Registering my own company and working for it overseas

G

gino

Registered Users (C)
Hi Everyone,

I am a green card holder and will be applying for my citizenship in Dec. 2009. I have been unemployed for awhile now and been thinking about registering my own company and then working for my company as a consultant overseas. I have a lot of experience and good education and I get lots of job offers from companies that work overseas. In that case I will be working for an American company. Before doing that, I need some expert advice from you guys. Would appreciate receiving some practical and sound advice!

Gino
 
Non starter

Wouldn't even consider that option as there is clearly no intent (in the context of INS rules) to maintain residency.

Would be different, if you have employment with a company that sends you abroad for a certain period of time.

Incorporating for the sole purpose of conducting business abroad as the sole employee of your company won't fly 10 feet. Especially if you have no US related history with your own company.

Further, the tax issues you will face are killing your application right away. Doesn't matter, if you file your tax statements. You likely will not have to pay taxes in the US and thus futher establishing that you have no ties to the US.
 
Nope, wrong. With most countries there are agreements against double taxation and once you work abroad for more than 180 day you have to pay taxes there. Though still file your US tax return, but not actually pay taxes as you paid those already abroad.

Further, as sole owner of the company (Incorporated, only employee) the issue of forgein taxation is going to kill his bussiness in about 45 seconds and he won't be able to find an accountant that can adequately (and with reasonable financial spending) represent him.

Been there, done that. No chance of success.
 
MartinAub said:
Nope, wrong. With most countries there are agreements against double taxation and once you work abroad for more than 180 day you have to pay taxes there. Though still file your US tax return, but not actually pay taxes as you paid those already abroad.
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Fair enough. My response wasn't specific. Yes, he'll need to file a return, and no, he won't need to pay taxes to the US. But my point is that not having a tax liability to the United States doesn't make him a non-resident -take the case of someone who lives in Buffalo and commutes to Canada every day to work. The Canadians will take their taxes, and once all is said and done he will have zero tax liability to the US - but he'll still file a 1040 and be a US tax resident.

Further, as sole owner of the company (Incorporated, only employee) the issue of forgein taxation is going to kill his bussiness in about 45 seconds and he won't be able to find an accountant that can adequately (and with reasonable financial spending) represent him.
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I agree that the N-470 is a non-starter, but I don't see how foreign taxation would "kill" his business.
 
Ok, your construct is a simplified one, mine was perhaps a little over the top.

Anyway, I have my own business and declined to extend a contract in Germany past 180 days as I would have to pay taxes there, plus social security etc and what have you.

Getting this reconciled with your company taxes (from a mere filing perspective) and your personal filings, plus the issue of insurances needed etc will kill the business as you either will do (by no means intentionally) break laws left and right as there isn't a freaking lawyer and accountant one affort to pay to get that figured out.

BTW, I have had a registered company in Germany and now have one in the US (for many years). I reasonably know what I am talking about.
 
I have to agree almost entirely with Martin, it is a non starter and the scam would be seen for what it was immediately.

Martin is your tax situation in Germany any different as a German citizen from say a US or UK citizen?
Just wondering.
 
McTavish,

it isn't. However, being German (and I only mean this by terms of growing up there) you learn about the specifics of the legal environmen. We all know how difficult it is to ge aquainted to "common" law that everyone knows in the US yet are unique to the US.

i.e. In Germany no police would ever stop you on the Autobahn and just pull you over. Whilst they on rare occasions do this, it would always be to a parking lot for safty reasons.

With regards to the taxation, there is no difference as a citizen, however, if you are establishing a business in Germany many other aspects apply. i.e. IHK which is an organization entrusted by the Government to which you you have to pay dues for employent education regardless of the fact wether you have employees or not.

What I am trying to say here is not the issue of conducting business in a foreign country - enjoy doing it and trust me, you on't succeed (if you want to stay legal), the issue is that with all the paperwork involved as a sole owner of a company (incorporated or otherwise) you will ABSOLUTELY show enough CAUSE to USCIS that there is no intend to stay in the US as you conduct your business abroad and pay your taxes there.

Even if you have a 5 million home and all in the US won't matter as your financial obligations (property tax aside) do not reside in the US.

Further, you need to really figure out how VAT and all effects you. How you can declare that on a US tax return (remember VAT is something that doesn't exist in the EU and please do not try to educate me on this, VAT got demolished in Europe more that 30 years ago, the term is still used, but the actual meaning is different)

Yet, in the US (and Switzerland) you still have (in certain areas) VAT.

The whole issue of sending out invoices to customers (base for your taxes) and reconciling those with applicable taxation laws and the dues you have to pay to certain enteties in the area where you conduct your business becomes a total nightmare.

As I said earlier - whilst there may be no intent to break the law - anyone doing this will, unless they are total experts and then their line of business would be international accountant and I am yet to find one and my brother in law is German and US CPA and boy do we have fights.

Also, in Germany; as a regular employee there is no legal requirement to file a tax return since all your taxes are already paid out of your paycheck through your employer. Thus, if you have no other source of income, you don't file a tax return (unless you need to claim expenses)
 
MartinAub said:
Further, you need to really figure out how VAT and all effects you. How you can declare that on a US tax return (remember VAT is something that doesn't exist in the EU and please do not try to educate me on this, VAT got demolished in Europe more that 30 years ago, the term is still used, but the actual meaning is different)

Yet, in the US (and Switzerland) you still have (in certain areas) VAT.
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No wish to educate you Martin but I don't understand your satement.
I understood that VAT was alive and well in Europe and didn't think it existed in the US.

I have to admit that VAT was one of the things I was happy to see the end of when I moved, I had no issues with the actual workings of it, I just hated doing the returns every 3 months.
 
Taxes ..

Don't forget the tax treaties only cover certain classes of income.
Wages are easy but dividends, cap gains etc are harder. This means you need to be careful with overseas corps.

Clever accountants structure corporations to try and avoid the mess but it's not cheap .. and plenty of litigation and audits on it.

Bottom line is the tax aspects are a *whole* lot more complicated than immigration law, especially as the US wants tax on global income.

What finally pushed me over the edge on the N400 filing was the the IRS considers me a citizen for I think it's 5-7 years, even if I gave up the green card! The fingerprint and photo at the airport thing was the last straw!
 
McTavis,

Wiki it. VAT would (and does) increase the value of mercendise each time it tades by the VAT percentage, to get rid of that, it is now based on the actual profit, rather then the value of the goods.

Actually a bit more complicated than this, but this isn't the forum to discuss this.

i.e. (sorry for that) Whilst in German it is often still called Mehrwertsteuer (VAT) it is actually Umsatzsteuer (Tax based on trade/turn over)

If you are a computer guy and work with SAP, you will still find it being called MWST in the database. This is utterly incorrect and many (so called recruiting companies) have no factual clues.

Unfortunately - as it is with USCIS - and the reason for forums such as this, there is a difference between what you say and what you mean.

VAT does not exist in Europe, except for Switzerland. Switzerland has promissed to get rid of it due to harmonization soon.
 
MartinAub said:
What I am trying to say here is not the issue of conducting business in a foreign country - enjoy doing it and trust me, you on't succeed (if you want to stay legal), the issue is that with all the paperwork involved as a sole owner of a company (incorporated or otherwise) you will ABSOLUTELY show enough CAUSE to USCIS that there is no intend to stay in the US as you conduct your business abroad and pay your taxes there.
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Really Martin, this is over the top. There are probably tens of thousands of Green Card holders who have business that operate in multiple countries; and doing paperwork does not show cause that you have abandoned residency.

I don't doubt that it's more complicated to run a business overseas, especially if it's small. It's not the end of the world, and there are plenty of accountants that specialize in cross-border tax issues. I had the pleasure of working with one when I moved from Canada to the US, and there was a little more paperwork and a little more expense.

There's all sorts of mechanisms under tax treaties for one to have US and German corporations and figure out the right way of demarcating income as personal income versus dividends, depending on how the nations treat each and their obligations under the tax treaty. Certainly for a small one-person business I would guess that the cost of setting up said structures would likely outweigh any financial gains of working abroad, but you should NOT speak in absolutes. It's not impossible, and it doesn't guarantee the loss of a Green Card.

Even if you have a 5 million home and all in the US won't matter as your financial obligations (property tax aside) do not reside in the US.
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Again, untrue.

Yet, in the US (and Switzerland) you still have (in certain areas) VAT.
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You have a sales tax in the US, not a true VAT. The closest parallel I can think of in North America is the Canadian GST. I don't recall there being any VAT equivalent in the US; I believe Sales Taxes are remitted as a percentage of gross sales, not as (tax collected - tax paid).
 
Not quite...

Picture one man working abroad and I do mean it litarally as this is what the question was about.

Got a little side tracked; I agree. But one person as sole proprietor working exclusively abroad for a US company he owns with NO partners or other employees? That in terms being valid for immigration?

Come on - that's a tad bit difficult to swollow

Sorry on the VAT, you need to read further.
 
barr1025

you NEED to differenciate, thus your info is wrong.

There is no VAT and you can't call it a sales tax. Funny thing here is to be precise, which is NOT the case.

A sales tax per se has nothing to do with VAT.
 
Nope, it is the very definition of it.

Whilst there is technically a value added tax, the determination of such tax has changed and thus (by means of living language) doesn't exist any longer in it's original definition.

Hence (and do I love the German language for being preceise) VAT is gone and it is a tax based on revenue and not soley on adding x% each time you trade goods and services (which is what VAT is)

But again, this isn't the point the OP made.

His question was about conducting business abroad as sole proprietor. By any means, allegiance to a country (by virtue of supporting it) comes from taxation and if such business is undertaken, you do not pay taxes in the US (since you don't conduct your business there) and thus by all means abolish your residency requirements or if nothing else your sincere desire to reside in the US. After all, if that business takes off abroad, why live in the US?
 
MartinAub said:
His question was about conducting business abroad as sole proprietor.
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Again, apologies for being pedantic, but I don't recall seeing the proposed legal structure in the original post. I would agree with you that as a sole proprietor it'd be a non-starter, but there are a number of different legal structures he could operate under.

if such business is undertaken, you do not pay taxes in the US (since you don't conduct your business there) and thus by all means abolish your residency requirements or if nothing else your sincere desire to reside in the US.
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Again, residency (for immigration or tax purposes) has absolutely nothing to do with having a tax liability to a particular country, or the US. One can be a US tax resident with absolutely no US tax liability.

After all, if that business takes off abroad, why live in the US?
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Why not? There are plenty of folks that do this.
 
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