOT a US resident personally, unless you physically reside within the US more than X% of the year. There are also many different tax treaties under which your W8 forms can provide exemptions, though some declarations might still require annual filing to declare you're not a resident, or pay taxes on dividends. Your US company is considered a US person, however.
  - germanier 11y ago
    Sure, that is correct in theory. In practice most European banks won't touch you with a ten-foot pole if they even just suspect you might need to fulfill US reporting obligations. Therefore they use a much broader definition This is not only about tax but all the cost associated in dealing with all the forms which makes you an expensive customer.
    - lstamour 11y ago

jamiethompson 11y ago

As a US Person, many European banks will either decline your business or only offer you a very expensive special US Person bank account. It's because of the ridiculous requirements the US places on them regarding tax reporting.

nickpp 11y ago

Do you have some links on reading material about this? I would really appreciate it.