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FAQ

Does a NON-US company need to collect W9/W8 forms if they pay affiliates worldwide form the money they receive from companies within the US?
It depends on your particular situation. The W-8/9 forms are obtained from US (W-9) and non-resident recipients (various W-8 forms) of U.S. source income subject to reporting and/or withholding.The company or individual who is required to obtain the forms is referred to as a “withholding agent.” Withholding agents are all US persons, foreign persons with a trade or business in the USA, and all other foreign persons who have willfully entered into an agreement with the IRS to be treated as withholding agents.A UK based company with non-US owners, will be a U.S. withholding agent only if:You are considered engaged in a U.S. trade or business. If you are engaged in a U.S. trade or business, you are a withholding agent even if you have no permanent establishment in the USA.You have entered into an agreement with the IRS to become a withholding agentIn all other situations you are not a withholding agent and you are not required to obtain W-8/9 forms.
How do I invest in the UK,in S&P 500 mainly?
If you want to “buy and hold” you can buy shares through a stock broker.Your bank may offer this service as do other specialist companies such as Hargreaves Lansdown. It pays to do your research to work out which is going to be most appropriate for your individual circumstances.For most people this is through a stocks and shares ISA (I’m assuming that you are a UK citizen based in the UK for this answer without a convoluted tax situation).-If you want to “buy the S&P 500” usually the cheapest way to do this is to buy an ETF. All major ETF providers (iShares, Vanguard etc.) have their own version of an S&P 500 ETF.An important point to consider are the currency effects. This might make a difference, again based on you own individual circumstances. If the pound falls against the dollar over the period of your investment you will relatively benefit. However, if you need US dollars at some point in the future e.g. you are thinking of emigrating States side you will relatively loose out.Some firms offer a way to try and hedge this exposure such as iShares S&P 500 Monthly GBP Hedged (IGUS).If you plan to invest regularly some companies offer sharebuilder schemes which will save you from paying as much in commission.-If you want to invest in individual companies listed within the S&P 500 from the UK you will usually need to fill in some type of IRS W8 form, usually a W8 BEN. Nowadays this can be done relatively easily online. In the past you used to have to go to the US Embassy and be insulted by someone with a chip on their shoulder.If you are looking to invest this way through a stocks and shares ISA check that your provider has a facility to register for this or they might not let you buy US companies through this wrapper.-If after doing your research things still aren’t making sense don’t feel afraid to get some professional advice (which I’m definitely not claiming my answer to be!!!) ‡ your bank should be able to help. It’s one of those things where it’s a lot better to ask twice rather than pay twice.
Can we use the tax classification of "disregarded entity" for our LLC if all owners live and work outside the US?
First the disregarded entity classification is only available to an LLC that has only one owner or two owners that are married and file a joint US tax return.  Your question seems to imply that you have multiple owners, which means the LLC will need to file a US partnership or C-corp tax return.The LLC itself is a US entity and therefore would not need to file a form W8.  The only time I would see you needing to file a W8 is for payments the owners receive from the LLC, which may be subject to US withholding.The non-resident alien owners of the LLC may be required to file a US Form 1040NR tax return, depending on the nature of your income which may or may not be "effectively connected US income from a trade or business".  From what you have said in your question, it sounds like at least some of your income is "effectively connected US income".Sorry I can't give you more specific answers without knowing a lot more information about your operation.  I would suggest you hire a tax professional who is familiar with US and UK taxation, as there are quite a few technical issues you can run into in dealing with cross border taxation.
I am a U.S. LLC paying a British consultant who lives and works in the UK; do I need to withhold US taxes? Does he?
The correct answer to this inquiry is that a US person does not need to obtain a Form W-8-BEN nor withhold tax if the consultant is a non-US person performing services entirely outside the US. However, as discussed below, a US person might want to obtain the form anyway.Since I’m not getting paid here I will not prthe complete chapter and verse from the Internal Revenue Code and the Treasury regulations, but here are the essentials. IRC section 1441 requires a 30% tax to be withheld on payments of US-source “fixed or determinable, annual or periodic” (FDAP) Income to a non-US person. This rate can be lowered by treaty.The key here is “US-Source” Income. The income in question here is from performance of personal services. Such income is sourced according to where the services are performed. According to the question the services are being performed outside the US (in the UK to be more specific); thus, they are deemed to have a source outside the US and hence not subject to US withholding tax.Form W-8-BEN (the Form for individuals, as appears to be the case since the question refers to a consultant and not a firm, in which case Form W-8-BEN-E would be used) is only used to establish qualification for a reduced rate of withholding tax or exemption therefrom. This is stated in the instructions for the form under “Purpose of Form.” If a payment is not subject to withholding tax in the first place there is no need to establish exemption and hence the form is unnecessary.You would help yourself out in case of an audit by asking the consultant to specify in the invoice that all services were performed outside the US. Moreover, it might be that in case of an audit the IRS might choose not to believe that the services were performed outside the US. To be completely covered you might still want to ask the consultant to prthe form, which then creates a rebuttable presumption in your favor. But then you might need to file Form 1042 to report the payment and the fact that you didn’t withhold tax.As a final note, I would add that if the services were provided in the US (at least in part) the consultant would have to rely on the Business Profits Article of the US-UK treaty (provided it didn’t have a US permanent establishment). In that case you absolutely would have to obtain the form and be certain it’s properly filled out to support exemption from withholding tax.
A UK Ltd company is the sole owner of a US LLC (formed specifically for stock investing). How would taxation work between the UK and the USA?
Sure, I can address tax issues. A UK private limited company (UKPLTD”) has a 100% membership interest in a LLC. The LLC invests in stocks through a US brokerage account. So, the stock account generates dividends and gains from stock sales.Trading in stocks does not represent a United States Trade or Business as noted in Section 864(b)(2)(A). Given this fact, Treasury taxes dividends at a 30% fixed rate by having the brokerage firm withhold the tax (Section 881(a)). Any capital gains are not taxed in the US as the gain represents foreign source income (Section 865(a)(2)). And, Section 881(a) does not tax foreign source capital gains from property sales for a non resident.Below, I will detail two scenarios for this situation.If the UKPLD held the brokerage account, UKPLD as a UK tax resident may use the 2021 US UK Tax Treaty Article 10 Paragraph 2(a) for reducing the withholding rate from 30% to 5%. The UKPLD files a W8-BEN-E with the brokerage account and sites the particular treaty provision along with narrative on the provision. The 5% tax paid by UKPLD in the US may offset taxes due in the UK by UKPLD on the same income so no double taxation results.If the LLC holds the brokerage account, UKPLD may not use the 2021 US UK Tax Treaty Article 10 Paragraph 2(a) for reducing the withholding rate from 30% to 5%. Reason: Article 1 Paragraph 8 of the referenced tax treaty does not consider the dividends coming from the LLC as coming form a UK tax resident. Reason: the UK sees the LLC as a corporate tax entity. So, UKPLTD cannot claim treaty benefits on the W8-BEN-E. Without treaty benefits, the withholding rate sets at the above mentioned 30%.No issue comes from using the LLC for claiming no capital gains in the US. As the US tax law noted above allows no taxing here in the US. So, the LLC does not require any treaty provision for capital gains.In summary, the one member LLC filing as disregarded tax entity represents a problematic tax vehicle here. As UKPLD will pay tax twice on the dividends ‡ once in the US and then again in the UK. To remedy this situation, the UKPLD may consider owning the brokerage account.I have completed the above analysis based on this particular country fact situation. As the situation changes, tax results may change. www.rst.tax
How shall I create an invoice for a US company who is providing a work on a hourly basis? This is my first freelance work which I will be doing remotely from India and I don’t have any company in my name?
I would invoice directly from Paypal or you can also do this via Payoneer with Direct Invoicing.https://share.payoneer.com/nav/D...RegardsShaun
What is the best practices to handle cash and tax on income from Apple as a individual non-US iOS developer?
Whatever you do, your local authorities are going to require that you pay tax on the income before it actually gets to you and you can spend it.  Unless you're earning a /lot/ of money, it's not going to be worth the hassle of doing anything too fancy, and potentially illegal where you live (tax evasion...).  You might even end up having to pay tax twice with your suggested structure!If you can afford it now, find a local accountant, explain your plans to them, and how the money from Apple is paid to you, and ask them what to do.  They'll probably advise you to either just declare the income as yours (perhaps registering as some sort of 'sole trader' with your authorities), or form some sort of limited company (in your own country) with you as director/employee.If you're just dabbling, register with Apple as an individual, find out from  your local authorities if you have to register with them to trade, and declare your income on your usual tax return.  If you don't know how to do this, ask your tax authorities (HMRC, in the UK where I live, are very helpful - they want you to pay tax correctly after all!).  When you start to make enough to afford an accountant, go to them and perhaps change your structure then, don't worry about it until then.One thing to look out for whatever you do is if your country has a double taxation treaty with the USA - Apple will let you file a W8-BEN form with them to avoid them withholding US tax in the income, or allow a lower rate.  Again, your local tax authority (or, if not, an accountant willing to do a bit of research) will be able to advise on this.  If you're expecting a lot of sales in Japan, there's a similar procedure (Apple will advise on this).I live in the UK, and started out simply by registering with the govermnent as a self employed sole trader (very easy to do).  After my first year, with newly acquired help from accountants to determine that I was making enough to justify the time and expense, I formed a limited company, which I now own, am a director of, and an employee of.  I transferred the IP in my work to the company,
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