If you have watched videos on our channel for some time and read our websites, then you know that we publish quite a lot on the subject of US LLCs. We often recommend the US LLC to people who live in tax-favored countries and emigrate there. But what if you live in Germany? Could you also use the US LLC there? What are the advantages and what are the disadvantages? Does it make any sense, does it make no sense at all? We want to address these questions today. [Music] First of all I would like to say that the US LLC, if you live in Germany and have unlimited tax liability in Germany, the same applies to Austria, by the way, has no tax advantages, zero tax advantages. You pay German taxes as normal . The decision for a US LLC must therefore have a different motivation than the tax one, more on that later. You essentially get tax advantages by moving abroad, not by setting up a foreign company that is supposedly tax-efficient. Unfortunately that does not work. So why would you even use an LLC in Germany if you don't have tax reasons? Well, the most obvious answer to that is e.g. B. as a liability cover. If you now e.g. B. you are self-employed but do not want to invest the share capital for a GmbH and, for example, B. If the UG and how the whole thing works with the UG is too complicated, then you could easily use a US LLC. This would give you liability protection , which is a significant advantage. Another advantage may be, for example: For example, your appearance may be more international with the LLC. Not everyone necessarily wants to appear with a GmbH or a UG; that looks very, I would say, German. Or as a self-employed person, many people want to have that international touch. That would be a second reason, i.e. the pure appearance seen from the outside. A third reason might be asset protection. Let me explain this a bit further. According to the German-American Friendship Agreement of 1953, US companies in Germany enjoy special protection. In particular, it lists what has to happen in the event of expropriation by the state. Namely, that society, i.e. American society, must be generously compensated. Now there are many of you who are perhaps worried about what measures will be taken in Germany in the future when the coffers are really empty. None of us really know, but if you can sleep better knowing that you have a legal form that is very well protected by an international agreement, much more than German companies, for example. B., then perhaps the US LLC would be worth considering for asset protection, including for your German assets . So those are three possible reasons that are not tax-related. As I said, again, there are no tax advantages why you would use the LLC in Germany. In the second step I would now explain again what an LLC actually is, because that will become important in the further course of this video. The LLC is a fairly new legal form that emerged in the USA in the 1970s. It's basically a corporation under corporate law, which means it has liability protection and so on and so forth, but it's a partnership under tax law. So it is a hybrid society. We don't have anything like this in German-speaking countries, which means that there is no similar legal form in Germany, Austria and Switzerland, nor in most European countries . The LLC is incredibly popular in the USA, exactly for the reasons I just mentioned, because you can use it to create a cover of liability relatively easily , but in the end you often don't have to prepare a tax return, balance sheet or anything else for the LLC , all of this is ultimately settled in your tax return in the USA, the tax and of course makes the whole thing very simple. Also that the company itself does not pay any tax, but, for example, B. a KG pays taxes have to be paid directly by the shareholders, makes the whole taxation process simple and of course much cheaper. This is the case in the USA. A one-man LLC, which has a single shareholder, and only then does the whole thing that we are currently discussing here make sense , is from an American perspective a so-called Disregarded Entity. This means that this company is not taxed separately, but only with the sole owner, which is basically completely ignored by the IRS. Only one owner's tax return is looked at. This means that if the owner is a person living abroad and the company does not have a permanent establishment in the USA, then the profits do not have to be declared in the USA, nor is there a tax return to be filed there, nor is there any tax in the USA pay. The company's place of business is where one of the partners lives, which is where the tax assessment would take place and the tax assessment is ultimately basically the same as for a sole proprietorship. That means it is essentially a partnership. So the advantage here is for you, so if you use such a one-man LLC in Germany, you don't have to worry. You don't have to file a tax return, financial statements, balance sheet or anything in the USA. There is a bit of compliance, I'll get to that later, but basically all the taxes have to be declared in Germany; it works the same way in Austria. So that means there's nothing you can do in the US, which makes it very easy for you. Now you may also be wondering which state in the USA is suitable for an LLC that you operate in Germany. In principle, any state of residence is suitable, there is no preference. As I said, no taxes are due in the USA anyway. One would proceed purely according to practical measures. So, popular is Florida, popular is e.g. B. also Wyoming, e.g. is popular. B. Delaware, these are the domiciliary states that have proven to be very efficient in the administration of LLCs and the formation of LLCs . You can find more information about individual states of residence on our website. But as I said, in principle this LLC can be located anywhere. You just have to make sure that you don't incur additional fees, e.g. For example, in California there is a standard tax of $800 a year just because this LLC is located there. Now that doesn't exist in the other states or that standard tax is somehow much lower, maybe $100 or $200. By the way, this annual minimum tax is already included in the price of our service package, which means you don't have to worry about it, but that's also why we choose the three states we have here on the website. The first question you now ask yourself when it comes to a foreign company is, can I operate one in Germany without having a foreign branch? Why is that important? There is the so-called founding theory and the so-called seat theory in corporate law. Germany applies the so-called seat theory to all states except the EU states. This means that a non-EU company that does not have an effective administrative headquarters in the country in which it was founded does not have legal capacity in Germany under German law. This basically means that if you appear in Germany with a Swiss company or a British company, which has been the problem for many limited entrepreneurs after Brexit , without these companies having any real substance in Switzerland or the UK , management have operating premises, then the company in Germany will ultimately be treated like a general partnership. This means that you as an entrepreneur are fully liable here. The situation is different only for EU companies . For EU companies, the founding theory always applies. This means that the law of the founding state applies, regardless of whether the company has substance there has administrative headquarters or not. That's why, as a German in Germany, you can set up a company in any EU country and operate it from Germany, as we know, for example . B. with the Irish Limited. You don't need a managing director or anything in Ireland, you can run it in Germany, pay your taxes there, and you don't have to do anything else. So now you're telling me, well, what does this have to do with our US LLC? Because according to your statement, Sebastian, the LLC would ultimately not have legal capacity in Germany if it did not have a permanent establishment in the USA. Well, here I come back to the friendship treaty between Germany and the USA from 1953. It is defined there that the founding theory also applies to the USA as the only EU country. This means that a US company can have its only permanent establishment in Germany without having to have any substance in the USA. That's why you can only operate a US LLC in Germany, with a German branch, otherwise you would have to build up all kinds of substance in the USA, managing directors, business premises, employees and so on and so forth. But we don't want that because then tax would be due in the USA. That is, very important point, founding theory. You can operate the LLC in Germany without a US permanent establishment. The next question is, do I have to register a branch for the US LLC in Germany or not if I operate it from Germany? That depends on what you do with it. If you imagine that you have a sole proprietorship and you have to register a business for this sole proprietorship because you are advertising with the company, so if you also do something like that with the LLC, then you have to have the LLC entered in the commercial register and Register an independent branch in the commercial register. If you only want to use the LLC for e.g. B. as a holding company, maybe it should hold real estate or something like that, then you don't have to enter it in the commercial register. However, if you want to do business with it, have customers, or want to write invoices, then it must be entered in the commercial register. Of course, all the personal details of the management of the LLC are then published in the commercial register. So you are not able to enjoy the possible anonymity that the LLC enjoys in the USA in Germany. The usual entries in the commercial register are made here. You just have to be aware of that if you were hoping to do anything anonymous here. By the way, any notary in Germany can make the entry in the commercial register for you; this requires documents such as a certified extract from the commercial register with an apostille and translation. If you set up the company through us , we will provide everything to you so that you can then register the branch. After registering the branch, you must register the company with the tax office. The question here is always whether the company will be registered as a partnership or a corporation. Well, most clients will want this to be registered as a partnership. For this purpose, it is important that certain wording is included in the LLC's statutes, the so-called operating agreement, so that the company is not classified as a corporation by the tax office. There are e.g. For example , things like whether the shares are freely transferable are important. They are usually transferable in the case of a corporation, but not in the case of a partnership. Or a decision must be made as to whether management is separate from the owners. In a corporation it is usually separate or can be separate, in a partnership it is not. So the appropriate wording has to be made, but of course we would then provide it to you accordingly, so that this company is actually registered as a partnership in Germany. Ultimately, this means that the company does not pay taxes; you as the partner always pay taxes. Otherwise the usual ones apply tax rules, which means that the company also receives a sales tax number. If the corresponding sales threshold of 50,000 euros is exceeded, you can apply for it accordingly or voluntarily beforehand if you want. It is actually a German company. Therefore you have no tax advantages. It is a German company, you write invoices like a German company. The same rules apply as for German companies, i.e. the branch of the LLC is actually a German company and since we said before that there are no taxes to declare in America, as I said, these taxes in Germany that you pay are the only ones that actually arise. What else will be needed in the US every year? As I said, we just said that you are a German company, which means that you of course have to submit your German tax return by the usual deadlines. In the USA, two things have to be submitted. Once a so-called annual report. It is submitted to the state, where only the details are confirmed in the commercial register. Registered office, company name, is the company still active and so on and so forth. In addition, the company must report total sales to the US tax authority IRS once a year using a so-called 5472 form. Both of these services are included in our service package. So you don't have to worry about it. We take care of everything that is due in the USA and then you simply have a tax advisor in Germany who takes care of everything that needs to be done in Germany. As I said, it is a German company, the tax advisor does not need to have any special know-how about the USA or anything like that. It is treated like a German company, it is a German company. Only the registered office is in the USA, the administrative headquarters and tax headquarters are in Germany. So, if you are interested in this somewhat exotic solution and would like to set up your LLC in Germany, we have a complete service package for you, which you can order directly online via our website nullsteuer.llc. I'll put the link to the service package in the link here. As I said, I would spontaneously say that this solution is of course not interesting for most entrepreneurs in Germany. They're better off with a UG or a GmbH or even a sole proprietorship, but if the three points I mentioned at the beginning are relevant to you, that is, e.g. B. Liability protection, but you don't want to have a German corporation, external appearance, image and possibly asset protection. If these are important to you, then the LLC may be the right alternative. Take a look at our information on the website, talk to your lawyer, your tax advisor and ask him what he thinks about it and then I would be happy to welcome you as a client soon. Are you an entrepreneur, freelancer or investor? Have you been moving abroad for a long time? Take the first concrete step today towards a future with more money and more freedom. Book a consultation with Sebastian and his colleagues. Our law firm helps clients like you legally reduce your tax burden, build and protect wealth, and maximize your personal freedom. Benefit now from our expertise and our network. Go to mandating.com and become a client of our law firm.