Forming a US LLC while living in Germany: tax, residency and filings
Running a US LLC from Germany makes its profits taxable in Germany, whatever the Wyoming address says. What the Finanzamt looks at, what the IRS still expects, and when the structure earns its place.
8 min read
8 min read
A US LLC does not disconnect you from German tax. What matters is not the Wyoming address but the place from which the company is actually run. If you decide, negotiate and invoice from Germany, that is where the taxing right sits. Here is what the Finanzamt looks at, what the IRS still expects, and when the structure is genuinely worth it.
Place of management decides everything
German law attaches taxation to the place of effective management, and a desk in Berlin is enough to create a permanent establishment there, with no office in the United States. Profits then fall under German tax, whether or not you distribute anything to yourself.
On top of that, Germany classifies the LLC by comparing it to local company forms, a test known as Typenvergleich, following the finance ministry letter of 19 March 2004. Depending on management, liability and transferability of shares, the LLC is treated either as a corporation or as a partnership, which changes who is taxed on the profit.
What you owe in Germany
- Income tax or corporate tax on the profit, depending on the classification.
- Trade tax, the municipal Gewerbesteuer, as soon as there is commercial activity on German soil.
- Business registration with the Gewerbeamt and notice to the Finanzamt, foreign company included.
- VAT on your services, with reverse charge for EU business clients.
- CFC rules under the Außensteuergesetz if the LLC counts as a corporation, earns passive income and is taxed at a low rate.
What the IRS still expects
Even with no federal tax due, a foreign owned LLC files. You need an EIN, then Form 5472 with a pro forma 1120 every year, plus the state annual report and, in some states, a franchise tax. A missed 5472 starts at 25,000 dollars.
When it makes sense for a German resident
It makes sense to bill in dollars, to unlock Stripe or Amazon US, to serve American clients without a local entity, or to sell software internationally. It does not make sense as a way around German tax: management sits in Germany, and the setup is visible immediately.
LLC Place forms the company, obtains the EIN without an SSN, provides the business address, supports the bank application and files 5472, 1120 and the annual report. Your German return stays with your Steuerberater, and we hand over every document they need.
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