Where to set up offshore LLC (as an American)?

Hello,

I’ve been searching through the forum, but most of the information I’ve found seems a little old and Americans, unfortunately, seem to be exceptions to a lot of things.

Situation:
I’ll start a new job with a 1-2 year contract outside the US in about a month, I:

  • am a US citizen - it is the only passport I hold

  • have been using my parents’ address (Texas) as my official address for the past few years.

  • will be on-sight in South East Asia, but officially billed as a private contractor for the company.

  • will make less than the cut-off amount for the American tax exemption in next year. It is realistic to assume based on my career, though, that in the coming years I will be over that mark.

  • plan to qualify for the 330 rolling days outside of the US

  • Don’t plan to return to the US for at least the next several years, maybe ever for residency.

From research so far, it looks like the best options for me are Belize, though I see a lot of people talking about Hong Kong or Singapore. I know that within the US, Delaware LLC’s are easy to set up, and may be a good short-term option since I’ll likely qualify for the foreign tax exemption in 2018.

I would love to talk to anyone that has some experience with this as my head is spinning a little bit. Website recommendations would also be great (there is a lot of information out there, but figuring out what is and isn’t sketchy is a bit harrowing - has anyone worked with, like Nomad Capitalist or Flag Theory before?).

Thanks!!

Nomad Capitalist: http://nomadcapitalist.com/
Flag Theory: https://flagtheory.com

Update:
I still don’t really have an answer, but I’ve found this (rather scathing) article about Nomad Capitalist and Flag Theory: https://gregorydiehl.net/edmund-john-flag-theory-review/

I also bought this book which I’m only a few chapters in, but has been useful so far:


(it doesn’t really answer the question so far, but since the American tax system is really complex - particularly for nomads - it helps break all of that stuff down).

The book was written by the people at 1040 Abroad, but I haven’t worked with them, so if anyone has opinions about that organization I’d love to hear as well.

Thanks,
Kyle

Beware you’re entering a legal and fiscal minefield which may not be worth the trouble.

The CFC laws in countries apply to controlled foreign corporations. They make you obligated to report all income from your foreign companies. Depending on the situation, the IRS may even double tax your foreign company and consider it a US company for fiscal purposes.

Additionally as an American citizen your global personal income is taxed in US. The FEIE exclusion helps you in that but only until $100k.

The only way to escape this is to renounce your citizenship. Even then US might exit tax you if they figure your reason to immigrate is fiscal. See Eduardo Savarin’s case.

Anyone reading this who’s European like me: yes the CFC law probably also applies to you and your country has its own version of it. Luckily as a European you’re NOT taxed globally in your country as long as you don’t LIVE there (as a resident).

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Yeah, it kind of sucks to be American in that respect - they’ll tax you no matter where you go!

why wouldn’t you want to setup LLC in Wyoming?
From what I’ve heard its kinda offshore which you can use within US.

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Why do you need an offshore company? I’m an American. I’ve lived outside the U.S. for nearly ten years. And I’ve considered setting up a business in another country. But I couldn’t figure out any benefit to having another company, and there is a cost to maintaining a company as well as dealing with the paperwork. Am I missing something?

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It may be worth it if you’re paying $10k after FEIE allowance. There are maintenance fees and paperwork though. Steward Patton can help. http://ustax.bz

I’m also an entrepreneur. I spent a bit of time looking into this. One option is to renounce your US citizenship but then where do you go, Dominica? There aren’t many countries that you want to be a citizen of that are easy to citizenship in. For example, Switzerland is great for tax and Visa purposes but hard to become a citizen of. An LLC is a pass through entity so it doesn’t matter where you set up your LLC. In fact, Delaware is a bad option if you don’t live there. Believe me, I made that mistake. The best place to set up an LLC is a place you have an address in. I’m trying to do the 330 day exemption so I use my parents house in Pennsylvania as the address. If you set up in a state you don’t have an address in (PO box doesn’t count) you have to pay a yearly fee to someone to have an address, usually $300 plus extra paperwork. Some states have onerous LLC reporting, like California so if you have an address there don’t bother. Yearly reporting, even if you have an address there, is $900. Pennsylvania has no yearly reporting or cost for LLCs.

I plan to not take more than $100k as personal income per year thus having no federal taxes and any extra profit I will reinvest in my company or buy land or something. Better to let the profit compound than pay taxes. Down the road I can take the profit or give the money away or invest in something else. That way I don’t pay tax on it. Why do I need more than 100k a year while I’m living in developing countries?

I hope that helps. This is not legal advice, obvi. Just a guy talking from personal experience.

Hey i have gone down this road and can tell you this: all the major banks in the caribians and around that area charge a lot for transactions like 70-200usd per transaction, a huge problem after finding a banking partner is to find a payment service merchant, My tips would be to find a good and cheap(and good!, dont use a shady one) payment merchant, flag theory is pretty good for setting up a company to try the offshore stuff, but trust me the Banking for offshore companies is a REAL pain