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Hello Expatriates community,

I'm seeking guidance on a somewhat intricate situation. I'm a German citizen, currently freelancing for a US-based company. I reside in Germany, where I'm also registered as unemployed, following the recent completion of my studies. To streamline my work with the US company, I've established an LLC in the US. My ultimate ambition is to move to the US.

I'm grappling with a few pivotal questions:

  1. From a taxation perspective, would it be more beneficial for the US company to direct payments to my LLC, after which the LLC would compensate me?
  2. Given Germany's tax system, which taxes residents on global income, how should I address the potential tax ramifications of earning via a US-based LLC?
  3. I'm aware of the US-Germany Double Taxation Treaty. How might this accord apply to my circumstances, and are there specific provisions I should be especially cognizant of?
  4. Are there any common oversights or essential factors I should take into account, particularly concerning receiving income through a US LLC whilst residing in Germany?

My primary objective is to optimize tax efficiency, all the while preparing for a potential relocation to the US. I greatly value any expertise or insights you can share on this matter.

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  • Since you are not performing any work in the US and you're not a US resident, you won't have any tax liability in the US.
    – phoog
    Oct 29, 2023 at 11:38
  • Do yourself a favor and get a tax acountant.
    – nvoigt
    Oct 29, 2023 at 14:47

1 Answer 1

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To streamline my work with the US company, I've established an LLC in the US. My ultimate ambition is to move to the US

LLC will not help you in any of this in any way. In fact, it may complicate things for you both financially and from immigration perspective.

From a taxation perspective, would it be more beneficial for the US company to direct payments to my LLC, after which the LLC would compensate me?

LLC is a disregarded entity for tax purposes in the US. So unless you explicitly elect to treat it as a corporation (which would open another can of worms), there's absolutely no difference for the payer whether they direct payments to you (dba LLC) or to you (dba your person).

Given Germany's tax system, which taxes residents on global income, how should I address the potential tax ramifications of earning via a US-based LLC?

You'll need to talk to a German tax adviser. While disregarded for tax purposes in the US, it may not be disregarded in Germany and you may end up having a corporate entity on your hands that would need to manage two sets of books (one as disregarded for US taxation, the other as corporate for German).

I'm aware of the US-Germany Double Taxation Treaty. How might this accord apply to my circumstances, and are there specific provisions I should be especially cognizant of?

It probably doesn't apply. You're a German citizen, German tax resident, working in Germany.

Are there any common oversights or essential factors I should take into account, particularly concerning receiving income through a US LLC whilst residing in Germany?

Again, talk to a tax adviser in Germany. If your LLC is not disregarded, it may have some obligations in Germany as your employer. Otherwise you may have some obligations as a self-employed individual.

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