In addition, HM Revenue and Customs (“HMRC”) and the Canadian Revenue Agency (“CRA”) have traditionally regarded US LLCs as capable of having share capital which has its own implications for cross border tax planning. partners) themselves who are taxed on those profits as entitlement to them arises, irrespective of whether such profits are actually distributed or retained. On the other hand, the profits of a transparent entity, such as a partnership, are treated as profits of the members (i.e. shareholders) are then generally only taxed in relation to any profits actually distributed by way of dividend. Why is the distinction important for tax purposes? The profits of an opaque entity, for example a company, are treated as its own and the company itself is taxed thereon. In each case the court had to decide whether the appellant was entitled to double tax treaty relief.įor both UK and Canadian tax purposes US LLCs have commonly been considered to be opaque, which contrasts with the US tax position under which (in the absence of an election to the contrary under the “check-the-box” regulations) such entities enjoy tax transparency. Similar issues were discussed and ruled on by the Tax Court of Canada in TD Securities (USA) LLC v The Queen last month. A recent decision of the UK’s First Tier Tax Tribunal in Mr Swift v The Commissioners has raised doubts in relation to the UK tax treatment of US limited liability companies (LLCs) and members’ interests in such entities.
0 kommentar(er)
