Discussion:U.S. Citizen purchasing Candian publicly traded stock wants to hold the stock in a U.S. LLC.
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Discussion Forum Index --> Tax Questions --> U.S. Citizen purchasing Candian publicly traded stock wants to hold the stock in a U.S. LLC.
| 2 September 2007 | |
| Does anyone see a problem from a Canadian standpoint if a U.S.citizen holds their Canadian stock through an LLC? Would you lose the benefit of the lower treaty withholding rate on the dividends? Any advice would be greatly appreciated. Thank you! | |
| 3 September 2007 | |
| From a CDN standpoint? Sorry, no can say, but from the US standpoint the treaty is double sided. If the US has a treaty on the income, then CDA also abides by the treaty. However, the source of the income is taxable first, so CDA could essentially tax the income first and then the US imparts the treaty benefits.
Is this public traded stock or closely held stock? Is the US citizen through the stock ownership actually operating a business in the US or is it only investment activity? Best bet for CDN answers is to speak to a CDN chartered accountant.... | |
| 7 September 2007 | |
| Thanks Sandy, I appreciate your time and knowledge-the stock is publicly traded and the LLC is purely a holding mechanism for the stock-investment only. | |
LKfromCANADA (talk|edits) said: | 10 September 2007 |
| Canada views an LLC as a regular C corporation. You would still get the reduced withholding on dividends. | |
| 11 September 2007 | |
| LK, Would the Canadian result be any different if the LLC elected to be treated as an S corp? | |
LKfromCANADA (talk|edits) said: | 20 September 2007 |
| Sorry, been away a few days.
No, Canada considers an LLC to be a corporation whether or not an election is made | |
| 24 September 2007 | |
| They just signed the fifth protocol (still needs to be ratified) of the Canada U.S. tax treaty ("Treaty") where an LLC will get treaty benefits.
http://www.fin.gc.ca/news07/07-070e.html Treaty benefits will be extended to LLCs beginning Jan 2008 if ratified in 2007. For years prior to that I think we need to ask the question how is the LLC being treated for U.S. tax purposes. If a corp then it should get Treaty benefits. If not then it would look-through to LLC to see whether the LLC member is entitled to treaty benefits. http://www.thefreelibrary.com/LLC+trap+for+the+unwary+in+Canada-a090388295 | |
