In this news
With the start of a new year we are forced to review the commitments and formalities involved in our maintenance Trade abroad. One of the most used vehicles within the framework of technical businesses is the case LLC Companies (Limited Liability Company) of the United States
A Brief Description of the Outsourcing Path
The rapid digitalization process of recent years has allowed significant growth Cross border trade of technology. Global demand for services Software development, mobile technology, online sales, trading, digital marketing and programming has grown rapidly in recent years and a sharper turn in its growth is expected.
This trend, promoted by companies and government programs to promote computer tools, has allowed them to be well received locally. Through continuous training of technical equipment that provides skills to professionals with required standards worldwide. Technical knowledge is widespread and the way to acquire it is relatively simple. and under that ground they proceed by contagion as if they were the same cases of each other. If things are the same, everything works the same way!
Thus, a section of the society, basically the youth, understands it Your businesses can be relocated abroad With dynamic and a Basically financial gain. A place where, although there are no special measures to promote their activities, there are no obstacles that hinder the development of their businesses, and this leads to extremely rapid growth.
Selected destination: United States
Establishment of Foreign corporate vehicles It is presented as an option to develop activity abroad. Current and multiple offers that are presented in digital media offer Get social fast In case of being used to bill for services abroad. As such it is one of the most widely used and promoted corporate vehicles American LLC Companies. Apart from the tax benefits they present, they have other aspects that make them the most preferred Subjects residing outside the United Statesand who intend to extend their business into that jurisdiction.
In theory, they are Companies that incorporate with little ease, where its executive body may be composed of non-US subjects as well as all its partners. Another important point is that Opening a bank account is relatively easy. They might as well be exemption from Income tax, As long as there is no physical presence in the country, they offer a simple receipt issuance system, and above all, they are very agile when it comes to administration.
Is Argentina foreign to my businesses abroad?
Argentina’s tax rules have incorporated changes since the 2018 tax reform. International tax transparency regime.
In it 130 of the Income-tax Act, Art This regime is developed in relation to the moment of imputation of profit and expenditure from foreign sources. Subsection e) deals specifically with profits of residents of the country derived by them Participation in companies or other entities abroadand establishes that they shall be charged on the financial year or financial years in which the annual financial year of such companies ends in proportion to their participation.
However, the most interesting thing about the article is found in the second paragraph where it suggests that the accusative is corresponding When the vehicle does not have tax personality. A concept which has been incorporated in the regulatory order of the Income Tax Act. Section 288 of the said standard defines that any company or other entity resident abroad does not have tax personality when it is not treated as subject to tax by the same tax law as income tax in the jurisdiction. .
This is the purpose of regulatory bodies Directly at LLCwhich have the characteristics of a capital company, but also present certain characteristics of an impersonal person.
For example, in the United States they are usually “transparent“. At the federal tax level, an LLC may choose to be taxed as a entityActing like it partnership or in case of having only one partner, it shall be considered A defiant institution. In the last two cases, Income generated is not subject to tax, because they are taxed on the heads of the LLC partners. Therefore, Argentine residents who hold shares in companies without tax personality, as in this case, must allocate their income and expenses in proportion to their holdings in the tax period that corresponds to the closing of the company or entity abroad. Distribution of such profits to its partners.
Liability of LLCs in the United States
Incorporation of this type of company is very easy and so is its administration and management. This can lead to Breach of Obligations These entities are required to pay state fees and, in relation to agents, both registration commitments and presentations to the IRS (Internal Revenue Services) as Tax returns annually
In most cases, there are professionals in the United States who submit the appropriate forms on time or request an extension of the deadline with the IRS. Conversely, it also happens that owners are completely unaware of the obligations that come with being liable to the IRS for a company registered in the United States. This action leads to Sum of fines Which, when they refer to non-compliance by foreign investors, are extremely draconian.
In addition to formal penalties for failure to appear in terms of Federal tax returnsis related to International Information Statements.
Later, one of the most serious penalties, which is worth mentioning and which has attracted more attention among those responsible for companies in the United States since its last regulatory change, was published on December 13, 2016 where the IRS added new obligations. Section 1.6038A-1 of the Code of Federal Regulations. These new changes took effect on January 1, 2017 and now also affect all foreign-owned single-member LLCs. This section deals with Obligation to present a significant amount of information annually With respect to foreign-owned entities, when owned by a non-US person/entity equal to or greater than 25% their votes.
For approval itself, the entity shall be responsible for the same Penalty of US$25,000 per year of non-compliance For failure to submit information within established periods, or to keep records up to date.
Meanwhile, as prescribed in paragraph 2 of point d) of Section 6083 of the Code, if any non-compliance continues for more than 90 days after notification, it will also be penalized. US$25,000 for each 30-day period During which the non-compliance continues after the expiry of the 90-day period.
As a final reflection on this brief description of the main characteristics and responsibilities of LLC companies, not everything ends in simple online creation. We must consider both sides of the coin, both Allocation of profits Foreign sources from a local perspective, as well as its Annual liabilities and substantial fines Before the US Treasury.
Moreover, it is necessary to be aware of it Current Automatic Financial Information Exchange Agreement Signed between the two countries, and their possible consequences for the inhabitants of Argentina.
Consider also the great responsibility of being the corporate vehicle’s representative before the IRS, compliance with formal obligations of annual tax or international informational declarations, and, by January 1, 2024, compliance with FINCEN’s ultimate beneficiary regime. .
Implementation of any foreign entity should not be based solely on ease of incorporation, administration or commercial image, but on comprehensive knowledge of international affairs and the accounting, legal and tax consequences arising from its selection.
