Resident in Ireland - Income source from US

daRobot

My wife is close to starting a business selling products in the USA.

She will be registering a business there, the goods will be produced and sold there, and therefore will be paying local taxes.

But this will all be done remotely from Ireland, with the goods sold exclusively to the US market.

Although she has planned to do so, she hasn't been to an accountant/tax consultant just yet. But would perhaps someone be able to roughly detail, what her tax obligation would be for this type of set up, as an Irish resident with an income source outside the EU.

Any advice would be greatly appreciated.

Marcusm

Irish tax will be the least of her issues. If she is contracting with a US manufacturer and having goods delivered to various US states, she will have a large number of different juridictions, some of which will have sales/use taxes and some of which will not. Some of those will charge sales tax on deliveries to the particular state and some will not. If this is a cottage industry, he only person getting rich with be the state/local tax adviser in the US. There is also the issue of US federal income tax and, depending on the quantum of profits, alternative minimum tax.

From an Irish perspective, if she contracts personally, ie not through a company of any sort then she will most likely be taxed on the basis of it being trading income - it's slightly complicated in that while she is resident all of the activity of the trade is overseas. Only a tax adviser will be interested in determining whether it is a trade assesssable within Case I or Case III of Sch D. In the olden days, broadly pre 1989 this will have been a matter of timing. Nowadays, I don't think it matters a whit.

She needs professional advice and unless she has a US partner or the business is particularly profitable, i doubt that a compliant taxpayer would see much return.

daRobot

Thank you for your response Marcus, although I find the overall tone of your post needlessly negative, working off the baseless assumption that there's no money to be made, when your knowledge of the specific business is non existent.

She's aware of the regional variations within the US tax system (in this case it will have no relevance), and of course where to register the business (Delaware and Nevada both have very business friendly tax regimes for anyone who may have an interest).

My only question is in relation to her tax liability in this country, if there is one at all. She will own the LLC in the States, and pay corporate and income tax there. So realistically, she will have no commercial ties to this country and therefore it's of interest to me to know what revenue may require from her.

I'll be putting it to my accountant next week when he returns from holidays, but if anyone has a definitive answer in the meantime, I'm all ears.

CIARAN_BOYLE

Assuming that she owns a company in America which produces and sells the product I think the only Irish tax she would have to pay is in her Irish salary plus cgt should she sell the business.

That said revenue could decide that the company is resident in Ireland because the company's owner controller and decision maker is Irish resident in which case the company would have to pay Irish cgt.

Also she will have to file a f11 (assuming you don't alread do so) as she is now a director

Marcusm

daRobot wrote: »

Thank you for your response Marcus, although I find the overall tone of your post needlessly negative, working off the baseless assumption that there's no money to be made, when your knowledge of the specific business is non existent.

She's aware of the regional variations within the US tax system (in this case it will have no relevance), and of course where to register the business (Delaware and Nevada both have very business friendly tax regimes for anyone who may have an interest).

My only question is in relation to her tax liability in this country, if there is one at all. She will own the LLC in the States, and pay corporate and income tax there. So realistically, she will have no commercial ties to this country and therefore it's of interest to me to know what revenue may require from her.

I'll be putting it to my accountant next week when he returns from holidays, but if anyone has a definitive answer in the meantime, I'm all ears.

Just to be clear, I wasn't intending to be "needlessly negative"; while it is true that Delaware of Nevada may be chosen as states of association for the purpose of forming an LLC, this only deals with the state income tax for that state of formation. They are the defaults as those states do not charge income tax basd on association. the taxes i think you need to concern yourself with in the US are mostly sales taxes in the states to which you will deliver goods - these have been a significant barrier to the formation of internet enterprises in the US as, without critical mass, many vendors simply refuse to deal with more than a handful of states.

With respect to the use of an LLC, you will meet an Irish accountant who will tell you that it's a US company and will lay out the basis of taxation of salary and dividends from a US company. However, the reality in that an LLC is not necessarily a "company"/"corporation" for Irish/US tax purposes respectively.

I wish your wife well but beware that she will likely want to find a partner to deal with localisation issues.

Marcusm

CIARAN_BOYLE wrote: »

Assuming that she owns a company in America which produces and sells the product I think the only Irish tax she would have to pay is in her Irish salary plus cgt should she sell the business.

That said revenue could decide that the company is resident in Ireland because the company's owner controller and decision maker is Irish resident in which case the company would have to pay Irish cgt.

Also she will have to file a f11 (assuming you don't alread do so) as she is now a director

Be careful, depending on the arrangement of the formation document a US LLC may very well not constitute a "company" for Irish tax purposes. Indeed, the default classification for US tax purposes of an LLC is generally as a passthrough, ie not taxable in its own right, entity - this was the reason for its creation in the first place - to allow US mom/pop businesses the benefit of limited liability without changing the tax status of the profits flowing from their businesses.

Mr. Incognito

I am locking this due to the tone of the OPs response to freely offered advice.

This is not a free advice shop.

Pay an appropriate professional for professional advice and read the charter.