If you are a foreigner, e.g. no US resident, you are fully taxable with your US LLC profits in your country of residence, e.g. let's say Germany. There is no way to get a tax discount or any other simple magic hack. However, if your lifestyle allows, to become a digital nomad (not living in a single country for more than 183 days) in theory you may operate tax-free (only sales outside of US, domestic US sales are taxable). The big benefit of a US LCC in this case is, that it's 100% trustworthy limited liability company that does not automatically enforce taxation residency for you individually and can be operated from anywhere in the world. No UAE, no Caribbean islands shell companies needed, that ring all bells and will keep business away.
Thx. Am I taxable in my country of residence even when the money is kept on the LLC's bank account in the US?
Let's say a small side hustle earns me $200/month. The money is kept on the LLC's bank account. Later on, when I visit the US, the LLC is paying for traveling and hotel. Would I still need to pay taxes in my country of residence?
(Even though you probably aren't a lawyer, I'd still appreciate your thoughts on this).
I'm not a tax advisor and most of my knowledge is about Germany, but if you have no physical business in the US, like office and proper residency (decision-making process), you have to tax in your own country. Tax evasion would be easy if that would not be the case. It's not only about profits but even the expenses need to be taxed/settled under e.g. German law.
So if your LLC collects $200/months and pays $100 for operations, you need to provide both positions to the German tax authorities, not just the $100 pro-forma profit.
They treat the LLC as "shell company" unless you have an office and can document that the business decisions are made there (because you are there a decent amount of time or have a hired manager and you just a shareholder).
US authorities have to report to the German authorities that you own an LLC, not the fiscal details, but the business facts.
If you are successful in your business, and your LLC is really making money, you can reduce your taxation duties in your current home country if you move abroad for half a year. If you don't stay longer than 182 days in one country, you are not taxable (except US citizens). This is also true if you move within the EU every couple of months. Of course this is not easy and comes with a lot of expenses and mental load (you MUST leave a country or you will have to tax everything their AND you have to document your stays carefully).
The LLC works great if you do that. The German GmbH does not. Hence starting an LLC can make sense if you plan to start this nomadic lifestyle. Owning a property (home) causes tax residency in Germany, so this is another story to take care of, if you are lucky enough to own something.
