Perspective Abroad, the podcast for entrepreneurs and freelancers who are drawn abroad. Regardless of whether it's tax planning, setting up a foreign company or lifestyle questions, we get down to business here every week. And here are your hosts: Daniel Taborek and Sebastian Sauerborn Yes, Sebastian, nice that it's working again today. Today we want to talk about another special topic, namely Exempt LLC. And there are a number of interesting topics that are always of interest to our clients or our viewers, listeners of our podcast, for example, how does an LLC actually work and what does that actually mean in terms of the fact that an LLC is a partnership under tax law and liability law but a corporation? But there are exceptions, too, and we have to talk about them again. Then in what form or under what conditions is it really tax-free, what hurdles are there? So, should everyone just get one of these LLCs now or are there things that need to be considered, perhaps difficulties? For example, when we get to the topic of bank accounts, how easy or difficult is it to get a bank account for an LLC? And when should you perhaps stay away from the LLC and what other alternatives are there? These are some of the topics we want to discuss today. Yes, sounds interesting. Yes, I'm looking forward to it. Yes, I do even more, because I have the questions and you have the answers. Exactly. Yes, let's hope so. Well, for many people it is always difficult to imagine that you can now simply found and own a US company without ever having set foot in the USA yourself. And then, even though you live in country x, so to speak, you have a company in the USA and perhaps do business with it in country y. So now you have to explain to our viewers how exactly does it work? Exactly exactly. We have already recorded a podcast on the subject of setting up a company in the USA, where we go into detail about the individual legal forms. I would definitely recommend that everyone take a look at the sections and segments on the subject of LLCs. I'll repeat it again very briefly, but we also discussed the legal type comparisons in detail there. So the LLC stands for Limited Liability Company. This is by far the most commonly used legal form in the USA, so it is extremely common there. The LLC is a new legal form, it was only more or less invented in the 1970s , it exists in every US state and as you said before, the LLC is a hybrid company, so on the one hand it is corporate law and liability law a corporation, but essentially a partnership for tax purposes. So what does this mean now? So the LLC is definitely suitable as a liability cover, so it has limited liability like a GmbH, for example, but because with the LLC the deposit may only be one dollar, the liability here is extremely limited, but as far as taxation is concerned , the company basically pays no taxes and is tax transparent, comparable to a German KG. A German GmbH & Co. KG does not pay any taxes; instead, the profits are taxed at the level of the limited partners. This means that the limited partners ultimately pay taxes on the profits, the companies only have to pay trade tax, but that doesn't exist in the USA. So that means, let's assume that I, we both live in the USA now, Daniel and I, and we would set up a company there together, then we would set up an LLC, we would both be members, i.e. shareholders of this LLC LLC makes $10,000 profit a year, then you take $5,000 on your tax return and I take $5,000 on my tax return, on my income tax return in the USA and we then pay income tax on that as normal . And of course, the LLC then also has to submit a partnership tax return, but as I said, it doesn't pay taxes itself, it's tax-transparent, taxes are always paid the member involved in the company. So now the interesting question arises , what if such an LLC only has a single shareholder? This usually doesn't work with a partnership. So I can't set up a GbR on my own, I can't set up a KG on my own. Well, I mean, I could of course say, I set up a GmbH, become managing director, partner, managing director and then the GmbH becomes a general partner and I myself am a limited partner as a natural person. Of course, that would be possible, but there are still two people in the company, namely the GmbH and myself. I cannot set up a partnership on my own. And when, as I said, this legal form was invented in the USA in the 1970s, the tax authority IRS was of course faced with a dilemma and asked itself, well, how do we do this now, how do we deal with it now around? So I mean, on the one hand, you could have simply said, well, okay, one person alone can't set up an LLC, but it takes at least two and the problem would have been solved, then it would be treated like any other partnership, comparable with the limited partnership, for example, which in turn corresponds to the GmbH & Co. KG. But it was actually the goal, the very clear goal of the inventors of this LLC to say that individuals can also found this company, so they clearly wanted to promote the entrepreneurial spirit, promote initiative and now they didn't want to do anything complicated again, they wanted to Basically, create a simple legal form with which anyone can ultimately become self-employed and of course enjoy liability protection - that's the key reason why a company is usually founded. So they said, we definitely want a partner to be able to set up such a company, even if one person cannot normally set up a partnership on their own. And that's why there was ultimately a revolutionary regulation that was now revolutionary from a tax perspective. The IRS said, okay, here's what we're going to do: although this company now has liability and so on, it has its own legal personality and also offers liability protection, can also hold assets and so on and so forth, but it's a one-person LLC is not a separate taxable entity from a tax perspective. That means this LLC doesn't exist for tax purposes, okay? It doesn't have to submit annual financial statements, it doesn't have to file a tax return, it does have a tax number with the IRS, a so-called EIN, but it doesn't exist under tax law, it's a so-called Disregarded Entity. Rather , as with a multi-member LLC, the sole owner of the LLC declares the income on his tax return and essentially does not have to submit anything for the LLC. From a tax perspective, one-man LLC is viewed in the USA as a business, a sole proprietorship, a sole trader or, in America, a sole proprietor. This means that from a tax perspective it makes no difference whether I become self-employed or run my self-employment through an LLC. This is only important in terms of liability law and corporate law and that's why I'm doing it. And that's a huge advantage because we all know that, we know that from clients, many clients who are self-employed, who have a business, are actually enthusiastic about the business. You can make a name for yourself, there is no separation here, there is no double taxation, everything is simply taxed, but there is the big drawback that there is no liability protection, instead I am ultimately liable for the company's liabilities with my private assets . And the LLC resolves this apparent contradiction. So they say, from a tax perspective, you are ultimately like a sole proprietorship, like a business, you can make a name and so on and so forth, it doesn't pay any taxes separately, that means it has normal income tax on it and so on and so forth, but In terms of liability, you have the liability cover of a corporation. So now I have to ask again, Sebastian. The LLC is generally a popular legal form, and not just because of the taxes. Can you maybe talk a little more about the advantages of the LLC? So, now let's assume that you and I, Daniel and I, now live in Europe and we are now setting up an American LLC together, so it has two shareholders. Then we will both be subject to limited tax liability in the USA, because we just discussed that the LLC does not pay taxes per se, but taxes are paid by the individual partners. So if we now set up an LLC together, then it is the same as if we set up a KG in Germany, setting up a limited partnership. Assuming that you live in France and I live in England, then we both have limited tax liability in Germany as French and English taxpayers , file a tax return there and ultimately pay taxes in Germany on this income from our German KG. The same thing is happening in the USA too. This means that if we set up an LLC together, we both have to get a tax number in the USA and we both have to pay income tax on this income from the LLC. So, now we just said that if there is only one shareholder, then this company is a Disregarded Entity. This means that it does not exist from a tax perspective and is not an independent tax entity. This means that if I, as a foreigner, as an individual, set up an LLC in the USA, then the company exists in the commercial register, so it is established there as a legal entity or as a legal entity with legal personality, but it does not exist for tax purposes. It would then exist for tax purposes if, for example, I were to carry out work on site in the USA and then actually here, let's say I would now, sorry, let's say I would, for example, organize concerts in the USA as a foreigner Artists with my LLC come there, give the concerts, then I would be doing business in the USA and would of course have to tax this income there. Or suppose I rent out a holiday home there or do something else. But if the LLC does not have any commercial activity in the USA, does not have a permanent establishment in the USA, then , following the logic that I have just developed, the entire income from this LLC is not taxable in the USA, because I have in There is no commercial status in the USA, so the USA, the tax jurisdictions of the USA have no right to tax, so the entire income that the company generates is not taxable in the USA. Unless there is a permanent establishment in the USA, there is a commercial activity in the USA that would trigger a tax liability there. So and that is basically a big advantage for people who live abroad and need a company and is of course particularly interesting for people who now live in tax-favored foreign countries and then do not have to pay taxes here on certain income. Now, of course, I'm still interested in knowing, so let's assume that I now fall in love with the legal form of the LLC, I now find it exciting, is it more harmful or do I also benefit from it, for example if I live in Germany, for example? Austria or Switzerland, so maybe in Europe I would start with an LLC? That would still be interesting. It is of course clear that for someone who, let me say, lives in Germany, for example, it is completely uninteresting, because if I, as I said, we just said, there is no permanent establishment in the USA, so no taxation. Of course, that doesn't mean that there are no taxes outside the US. If I do business in Germany, whether through an American LLC, German sole proprietorship, English limited company or whatever, then I have a permanent establishment in Germany, then the profits there are always taxable, I can't do that escape. So in this respect, as someone who has unlimited tax liability in Germany, it of course makes absolutely no sense to use an LLC, I'll just get myself into trouble because it will cause all sorts of problems with the tax office, but ultimately I'm doing business taxable in Germany and all the time I pay the same taxes that every sole proprietor pays in Germany, i.e. income tax, trade tax and so on and so forth. Well, it wouldn't do any good. The whole thing is only interesting if I live in a country, for example Dubai, where I don't have to pay taxes and where ultimately, because I don't have to pay taxes in the USA and I also don't have to pay taxes in my country of residence Income can then be collected tax-free. However, the LLC, Sebastian, is not generally tax-free. So what do I have to consider so that it works and I really don't have to pay taxes for my LLC? Exactly. So as I said, of the millions of LLCs that exist, LLCs that exist, of course, I don't know, 95 percent, I don't know what the proportion is, 95 percent, pay taxes in the USA quite regularly. The tax exemption in the USA only applies if, firstly, and this is a very important point, there is a shareholder who is a natural person, and secondly, this LLC does not have, let's say, no business in the USA, not commercially there operates, does not have a permanent establishment there, although the definition of permanent establishment in the USA differs from what we know in Europe, so you have to be very careful with sales representatives, for example, it doesn't have to be a sales representative, it can also be a so-called representative of the company , who is somehow heavily involved there. These are the conditions so that the LLC's income is ultimately not taxable in the USA. I would now like to dig a little deeper into this topic. So, specifically US business. There are some clients or some viewers, listeners, who might say, I would like to set up an LLC because this legal form would make it easier for me to serve the USA as a market. So now the question, for example, I am now a dropshipper. We have many who are dropshippers and perhaps want to use Amazon FBA. Actually, it would now be the case that you would not have any tax liability in the USA if you operated a pure dropshipping business. Is that right? Yes that is correct. So as I said, the definition here is that ultimately there cannot be a permanent establishment in the USA and a permanent establishment could also be, for example, that the LLC employs a freelancer who takes care of all the customer service in the USA here somehow regulates everything here with the individual business partners and so on. So that could potentially be a permanent establishment. So basically in the USA you are not allowed to have anything at all in the sense of employees, substance, office or anything else. It is generally possible, of course, to work with large providers such as Amazon, FBA or something similar, to keep warehouses here, to use their infrastructure, that does not trigger a permanent establishment, but it all depends very much on the individual case. This means that legal advice and tax advice are absolutely necessary if business is to be done with the USA. But to summarize again, business can be done in the USA. The easiest, of course, are service businesses. So let's say I'm a digital nomad, I'm a programmer and I have an LLC and use it to invoice US customers. That's not a problem at all because the service is provided outside the USA anyway. It is absolutely clear that there is nothing in the USA. There may be this gray area whenever I actually deliver products to the USA, for example, if something is taking place in the USA, you have to look very closely. So it's not automatic taxation, but of course you have to be aware that it may be a balancing act and you actually have to think about whether it makes sense to do it that way. So if I now sell digital products in the USA, for example, video courses, online books, my server is now in the Amazon data center in the USA, for example. Is it my place of business then? No, that wouldn't be a permanent establishment, no. Okay, because that's quick, so ultimately I'm delivering from the USA to the USA, that would be a special question. If I now go over, you just talked about walking a tightrope, so now I've crossed the line, my business has now grown so much, I have to hire a support employee in the USA, so now trigger tax liability, set up a permanent establishment out of. How does it work then ? Do I then have to register myself, do I have to somehow change the status of my company or simply submit a tax return and how expensive and time-consuming will the whole thing be? So in that case I wouldn't use the LLC, especially not an LLC that I also use elsewhere to generate tax-free income. I think that's risky because I'll ultimately have to disclose all of these documents to the American authorities and then desires may develop there or at least there will be detailed checks, audits and so on, all of which you don't want. So I wouldn't create an LLC that now has a mix of income, taxable income in the USA and non-taxable income in the USA. Now to briefly explain what would happen, we said earlier that the LLC doesn't pay taxes, which means that if I had a situation where I had a permanent establishment in the USA, I would have to pay taxes there, I would have to personally apply for a tax number in the USA and would then have to submit a tax number yourself and declare the profits of the LLC there. The rule is that the LLC still remains a Disregarded Entity, which means that it does not have to submit its own tax return, it does not have to submit a balance sheet, everything is done on my tax return. I wouldn't do it, I would set up a separate company, probably just a C Corporation, and that would ultimately do this US business. OK. So, now I have founded an LLC and now I want to do business with this company in Europe, or rather in the European Union. And let's assume that I don't live in the European Union. So I live in another tax-favorable country and now I want to do business with the LLC in Europe, in the European Union. Is there anything special to consider? So of course we have to fundamentally differentiate between the different types of taxes. We have no sales tax in the USA, no VAT according to the European model, but of course we do have that in the European Union. Now, in the B2B sector, when my customers are commercial customers, other companies, there is actually nothing to consider. They also do so-called reverse charging for US companies , which means that they simply enter the US tax number, the EIN, in their systems and can then do reverse charging, which means that the German, let's say example, becomes sales tax booked in, booked out again, so it is treated like any other EU company. If I now supply natural persons in the European Union, then in many cases I of course have the sales tax problem. We have known since 2015 that digital services, i.e. access to any videos, to any online courses, if I sell software licenses and all these things that are automated electronically, then EU sales tax is charged on them Due from the first euro of sales in the European Union, always in the customer's country. This means that if I have customers from 20 EU countries, then I have to calculate sales tax individually for 20 EU countries and then pay it accordingly via OSS, that is a central system where I pay all the VAT and this is then distributed to the states. So it is very important to understand that the LLC, even as a non-EU company, has to register for EU sales tax here. I cannot use the LLC to avoid EU VAT, this is a very important point. That means if an EU company would have to charge sales tax, in many cases, not in all cases, in many cases, then I also have to register the LLC as an American company for sales tax . The same has been true for physical products for some time now. That means, if I do dropshipping, for example, there used to be all sorts of rules, if it 's under 15 euros, there's no sales tax at all and so on and so forth, then there were sales thresholds up to 100,000 euros, you had to don't register and so on and so forth, none of that exists anymore. Even today, from the first euro of sales in the European Union with physical products, dropshipping, e-commerce or anything else, I have to register for VAT in the European Union and then I have to pay the VAT accordingly via OSS and IOSS . Sometimes I have to pay it in advance, then it is paid, sometimes monthly. And if I have a warehouse in the EU, that is, if the LLC now maintains a warehouse, then I have to register separately for VAT in the country where this warehouse is located, in addition to IOSS and OSS. Even if I run FBA Amazon? Yes. And here is a big problem, because if, for example, I want to apply for a sales tax number in Germany, which the LLC can easily do, then Germany wants a certificate of residence from the USA. The LLC does not receive this certificate of residence because it is not tax resident in the USA, so I do not receive a VAT number in Germany. This shouldn't actually be a problem with IOSS and OSS, because they don't issue country-specific VAT numbers, they issue EU VAT numbers. I'll start with EU, but if I had a warehouse in Germany, for example, then I would have one serious problem, that probably won't work with the LLC. I would then have to switch to another legal form. Okay good to know. Now I would like to talk about another myth, and the myth is that I live in a country where foreign income is tax-free, for example Paraguay, and now many people think that I'll just take an LLC and set up a US one LLC, I work from home in Paraguay, for example, as a web designer and the income I earn is foreign income because I invoice it to customers via my US LLC, i.e. via a foreign company. Is it really like that? Yes, that is a very important point. So basically we know that there are various countries in which foreign income is not taxed. What is foreign income? So, for example, if I now have rental income here in Germany and I live in Paraguay, then that is foreign income. If I receive dividends from a US company or Swiss company and I live in Paraguay, then that is foreign income. These are then not taxed in the country of residence. And then there are now a number of countries where this is the case. So we all know the UK, Malta, Cyprus and then we have Portugal and then we have Ireland, then we have Spain, there are all such special statuses where I can refer to them here and as I said, overseas too of course, Costa Rica, Paraguay and so on and so forth. Of course that is also possible. Mind you, the emphasis is on foreign income and the examples that I just mentioned, where there was rental income and capital gains, which were ultimately generated abroad. Now if I have an LLC but live locally in Paraguay long term, I'll now say Paraguay as an example, and work for this LLC here every day, then this is not foreign income, because it is generated domestically, the value creation occurs domestically. I am based domestically as the owner of this LLC, which means that the LLC may have a permanent establishment in Paraguay or, since it is a Disregarded Entity and basically the one-man LLC corresponds to a business, I am here as a commercial entity Traders operate in Paraguay, but this income would essentially then have to be taxed in Paraguay. Now we all know that in the end the procedure here often follows the motto: where there is no plaintiff, there is no judge, that is, of course, due to the inefficiency in these countries on the part of the authorities, it is often the case that no one will ever ask or that People don't care anyway, they are even grateful that there are some rich foreigners sitting there and spending money in their country. So what I mean to say is that in fact it may be unproblematic or a calculable risk that some people are willing to take. Especially if, like a digital nomad, you only plan to stay there for a short time anyway. So what do I know, half a year or a year or something like that. So you shouldn't have the illusion that there is legal certainty here, that that's actually the case. And of course there is extremely little reliable information about it online . There are plenty of websites run by some scammers that make it seem like there is legal certainty. But basically it is very difficult to actually find a clear statement here. Hence my statement, perhaps it is a risk that one is willing to take, which, based on the experience of hundreds or thousands of other people affected, may in fact not be a real risk at all, but basically everyone has to deal with it themselves, everyone has to deal with it themselves deal with it , get legal advice, get tax advice and consider whether this is the right thing to do in your situation. So it's definitely not the case that you can talk about this so-called territorial taxation, which doesn't exist in that sense anyway , and say, well, you can then work independently in this country and you can in that country manage a foreign company without setting up a permanent establishment and without then being required to do so for tax purposes in the country of residence. Okay, good, so we talked about that too. Now another topic that our viewers and our clients keep asking. How does the LLC perform when it comes to issues such as anonymity and information sharing? Does the LLC have advantages, perhaps if you compare it with the other well-known companies such as UK Limited and the like? Yes. So, the LLC has very big advantages in this regard and of course you have to emphasize with the thick Sharpie that it's not about any dubious activities or about hiding something from the authorities, but there are many reasons for a healthy relationship here to have his privacy and also to ultimately claim a certain privacy, a certain concealment of his own circumstances and his own assets, which then also serve to protect them. So this attitude that we have today of this transparent citizen, the transparent entrepreneur, that there are transparency registers in every country, that in the future I will also have to upload full balance sheets and profit and loss statements to the commercial register, where then basically Everyone sees what everyone involved in it has earned, which is of course very questionable for many reasons. So you ask yourself, what is the actual intention of the authorities here? Here we always talk about protection against terrorism, money laundering, human trafficking, drug trafficking and so on and so forth, all of which are of course very serious topics, I realize, of course we all want to fight them, we are all in the same boat, but Now these measures really serve if this is the case Neighbor makes 100,000 in sales with the small GmbH and it says exactly what he earned and everyone can see it, does that really serve to limit and combat terrorism here ? Or is there another request, which is perhaps more in the direction of control, which perhaps also means being able to access assets as needed if I am a tax authority or state that reacts arbitrarily? So that means there are actually many good reasons for wanting to protect your privacy in a certain way. At least on a very superficial level and this is actually possible with the LLC. So of course there are no public transparency registers in the USA. Of course, I also have to submit my information to the US authorities as part of a tax return, which I have been submitting as a mini tax return for every LLC in the USA since 2017 , of course, but it is not published. For example , there is no publication in the commercial register . The registered office is listed in the commercial register in the USA and in some states the shareholder is actually published, but in many states not. I don't have to submit any balance sheets there, no other financial figures are submitted there and of course the USA does not take part in the automatic exchange of information. As I said, the USA is in the process of introducing a transparency register, but it will not be made public and it contains the information that has to be provided to the IRS today anyway. So as I said, you won't be able to avoid it. But it is not publicly visible. OK. You have already mentioned that different regulations apply in different countries with regard to anonymity, for example. Are there any other advantages and disadvantages if I want to set up my LLC now and various service providers suggest Florida, for example, Wyoming, Delaware, how do you advise someone to proceed if they decide on the right location? Although it doesn't really matter if I never have to be there in person anyway, or maybe even want to. Yes, well, exactly. So, above all, you have to understand, and this is very important, the tax advantages that we discussed earlier, which means that the profits of the LLC are tax-free in the USA as long as the necessary conditions are met. These apply no matter which state the LLC is registered in. So some people always think, Delaware, this tax haven and so on and so forth, that's absolutely not correct, Delaware has absolutely no tax advantages. Nonetheless, many LLCs are formed in Delaware, but for other reasons. On the one hand, this is because Delaware ultimately has very, I would say, accommodating jurisdiction, especially for large companies. This is especially helpful when you have such a big lawsuit - we know about product liability - in the USA . There is also a long legal history in Delaware, which is the first state. This means that in case law it is always important to be able to rely on precedents, so that is available in Delaware. So it's all interesting, Delaware is the standard anyway if you have American investors that American investors expect and Delaware also offers good anonymity, so these are all advantages of Delaware, but there are no tax advantages, absolutely none. So that means I just gave the reasons for Delaware. Other states to consider that are also good for anonymity include Wyoming. Wyoming also has a few other advantages now. In Wyoming, for example, corporate law, i.e. LLC law, is slightly different in each state, each state has its own nuances. Wyoming has now enshrined liability protections in law. Why is that important? There are always attempts to undermine liability protection and ultimately the reason is that if the entrepreneur treats the LLC like a petty cash fund, then, as I said, it is not his own Legal personality, but then it is he himself, so he has no liability protection. Well, that's something that's been tried again and again, and in the end, Wyoming stood out and said, no, we'll write that into our corporate law there. Even if this is the case, the cover of liability is ultimately not, I would say, attacked. So, that's why Wyoming, for example, is advantageous. Wyoming also has other advantages if you want to establish a trust and so on, especially when it comes to asset protection and so on. Also because it is extremely difficult for creditors and other external, let me say, interested parties to get access to the assets of an LLC, even if the owner of the LLC has financial problems, bankruptcy and so on . So there is another state of domicile that we recommend and that we can also set up with a zero-tax LLC. And Florida does not offer any privacy, which means that the owner there is published in the commercial register, but that is sometimes intentional. So there are certainly business partners who want to see who is in the commercial register. By the way, banks don't care at all, it doesn't matter at all. But sometimes Florida and the fact that the owner is there in the commercial register is a deliberate thing and then you take Florida, which is definitely recommended, but from a tax perspective all LLCs are the same. OK. Now another important topic, namely, the various service agencies in the field always offer, we can set up any company you want, be it the UK Limited or the Limited in Ireland or the LLCs within so and so a lot of hours and in many cases that may happen really, really quickly, but the awakening, the rude awakening, sometimes happens when I want to open a bank account with my newly founded company. And ultimately, I need the bank account to do business with my company . What about the LLC? Is that easy, is that difficult? So, I'm now setting up an LLC in the USA from a different country of residence and now I want to open an account the next day, what advice do you give clients and what should they be prepared for, what should they be prepared for, how does it work? So here you have to say, it is of course the case that after the company has been founded, tax registration must first take place. In the US, registering for taxes if you don't have a social security number is a bit time-consuming. So you don't have to count months, but well, you have to count a few weeks until the tax number is available. Of course we do this for our clients, but basically the tax number is not handed out online, but rather sent to you by post. Of course that's not so nice. If you actually need the tax number immediately, you could buy a shelf company, we also offer shelf companies, there in the UK we have a few LLCs that already have tax numbers and so on, but of course most clients do n't need that. This means that the LLC is founded, we apply for the tax number and as soon as the tax number is available, you can open the account. The LLC is one of the easiest legal forms to get an account. There are a number of online banks in the USA where you can open an account. We help clients open an account with Mercury, which is the leading online bank that specializes in foreign entrepreneurs. The disadvantages of Mercury are that there are only dollars, there are only dollar accounts and so on. If you're working right now, not so nice. Then you can use the other providers here, so everyone knows Wise, Payoneer is also possible, for example, so there are actually a lot of online providers like that that open accounts there. Just last week we opened another account with Payoneer for an American LLC, where you then get an IBAN from an Irish bank. Limitations for example there is that You can only accept payments from companies and not from natural persons, i.e. only from business customers. This and other restrictions with Wise include, for example, that you don't get a card for the LLC. So there are certain, well, small restrictions everywhere that you have to look at in advance, of course. Of course, what's very important to understand these days is that it's ultimately impossible to get an account somewhere if the company doesn't have a website and you don't have a LinkedIn profile or something like that. So all banks look at that, website and LinkedIn profile. You don't need to try it beforehand. That's why I always say, as I said, while you're waiting for the tax number anyway, you can get to grips with things, build a real website and one even if you don't have a real LinkedIn profile yet. Then please do the same, these are important points. So who is the LLC particularly suitable for and perhaps not for whom? So from my point of view, the LLC is particularly suitable for digital nomads, i.e. people who don't end up staying in any country in the world for a very long time, but rather move back and forth through world history, at least for a certain period of time. You shouldn't forget that even with the LLC you potentially have to ask yourself, does this LLC now have a permanent establishment where I live? That means, even if, for example, I now have NHR status in Portugal or Beckham Law status in Spain and I then have an LLC and am actually more or less commercially active there, that means I work there , I do acquisitions there, I do software development for them, I'm a digital nomad or something else, then this company may have a permanent establishment in my country of residence. And this means that the income from this is no longer tax-free. Of course, if the LLC now has income from licensing income or something like that, capital gains, without me trading commercially, then that's something different, then you can have that, but the question is, does the company have a local branch that ultimately generates the income here would be subject to local tax liability is a question that everyone has to ask themselves carefully and why anyone who now lives in a country for a longer term, I say now, if someone plans to live in Spain with Beckham Law for a few years or more Non Dom in England or as Non Dom in Malta or under RNH status and so on, so if you plan to be somewhere for a long time and plan to operate here with an LLC, you need to get very careful advice on this. And of course this whole problem does n't exist with digital nomads. So if you're a digital nomad who travels through world history and is in each country for maybe less than three months, he doesn't have this problem. This means that the LLC is particularly recommended for digital nomads . You have the advantage that you have a real company, you have a real address, you have liability protection, you don't have to write your own address on the invoice, you get a bank account quickly, so these are all advantages specific to digital nomads that play a role here. And of course, basically for all other people who live in countries like the ones we mentioned, Dubai, Spain, Portugal, Malta and so on and so forth, whereby you always have to check there, how can I have a local one? Prevent a permanent establishment so as not to run into tax problems. Especially for people who live in Dubai, who now have big problems with a Dubai company, for example, getting a bank account, problems accepting credit cards and all of these things that I can easily do with the LLC. Every LLC can get a Stripe account, every LLC can get a PayPal account, every LLC can get a bank account. Which is now difficult with companies from Dubai, for example. So people who live in such countries and say to themselves, I somehow need a common legal form that is accepted worldwide where I can make credit card payments can accept and so on and so forth, the LLC is particularly suitable for this. So, who is the LLC not suitable for? Who should stay away from the LLC and perhaps switch to an alternative? So as I said, anyone who has unlimited tax liability in a classic high-tax country, such as Germany, Austria, Italy, France, all these countries, is absolutely not suitable for the company. In the best case scenario, I pay income tax as normal, then I can register my own business straight away and then I don't need this company. In the worst case, evasion will be prohibited here, sorry, in the worst case, evasion will be assumed and then I may have to face tax evasion proceedings. So that means that anyone who lives in such a country should not set up an LLC. By the way, this also applies if you don't actually plan to do business in the USA. I would advise all clients who live in Germany to set up a corporation or, if they absolutely want a partnership, to set up a limited partnership in the USA, which corresponds to the German GmbH & Co. KG. OK. Now, how does the LLC actually compare to the UK Limited? So I may now live in a tax-favorable country and could also use a UK Limited for my work abroad. Correct, yes. So, that's a very good question. Ideally, in my opinion, it is a question of both/and not either/or. So UK Limited of course has all the issues that we discussed earlier. So that means transparency register, you have to submit complete balance sheets, profit and loss accounts, you have a corporation tax of 19 percent, which is relatively high, so that's it. Now, of course there are ways to say how I can get around some things. So, for example, if I am not myself a managing director and shareholder of the company, I could, for example, have a salary paid out to me and if I now, let's say, I live in Dubai, have a salary paid out to me by my UK Limited, then that would be Of course this is also tax-free. But in a way it's all a bit complicated. So there you have it, the advantages of the LLC are obvious. When it comes to accounting requirements and so on, the LLC actually doesn't have the same scope as other companies. Accounts I think are equivalent, I get very good accounts for the Limited. The Limited is of course also outside the EU, which may also be an advantage. Often, our clients use both in combination, because it's often the case that if you have a European customer, they might cringe when they get an invoice from an LLC, especially if it's in Delaware or something like that. because he doesn't know how to deal with it. If he receives an invoice from a limited company, then that is far less suspicious and then you just take a limited company and then have an LLC, which then in turn issues invoices to the limited company in order to reduce the profit there or as good as to eliminate. So, then one final question. If I set up a US LLC now, will this help me when entering the USA, i.e. when applying for a visa? So, this is in a sense an academic discussion here, i.e. very theoretical, because basically, it might be possible to apply for a US visa or even a green card, but of course the purpose of this exempt LLC is to avoid taxes , also to avoid taxes in the USA, while a visa and green card in the USA are given to people who do business there, who pay taxes there, who hire employees there, who create substance. Ultimately, this project is diametrically opposed. So that means my recommendation would be that we do n't need to have a big discussion about whether this would be theoretically possible in some way, maybe it is, but I would say that it contradicts itself in spirit, so to speak. The That means you would basically say you wouldn't use the Exempt LLC for that, you would rather set up a separate company to apply for a visa or green card. OK. Then we also talked about this important point. Yes, thank you very much, Sebastian, it was a nice conversation. Time flies, an hour has passed, but there were also a lot of interesting questions and topics that our viewers asked us again and again and that's why we've summarized them here for everyone in this podcast. Wonderful. I was happy, Daniel, see you soon. See you then. Until the next episode of Perspective Abroad, the podcast for all entrepreneurs who are moving abroad. 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