Our services
LLC Tax Returns
EIN / ITIN
The American LLC offers multiple advantages to Belgian tax residents. Nevertheless, certain conditions must be respected and the various reporting obligations must be known. The bilateral tax treaty between Belgium and the United States recognizes the semi-transparency of the American LLC (provided of course that you are considered non-ETBUS).
According to the tax treaty between Belgium and the United States :
(https://www.irs.gov/pub/irs-trty/belgiumte07.pdf)
In general, paragraph 6 relates to entities that are not subject to tax at the entity level, as distinct from entities that are subject to tax, but with respect to which tax may be relieved under an integrated system. This paragraph applies to any resident of a Contracting State who is entitled to income derived through an entity that is treated as fiscally transparent under the laws of either Contracting State. Entities falling under this description in the United States include partnerships, common investment trusts under section 584 and grantor trusts. This paragraph also applies to U.S. limited liability companies ("LLCs") that are treated as partnerships or as disregarded entities for U.S. tax purposes.
Paragraph 6 is not an exception to the saving clause of paragraph 4. Accordingly, paragraph 6 does not prevent a Contracting State from taxing an entity that is treated as a resident of that State under its tax law. For example, if a U.S. LLC with members who are residents of Belgium elects to be taxed as a corporation for U.S. tax purposes, the United States will tax that LLC on its worldwide income on a net basis, without regard to whether Belgium views the LLC as fiscally transparent.
The tax treatment of the U.S. LLC discussed is with respect to a partner or partners who would be Belgian tax residents.
The U.S. legal entity qualifies as a disregarded entity. This translates into French as a fiscally disregarded entity. As a result, the LLC is semi-transparent. In such a company, the income received passes through it, and it is then the individual who is taxed for income tax in his country of residence.
On US soil, a single or multi-partner LLC realizing income, will have their income taxed in Belgium; being due to the non-ETBUS status of the entrepreneur.
Business income held by non-resident aliens receives special tax treatment in the United States. They are also known as "non-resident aliens" or more commonly "NRAs".
To qualify as an NAR, the following requirements must be met:
- Not being an American citizen;
- Have not lived in the United States for a period of time in order not to pass the substantial presence test.
If the contractor is qualified as "engaged in a trade or business in the United States" or more commonly "ETBUS", the NAR income will, in this case, be subject to U.S. tax.
To become an ETBUS, a dependant agent must be present in the company in the United States. A dependant agent is a person whose role is to perform tasks that are critical to the continuation of your business. These are tasks other than simple administrative tasks. Thus, the dependant agent will take part in the management policy of the activity or in the definition of the commercial strategy.
In addition, to be considered a dependent agent, a company must exclusively or almost exclusively provide services to the NRA-owned entity.
It is necessary to remain vigilant about possible mistakes that may be made. Indeed, the penalty is $25,000.
In addition, the fine can add up if you have multiple single-member LLCs owned by strangers. With similar errors made on multiple forms, you run the risk of having to pay tens, if not hundreds, of thousands of dollars in penalties.
ExpertLLCUSA.com offers to help you complete and submit all of these complex forms, in addition to providing you with your EIN and a U.S. address.
Do not hesitate to make an appointment with one of our specialists for your U.S. declarations for a U.S. LLC held by one or more Belgian tax residents.
Disclaimer: This document has been prepared on the basis of information available in the public domain and is for guidance only. All necessary precautions have been taken to certify the accuracy of the information. Notwithstanding, no legal liability is granted for any consequential incident that may arise from errors or omissions contained in this document.
