Questions about taxes from USA income issued by Delaware llc or UK ltd

[inkogito]

We are PC game makers. Our publisher is from USA-California and we are going invoice them for services. I have company in UK (ltd) and I want create new company in Delaware (offshore llc).

I have questions:
I want invoice the game from Delaware llc or UK ltd. Are there some federal, VAT, withholding.... taxes in USA?.

There are no such taxes from UK probably. Invoice will be without VAT. Will I pay taxes only in UK?

And what about Delaware llc? Can offshore company incorporated in Delaware have an income from USA? Must such company pay tax from this income? How much?

Does anybody has experience with this?

[Freelancier]

Usually the publisher of something is also the seller of it, who then remits a percentage or a fee back to the developers, so what you're describing about invoicing them for services... how exactly are the CA company the "publisher"?

I can answer some of the easier questions, though: we have no national VAT in the USA. Each state has a sales tax, but that's only for products and services sold in a state where the seller maintains a physical presence.

If you have a corporate presence, you may be obligated to pay income or federal/state corporate taxes. But that's where you want to get an accountant familiar with both UK and US tax law involved instead of some anonymous people on a free web site giving you financial advice. There may be a way to set up the companies so that you reduce your exposure in all the countries in which you eventually operate, but you'll need a professional to help you get this right and to stay on the right side of the law.

[Harold Mansfield]

If you make money in the U.S you pay U.S. income taxes. If you set up a U.S. corporation, you pay U.S. corporate income taxes. We don't have VAT.

Don't understand this question:



And what about Delaware llc? Can offshore company incorporated in Delaware have an income from USA? Must such company pay tax from this income? How much?



Delaware is part of the United States. Why wouldn't a Delaware company be able to make income? Why wouldn't any company anywhere in the world not be able to make income? I think you've misunderstood Delaware tax laws.

You can search the Internal Revenue Service website for more information about it:
Internal Revenue Service (http://www.irs.gov/)

You will certainly want to get a professional to help you with this.

[inkogito]

yes, publisher is seller, and he will pay us share from sale. We will invoice this share from UK company. Then I think is no income tax or other tax in USA. But I live in Europe and Delaware has special 0 taxes for non residents and non USA income. Therefore I am thinking about setup of new company there.

[Harold Mansfield]

But I live in Europe and Delaware has special 0 taxes for non residents and non USA income. Therefore I am thinking about setup of new company there.
That's state taxes as it pertains to the state of Delaware. You're still responsible for Federal taxes. No state tax structure can shield you from Federal Tax liability.

[inkogito]

Harold its clear, for Delaware company. Therefore i had another specific questions for Delaware company and another for UK company. I think UK company doesnt pay taxes in USA, only in UK.

[Harold Mansfield]

Harold its clear, for Delaware company. Therefore i had another specific questions for Delaware company and another for UK company. I think UK company doesnt pay taxes in USA, only in UK.
Delaware is a state. They can only control your state tax liability. If you are incorporated in the United States (no matter which state) you are still responsible for Federal taxes. That has nothing to do with Delaware.

We here in America pay both state and federal taxes. I live in Nevada where there are no personal income state taxes, but I still have to pay Federal taxes and so will you. A state does not and can not circumvent the Federal Government.

The only benefit to you incorporating in DE is their corporate state tax laws. They do not control Federal. Uncle Sam will come for you.

[Freelancier]

However, if you do NOT have a US corporate (or LLC) presence, you do not necessarily pay USA taxes on your income (because the publisher would be considered a customer of your UK company, so no taxes would get paid because you're an out-of-country company). However, you would pay UK taxes on all revenues to your UK company. So this is why we keep saying you likely need an accountant familiar with taxing laws in both countries to make sure you get the best advice for how to structure your business to your advantage (there may very well be an advantage to having a DE LLC to receive money paid by your publisher, but I'm not clear on what that is based on what you're describing).

[Harold Mansfield]

If you just keep your company in the UK, any customers will doing business with you in the UK. Once you incorporate in the U.S. you will pay U.S. taxes.
Maybe I'm misunderstanding the issue, but what's the problem with just being a U.K. company and doing business world wide? Why do you need to incorporate in another country just because you have customers there? Seems like you're just asking to pay more taxes for no reason.

[Freelancier]

Seems like you're just asking to pay more taxes for no reason.
It might actually be less taxes, that's the fun of international tax treaties. But it definitely increases complexity when it comes times to do your taxes.

[Evan]

What purpose is there to invoice them from a US-based entity? You're making one transaction potentially a lot more complicated than it needs to be and adding potentially a lot of unnecessary expenses.