LLC for investing from abroad: the dividends, the forms and the estate tax question
You buy and hold. Index funds, dividend shares, Treasury bonds, maybe a stake in a friend's company. You live in , and the horizon is twenty years or more. For you the questions are quieter than a trader's: what the US keeps from each dividend, and what happens to the portfolio when it passes to your family.
Does an LLC help or hurt a long-term investor?
Mostly it organises. It rarely cuts US tax, and on the estate question it can't be relied on.
Dividend withholding
A one-owner LLC is invisible to the IRS for income tax, so your own treaty rate applies, exactly as if you held the shares yourself.
Capital gains
You likely pay no US tax on them already. Under 183 days a year in the US, a non-resident's gains on shares are exempt.
US estate tax
No IRS rule says how a non-resident's LLC interest is treated. A corporate election makes it plainly worse. Chapter 02.
Yearly paperwork
Form 5472 and a pro forma 1120 every year, even in a quiet year, plus the state's yearly fee.
Family or partner money
Several people can hold one portfolio under one operating agreement, with shares written down.
A separate account
The portfolio sits in a company account with its own records, apart from your day-to-day money.
US estate tax for non-residents: the US$60,000 line
This is the reason most long-term investors abroad look at a structure at all, so it gets the most care.
The US taxes the estate of a person who was neither a US citizen nor domiciled in the US only on assets "situated" in the US. On the IRS's list: US real estate, US marketable securities, debts of US persons and a US business. Off the list: securities that pay portfolio interest, bank deposits not used in a US business, and certain life insurance.
Two numbers do the work. If US-situated assets, plus adjusted taxable gifts, are over US$60,000, the executor files Form 706-NA within nine months of death. The tax uses the section 2001(c) rate schedule, from 18% up to 40% above US$1 million, less a unified credit that the Form 706-NA instructions put at US$13,000 in general.
Before any treaty. No gifts, deductions or foreign death tax credit counted.
Where an LLC fits, and where it doesn't
Shares issued by a domestic corporation are US property for a non-resident, under section 2104(a).
With default treatment the IRS hasn't said whether it looks through the LLC to the shares. With a corporate election the LLC is a domestic corporation, so its own shares are US property by the same section.
Shares of a foreign corporation fall outside section 2104(a). The price: often no treaty rate on dividends, your country's foreign company rules, and section 2104(b) on transfers made within three years of death.
Adviser signs off here. Estate planning across two countries depends on your domicile, your country's own inheritance tax and any treaty. Use this chapter to ask better questions, not to decide.
Dividend withholding estimator, by treaty country
Every quarter, the broker keeps part of each US dividend before you see it. The rate depends on who the IRS thinks owns the shares.
Ordinary dividends from US companies. Fund and REIT dividends can differ, and a company claiming a treaty must also pass its limitation on benefits test.
Rates: column 6 of the IRS Tax Treaty Table 1 (Rev. May 2023), with Hungary's treaty ended from 2024 and Russia's listed with a caution on the IRS treaties A to Z page.
Interest, gains and private stakes: what the US already leaves alone
A non-resident's long-term portfolio is taxed in the US far less than most people expect, LLC or not.
| What you hold | US tax for a non-resident | The rule |
|---|---|---|
| Dividend shares and US ETFs | 30%, or treaty rate | Withheld on each dividend |
| US Treasuries, registered corporate bonds | Usually 0% | Portfolio interest exemption, with a W-8 on file |
| Cash at a US bank | 0% | Deposit interest not tied to a US business is excluded |
| Selling shares at a gain | 0% under 183 days | Capital gains exempt unless in the US 183 days or more |
| US fund payouts from interest | Can be 0% | Interest-related dividends a fund designates in writing |
| US real estate, or a company mostly made of it | Taxed | Treated as connected with a US business |
| A stake in an operating US LLC | Taxed, and a US return | A partner in a US business is in that business |
The last two rows are where long-term investors get surprised. Buying into a friend's US startup as a member of its LLC makes you a partner in a US trade or business, with a US return to file. A stake in a US C corporation doesn't: its dividends are withheld and the gain on sale is generally exempt, unless the company is mostly US real estate. All of it from Publication 519.
W-8BEN or W-8BEN-E, and the disregarded LLC trap
The form decides your rate, and owners of one-person LLCs pick the wrong one all the time.
The trap runs both ways. A W-8BEN-E in the LLC's own name tells the broker the LLC is the foreign owner, which it isn't. A W-9 from a one-owner LLC tells the broker the money belongs to a US person. Either can end in the wrong withholding or a frozen account. The full form walk-through is on our W-8BEN-E page.
Back home: CRS reports, foreign company rules and fund rules
US tax on a buy-and-hold portfolio is small. Home tax is usually the bigger number, and a structure can change it.
Who reports the account
The US isn't part of the OECD's Common Reporting Standard; it exchanges under FATCA. A holding company's account at a bank or broker in a CRS country is reported to the countries its owners live in. Our CRS countries list shows who exchanges with whom.
Foreign company rules
A company that only holds investments earns passive income, the classic target of CFC rules. Many countries tax that income to the owner each year, paid out or not. A non-US holding company is where this bites first.
Fund rules, and a US one to avoid
Some countries tax foreign funds on a yearly deemed basis. In the US, an LLC that elects corporate status becomes a US person, and its non-US funds become PFIC holdings that need Form 8621. One more reason to keep the LLC disregarded.
Three ways to hold the same portfolio
There's no free option. Each route trades one problem for another.
| In your own name | US LLC, one owner | Non-US holding company | |
|---|---|---|---|
| US estate tax on US shares | Exposed above US$60,000 | No IRS rule; don't rely on it | Foreign shares sit outside 2104(a) |
| US dividend rate | Your treaty rate | Your treaty rate | The company's country's rate; 30% where there's no treaty |
| US gains | Exempt under 183 days | Exempt under 183 days | Generally exempt |
| Yearly filings | None in the US for most | Form 5472 and pro forma 1120 | Local filings, maybe accounts |
| Home country | Taxed as your own | Depends how it classifies the LLC | CFC rules likely in play |
| Yearly bill with us, from year two | Nothing | From US$69 (New Mexico) | US$1,159 (BVI) |
Comparing holding company countries on tax, treaties and cost is the job of our holding company guide; the BVI business company page has the full bill for that route.
Costs, and the order to do things in
Prices are our all-in figures with state fees at cost. Three steps need an adviser's sign-off, and two of them come before you pay us anything.
- Write down the portfolio
What you hold, where, its value in US$, and who should inherit it. Adviser signs off
- Choose the route
Own name, US LLC or holding company, with the estate tax and home tax answers in hand. Adviser signs off
- Form the company
For an LLC we file in the state you pick and apply for the EIN without an SSN.
- Write the operating agreement
Owners, shares and who may give the broker instructions, and what happens on a death.
- Open the bank and broker accounts
We set up the bank account with you. The broker gets the company papers and your W-8BEN.
- Move the holdings
Moving shares into a company can be a sale at home; buying new inside it isn't. Ask before you transfer. Adviser signs off
- File every year
Form 5472 for the LLC, a new W-8 by the end of the third calendar year after you signed it, and your home return.
Questions investors ask
Does a US LLC protect my US shares from US estate tax?
What withholding rate applies to US dividends in my LLC?
Do non-residents pay US tax on capital gains from US stocks?
Should my single-member LLC sign a W-8BEN-E?
Is a BVI holding company better than a US LLC for US shares?
Will my home country see my US brokerage account?
Changelog
13 November 2026: first published, from IRC sections 2001, 2104 and 864, IRS Publication 519 (2025), the IRS estate tax FAQ for non-residents, the Form 706-NA and Form 8621 instructions and IRS Tax Treaty Table 1.
A quiet company for a long-term portfolio.
A US LLC from US$99 in year one, or a non-US holding company if your adviser points that way. Either is formed from wherever you live, with the bank account set up with you.