You formed a U.S. LLC or corporation. Maybe for TikTok Shop, which requires one. Maybe for Shopify. Maybe someone told you it was the smart move. And nobody mentioned that U.S. LLC taxes for non-residents have a second half- the half your home country decides.
You sit at home. Sydney, London, Dubai, Toronto. You make every decision about the U.S. company from there.
The U.S. side is handled, or so you were told. And your home country does not touch the profit until you take it out.
Here is the question nobody asks at formation. Where are the decisions made?
A company can live where its brain is, not only where it was born. If you run your U.S. company from home, your home country may claim it, too. And the assumption that “no tax until I take money out” costs the most.
None of that is a reason to skip the U.S. company when you need one. It is a reason to answer three questions before it exists, not after the first profitable year.
Written for owners who run a U.S. corporation, partnership, or LLC from outside the United States. If you sell on Amazon through your foreign company and have no U.S. entity, your question is different, and this article covers it.
Why is “no tax until I take money out” the expensive assumption?
The belief sounds reasonable. The U.S. company is separate. It pays its U.S. tax, or none. My home country sees a foreign company and waits for a dividend.
Your home country has three ways to reach it sooner.
- It reads the entity its own way. What the IRS calls your company and what your home country calls it can be two different things.
- It looks at where the company is run. If the real decisions are made from home, your home country may treat the U.S. company as its own.
- It reaches profit you leave inside. Many countries tax the owner on what a company they control keeps, distributed or not.
Three different rules. One result. The dividend you were waiting for was never the trigger.
Keep this line. How your home country reads your U.S. company decides when you are taxed, what the income is called, and whether your credits survive. It almost never decides whether you are taxed at all.
Does your home country tax your U.S. LLC, and how does it read it?
Every country runs its own test. The U.S. reads your entity one way. Your home country may read it the opposite way. Two words decide it.
Transparent means the tax authority generally looks through the company to the owner. Opaque means it treats the company as a separate taxpayer. Opaque is not the same as tax-free until you distribute. The next two sections are why.
When both countries read it the same way, the structure is usually cleaner. When they split, the risk jumps: you can be taxed twice on the same dollar, or lose the credit that was supposed to prevent exactly that. Here is the board.
| Home country reads it as TRANSPARENT | Home country reads it as OPAQUE | |
| U.S. reads it as TRANSPARENT (income taxed through to the owner) | Usually cleanest. Often taxed in steps, with a credit or treaty lining them up. Relief is never automatic. | Potential double-tax risk. The U.S. may tax the owner now, your country may tax the payout later, and credits or treaty relief may not fully offset the tax. |
| U.S. reads it as OPAQUE (the company taxed as its own entity) | Mismatch the other way. Your country may tax you now, and credits may not fully offset the U.S. corporate tax. | More predictable. But where the company is run, and what your country does with retained profit, still matters. |
A U.S. corporation usually lands in the bottom-right square. Both countries see a company. That is the square where the next section does the damage.
An LLC or a partnership is where the two countries most often split. The U.S. looks through it. Many countries do not. Which square you land on is the review, not a guess.
What happens when you run the U.S. company from home?
This is the one that catches owners who did everything right on the U.S. side.
A company formed in the United States can still be treated as a company of your home country if you really run it from there. The test is where the business’s decisions are actually made.
What counts, and what does not.
- Strategy, budgets, pricing, major contracts, financing, and what happens to profit. These count.
- Posting videos, answering customers, and running the day-to-day. These do not.
- A U.S. representative with a limited role does not move it. The role is limited by design.
The shape we see most often: an owner forms the U.S. company, the structure is sound on the U.S. side, and a year later the owner’s own accountant at home flags that the company is being managed from the kitchen table. The exposure never came from the formation. It came from where the decisions were made.
The four answers below are for a U.S. company taxed as a corporation, which is what most TikTok Shop sellers form. An LLC the U.S. looks through gets a different set of answers, as shown above.
Same U.S. corporation. Same owner running it from home. Four different answers.
Canada. Canada may claim it, but the treaty hands it back to the U.S. Canada can still tax a small slice tied to work done in Canada. The cleanest case.
United Kingdom. The UK can treat it as a UK company too. The UK taxes its profit, with a credit for U.S. tax. Usually little extra tax, but a UK return every year.
Australia. Australia can treat it as Australian. Australia can tax its profit, with a credit for U.S. tax. And U.S. tax never turns into franking credits for the owners.
Dubai. The UAE can treat it as a UAE taxpayer. UAE tax is lower than U.S. tax, so the credit usually removes the cash cost. Registration and a UAE return still follow, with a fine if registration is late.
Here is what those four answers look like for a U.S. corporation with $150,000 in profit that pays $31,500 in U.S. federal tax and is run from home.
| Owner runs it from | Extra tax at home, after credit | What else follows |
|---|---|---|
| Canada | A small slice, tied to work done in Canada | A Canadian return every year |
| United Kingdom | about $6,000 | A UK return every year |
| Australia | about $13,500 | An Australian return, and the owners lose franking on the U.S.-taxed profit |
| Dubai | Usually zero; the credit covers it | Registration, a UAE return, and a fine if registration is late |
Illustration only. Assumes $150,000 of profit, 21% U.S. federal tax, no state tax, and that the home country does treat the U.S. company as its own. Whether it does is the question for your adviser there. Your numbers will differ.
For Australian owners, the table doesn’t include the higher cost. U.S. tax never becomes a franking credit, so profit taxed in the U.S. reaches the owner unfranked and is taxed again. About 13 cents more per dollar, at the top personal rate.
That is a question for your home-country accountant, in writing, before the company exists. Not after.
Ordinary formation providers never ask where the decisions will be made. That is the whole problem.
What about profit you leave in the company?
The last comfort is the retained profit. Leave it in the U.S. company, pay 21%, and nothing happens at home until a dividend.
Many countries have rules that reach the retained profit of a company you control, whether or not it is distributed. The 21% is deferral, not saving, and in some countries it is not even deferral.
Which rules reach you depends on your country, your ownership, and what the company does. One more question for the home adviser, and one more reason to ask it before the first profitable year.
What to settle before you form, or before this year closes
Who owns the U.S. company. You, your home company, a trust, or a partner. It changes every answer below.
How your home country reads the entity. Which square of the board you land on.
Who makes the real decisions, and from where. Decided before the managers are named, not after.
What your home country credits, and what profit you leave inside.
What it costs to put real decisions in the U.S. A real decision-maker there has consequences of its own, and a nominee who rubber-stamps fails in both countries.
We frame the questions. Your home-country accountant answers them, in writing. The CEO Blueprint writes that list for your country and your structure, so the two advisers are working from the same plan instead of guessing at one piece of it.
Settled first, the structure is designed on purpose. After a profitable year, we uncover a correction with a price in two countries.
| CEO Blueprint Running a U.S. company from home? Settle what your home country will do with it before it exists. We map your structure on your facts: who should own the U.S. company, how your home country reads it, where the decisions should sit, what each route costs in both countries, and the written questions your home accountant needs to answer. Starts at $1,250. |
What we do
We help foreign-owned brands set up a U.S. company that works with the IRS, your home country, and the marketplace you are selling on.
The CEO Blueprint maps your expansion based on your facts and frames the questions each specialist must answer. We work with tax attorneys and CPAs, and we introduce the right professionals for the work that follows. Home-country calls are theirs.
Frequently asked questions
My home country sees my U.S. company as a company. Does that mean no tax until dividends?
Not by itself. Treating it as a separate company is one question. Whether your country also treats it as one of its own companies because you run it from home is a second question. Whether it reaches the profit you leave inside is a third. All three have to come back clean.
I have a U.S. Business Representative. Does that mean the company is run from the U.S.?
No. The representative verifies identity for the platform and acts for the company within a defined role. Where the real decisions are made is a separate question, and that is the question your home country asks.
Can I just move the decisions to the U.S.?
Real decisions in the U.S. mean a real decision-maker in the U.S., and that brings its own consequences on the U.S. side. A nominee who rubber-stamps fails in both countries. It is one route, and it has to be designed, not announced.
I sell on Amazon through my foreign company. I have no U.S. company. Does this apply to me?
Not this one. Your question is on the U.S. side: whether your foreign company’s U.S. inventory creates U.S. tax, and what that costs with no treaty. That is this article. If TikTok Shop is next, you’ll form a U.S. company, and this one applies.
This article is educational and is not legal or tax advice. The examples are simplified and do not recommend an entity, ownership chain, management arrangement, or tax position. Home-country conclusions require a qualified adviser in that country, in writing. Scott Letourneau holds the MSCTA® credential, and we work with tax attorneys and CPAs to execute legal and tax matters. Tax rules and platform policies change.
VERIFIED EXPANSION/by NCP | Since 1997
