LLC
Limited Liability Company
- What it is
- A company with limited liability of its members — the equivalent of a familiar limited company
- The main point
- The owner’s personal property is separated from the company’s debts
- Where you encounter it
- The US and a number of other countries; in Europe equivalents have other names
- Taxes
- Depend on the country of registration and the owner’s tax residence
- An important nuance
- A foreign company may fall under CFC rules in your country of residence
In plain words
An LLC (limited liability company) is a company whose members have limited liability. Put simply: it is the closest equivalent of a familiar limited company. The key idea is the separation of property: the company itself is liable for its debts, not the owner’s personal assets, provided the owner has given no personal guarantees and has not abused the form.
The form is widespread in the United States, where the terms depend heavily on the particular state, and it is also found in other countries under the same or a similar name. In Europe forms with the same meaning have other names: Ltd, GmbH, Kft and so on. What they have in common is limited liability and the company’s separate legal personality.
For a client changing their country of residence, the main question is not the form but taxes at two levels: how the company is taxed in its country of registration and what happens in the country where the owner lives. After a move, a foreign company may fall under CFC rules: its income will have to be declared where you are tax resident. That is why the structure is always checked against the immigration plans.
Why an LLC is set up
What to check
- Country and jurisdiction
- Constitutional documents
- Reporting requirements
- Tax in the country of registration
- CFC rules for the owner
- Dividends and their taxation
- Members and shares
- The beneficial owner
- Registers and disclosure
- Opening an account
- Substance where required
- Bank compliance
How a company is usually set up
- 01Define the task and jurisdiction
- 02Check the tax consequences
- 03Company registration
- 04Opening a bank account
- 05Reporting and maintenance
What you need to know
- Limited liability is not absolute — personal guarantees remove it
- The terms depend heavily on the particular jurisdiction
- A company requires annual maintenance and reporting
- Setting up a company is easier than opening an account for it
- CFC rules may catch the owner after a move
Common mistakes
- Registering a company before calculating the tax consequences
- Mixing personal money and the company’s money
- Forgetting the annual reporting
- Assuming a foreign company is invisible to the tax authority
- Setting up a company where it will not later get an account
What this means for a BRIDGES client
We look at your company as part of the immigration picture: it evidences your source of income in due diligence and at the same time creates tax obligations after the move. Reconciling these two things before applying is cheaper than putting them right afterwards.
Frequently asked questions
01 /What is an LLC, in plain words?
A company with limited liability of its members, the closest equivalent of a familiar limited company: the company is liable for its debts, not the owner’s personal property.
02 /How does an LLC differ from an Ltd?
Mainly in the country and the details of regulation. The meaning — limited liability — is the same. The specifics depend on the jurisdiction.
03 /Does a company give a residence permit?
Not by itself. But in a number of countries business immigration is built around a company: there, genuine activity, employees and presence matter.
04 /What are CFC rules?
Rules on controlled foreign companies. Under them an owner may be obliged to declare a foreign company’s income in the country of their tax residence.
05 /Is it easy to open an account for the company?
Usually harder than registering the company itself. The bank checks the beneficial owners, the activity and the link with the jurisdiction.
06 /Is liability always limited?
No. Personal guarantees, abuse of the form and bad-faith conduct can lead to the owner’s personal liability.
See also
Read next
This material has undergone editorial review by BRIDGES.
Do you have a foreign company?
We will check how the move will affect it and your taxes — before the documents are filed.