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Superficially, you seem misinformed. Matter of factly, a great problem would be that you're requesting advice on tax evasion on a public forum.
I don't think the US offers any trusts that are tax-efficient in the way the questioner would like, but I'd be interested to know if I'm misinformed!
In which jurisdiction would you be starting the main company and the holding company? You mentioned you’d incorporate in the us, but for which entity? Both? I strongly recommend against a US person including non-resident citizens owning a foreign company, especially as a holding company or similar because the compliance is effectively impossible to manage without thousands of dollars in accountancy (see IRS form 5471…
Earlier quoted context omitted.
That's a good question! I don't see a reason why it shouldn't work. There shouldn't be a difference between a founder holding shares and an employee holding shares. Not sure how options play into it though.
You have to own at least 10% of the company for the so called „Schachtelprivileg“ (5% tax). Don‘t think this applies to options at all.
The greencard doesn't really matter except for making it simpler to get a tax ID for your new company in the US. but its not really a hurdle or benefit or factor, since non-greencard non-citizens can be tax persons to the US, which is really the most complex part. The holding company is just for limited liability, as well as being incorporated domestically in the US simply makes it more familiar for banks and the tar…
Interesting, thanks for your comment. The question is then if the US will also tax my German holding company even if I don't withdraw any money from it to my personal account. If the US also taxes my holding company as if it were my personal income then there is no point in setting up a holding company for which I have to fly to Germany to make the signature ;)
there are many permutations and variants that you aren't considering, you should contact a US CPA or US tax attorney, that has experience in international tax issues
In which jurisdiction would you be starting the main company and the holding company? You mentioned you’d incorporate in the us, but for which entity? Both? I strongly recommend against a US person including non-resident citizens owning a foreign company, especially as a holding company or similar because the compliance is effectively impossible to manage without thousands of dollars in accountancy (see IRS form 5471…
The idea was to incorporate the main company in the US as a Delaware C and the holding company in Germany.
If you're planning on making your money in the US in any case, you might want to just set up a US holding company, or just holding the assets directly.
If you do anticipate moving to Germany any time soon, also be aware of the US expat/exit tax, which is a kind of capital gains tax that triggers when you become non-subject to US tax jurisdiction. I can't really explain it much in an HN comment.
Expat Tax: https://www.irs.gov/individuals/international-taxpayers/expa... https://www.goldinglawyers.com/what-is-expatriation-us/
Form 5471 (one of the forms the IRS makes you file with respect to the proposed German holding company): https://www.irs.gov/forms-pubs/about-form-5471 https://www.goldinglawyers.com/form-5471-filing-rules/
Also as an aside, make sure you file FBARs (as an individual) and Form 8938 if you still have German accounts/assets that meet the criteria (they are different).
https://www.irs.gov/businesses/small-businesses-self-employe... https://www.irs.gov/forms-pubs/about-form-8938
The US is extremely mean to people with international connections. It's very difficult to remain compliant, but as a business owner you are significantly increasing the likelihood that you will be audited, so it's best to try to keep things as compliant as you can.
Get a tax pro. Anyone who has any connections with another country will need one, just to talk to if nothing else.
Again, I'm not a lawyer or a tax pro, just a sad dual-citizen who has been screwed by US tax compliance before...
The answer is No (as you can easily confirm by googling this). You should hold the shares personally. Holding your shares through a US entity is not an advantage. Holding your shares through a foreign entity will cause you to get penalized if you continue to remain a US tax citizen. The only situation where I could see an advantage would be if shares were held through a foreign entity and you hold them there (without…
Do you know how you would get penalised? Is there no similar instrument in the US which allows you to not withdraw money & delay the taxation event?
I was in the same boat as you when I started my company and looked into the same kind of setup. I researched it at the time but cannot remember the details.
In general, having a Green Card making you the same as a citizen when it comes to taxes, liability, etc. So it's actually more a business-specific and personal finance specific question as a founder.
You probably want to establish a corporation regardless. California is pricey for LLCs but other states like NY are actually dirt cheap to establish. You can do more complex incorporation but only an attorney can really tell you what makes sense.