Question 1

LLC vs C-Corp: which is better for tax purposes as a non-US founder?

Accepted Answer

For most non-US founders without US investors, an LLC taxed as disregarded (single-member) or partnership (multi-member) avoids US entity-level tax — profits flow through to your personal return in your home country, and the US only taxes US-source FDAP income (typically 0% if no ECI). A C-Corp pays 21% federal corporate tax on worldwide income and triggers GILTI for foreign shareholders, so unless you plan to raise venture capital in the US or issue green-card-bound equity, the LLC structure is usually more tax-efficient. The USLaunchStack Tax Planner maps your country of residence to the optimal structure.

Question 2

Will I be double-taxed as a non-US founder with a US LLC?

Accepted Answer

Not necessarily, due to the US income tax treaty network (66+ partner countries). Your home country's tax on the LLC's pass-through income often qualifies for a foreign tax credit, which can eliminate the double layer. The US itself does not impose entity-level tax on a single-member foreign-owned LLC — profits are taxed only in your home country. Treaties with countries like Germany, UK, Canada, India, Singapore, and the UAE further reduce withholding on dividends and interest. The Tax Planner maps your specific country's treaty provisions to the structure you're considering.

Question 3

What is FDAP tax and does it apply to me?

Accepted Answer

FDAP (Fixed, Determinable, Annual, or Periodical) income is the umbrella term for passive US-source income paid to foreign persons — dividends, interest, royalties, and rents. By default the US withholds 30% on FDAP payments. Most US income tax treaties reduce this rate: 0–15% for dividends, 0–10% for interest, 0–10% for royalties depending on your country (the Tax Planner covers the rates for the 66 treaty partners). If your LLC has no FDAP payments to foreign persons, you may not owe any US withholding.

Question 4

Do I need an ITIN if my LLC has no US employees?

Accepted Answer

An EIN (Employer Identification Number) is sufficient for most LLC-only operations: opening a US bank account, filing Form 5472, and signing contracts. An ITIN (Individual Taxpayer Identification Number) is required when you need to file a personal US tax return — for example, to claim a treaty-reduced withholding rate on dividends you receive from your own corporation, or to file a US individual return (Form 1040-NR). Non-resident single-member LLC owners generally do not need an ITIN for the entity itself.

Question 5

What is GILTI tax and do foreign-owned C-Corps have to pay it?

Accepted Answer

GILTI (Global Intangible Low-Taxed Income) is a Section 951A inclusion designed to prevent multinationals from parking profits in low-tax jurisdictions. Any US C-Corp that is more than 50% foreign-owned must include in its US shareholders' income the excess of certain foreign subsidiary earnings over a 10% return on tangible assets. Foreign individual shareholders then pay up to 37% on the GILTI inclusion — effectively making a low-tax-jurisdiction holding company less attractive for individual (non-corporate) foreign owners. Holding-company structures and Section 962 election can mitigate some exposure. Always have a qualified US tax professional review GILTI scenarios before choosing a C-Corp.

Plan your US tax structure before you form

Your Business Profile

LLC Pass-Through Tax (Single-Member)

C-Corp Federal Tax (21%)

FDAP vs ECI: The Critical Distinction

Your Home Country Tax

QSBS Exclusion (C-Corp Only)

Your Action Plan

Key tax concepts for international founders