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German Residents and US LLCs Explained

Mar 16, 2025

Key Considerations for German Residents Using US LLCs

Introduction

  • US LLCs often recommended for those in tax-favored countries emigrating to the US.
  • For residents in Germany (or Austria), US LLCs offer no tax advantages.

Tax Implications

  • German residents with a US LLC face normal German tax rates.
  • Tax advantages come from relocating, not just setting up foreign entities.

Why Consider a US LLC in Germany?

  1. Liability Protection:
    • Useful for self-employed individuals without capital for a GmbH or complexity of a UG.
  2. International Appearance:
    • Enhances international image compared to German GmbH or UG.
  3. Asset Protection:
    • Special protection under the German-American Friendship Agreement (1953).
    • Offers security against potential future expropriations.

Understanding US LLCs

  • Hybrid legal form: corporation in law, partnership in tax.
  • Popular in the USA for liability coverage and simplified taxation.
  • Disregarded Entity: Single-owner LLCs not taxed separately by IRS.

Operating a US LLC in Germany

  • Founding Theory vs. Seat Theory:

    • US LLCs operate under founding theory due to the 1953 treaty.
    • No need for a US establishment - can solely operate in Germany.

  • Registration Requirements:

    • Business activities in Germany may require commercial register entry.
    • Necessary documents include certified extracts and translations.

Tax Registration in Germany

  • LLC should be registered as a partnership if specific conditions met.
  • Taxes paid by partners; usual German tax rules apply.

Compliance Requirements

  • Annual US submissions:
    • Annual Report for state registry.
    • Form 5472 for reporting total sales to IRS.

Choosing the Appropriate State for LLC

  • Popular choices: Florida, Wyoming, Delaware.
  • Avoid states with high standard taxes like California ($800/year).

Conclusion

  • US LLC as a German entity offers liability protection, international appeal, and asset protection.
  • Service Packages: Comprehensive setup and maintenance services available.
  • Suggested for specific cases; typically, a UG, GmbH, or sole proprietorship is more suitable for most German entrepreneurs.

Further Steps

  • Consult legal and tax advisors.
  • Explore service package options at nullsteuer.llc.
  • Consider consultation for tax optimization and asset protection at mandating.com.

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