Which european country has the lowest taxes?

What is the tax on a foreign company which is a partner of the LLC in USA? Will IRS allow that foreign company to take the profits back to its own country and pay the taxes?

• A foreign company enters in to the joint venture (JV) with a US national and that JV sets up a Limited Liability Company (LLC) in USA. One partner is a US National/Tax payer and the other is a foreign company. Apparently the tax law is that LLC will pass on the profits to partners and the partners will file their taxes in their independent capacity. In this case what are the tax laws for that foreign company? Consider that the foreign country, to whom this company belongs to, also has the treaty with USA to avoid double taxation. Will IRS allow that foreign company to take the share of profit back to its country of origin and pay the taxes in it's home country?

• Answer:

  This is an extremely complex area of the tax code. If you are in this situation, I would strongly suggest that you consult with a reputable international tax advisor. You should also check out http://www.irs.gov/publications/p515/index.html. The general rule is that a partnership - which is the default tax treatment for an LLC in the US - must withhold tax (at a rate of 35%) on a foreign partner's share of the partnership's income that is effectively connected with the conduct of a US trade or business. A foreign corporation that is a partner in the LLC should provide http://www.irs.gov/pub/irs-pdf/fw8ben.pdf to the partnership and can use that form to claim the benefits of a tax treaty, should the treaty allow the foreign corporation to claim such benefits - many treaties do not exempt a foreign corporation from being taxed on its distributive share of the effectively connected income from a US-based partnership. A foreign corporation files http://www.irs.gov/uac/Form-1120-F,-U.S.-Income-Tax-Return-of-a-Foreign-Corporation to either pay its outstanding liability or to claim a refund of taxes paid. A foreign corporation will also pay taxes to the country in which it is incorporated based on the laws of that country - if the country allows a credit for foreign taxes paid, then the foreign corporation would claim a credit for the taxes paid to the US, again based on the laws of the country in which it is incorporated.