Do I have to file if my US LLC had no income?
Usually yes. The annual compliance set for a foreign-owned US company is decided by who owns it, not by whether it traded. Related-party transaction reporting in particular is due whether or not the company had income, so a company that spent the year dormant can still owe a return. The penalty is charged per form, which means a quiet year left unfiled is not a small omission. Treat the filing calendar as fixed from the point the company is formed and owned, and confirm each year which returns that ownership pulls in.
My US LLC has one foreign owner — is it ignored for filing?
It is ignored for one purpose only. A foreign-owned single-member limited liability company can be invisible for US income tax, so its profit is reported by the owner rather than by the company. That invisibility does not extend to information reporting: the company sits inside the related-party reporting regime in its own right. Clients meet this as a contradiction — an entity with no income tax return of its own that nonetheless has a filing obligation, with a per-form penalty behind it. Separate the two questions and answer each on its own footing.
Does registering my company in one state cover the others?
No. State registration sits alongside the federal filings and follows where the company is actually present and doing business, not where it was formed. A company incorporated in one state and operating in another generally has to register in the second as well, with its own annual return and fee. This is a part of the compliance set that is often discovered late, because nothing federal prompts it. Map the states the company touches before the first year closes, then keep that map current as staff, premises or contracts move.
What happens tax-wise when I take profits out of my US company?
Moving profit to a foreign owner can bring withholding into the picture, which is a separate mechanism from the income tax on the profit itself. The payer is the party responsible for getting it right, and the position depends on the type of payment, the owner's residence and whether a treaty applies. Because the withholding is deducted at source, an unclaimed treaty position becomes a refund claim rather than a lower deduction. Decide the characterisation and the documentation before the payment is made, not when the annual return is prepared.
Why does my accountant want every payment between my two companies?
Because related-party transactions are what the information return reports. Loans, management charges, goods, licence fees and amounts paid on the company's behalf by its owner are the substance of that filing. The reporting is transactional rather than profit-based, so there is no level of trading activity below which it stops. Reconstructing a year of intercompany movement afterwards from bank statements is slower and less reliable than recording it as it happens. A simple intercompany ledger maintained through the year turns the filing into a transcription exercise.
Is the information return penalty charged once or per form?
Per form. That is the detail which changes the size of the exposure, because a company with several reportable relationships, or several unfiled years, multiplies the same penalty rather than paying it once. It is also charged on the failure to file, so a company with no income and no tax due can still be penalised. The practical consequence is that the informational filings deserve at least as much attention as the income tax return. Where years are already missing, deal with them as a set and document why they were missed.
What counts as foreign income, and what is a foreign tax?
Foreign income is income sourced outside the country you are filing in — where the work was done, where the property sits, where the payer is resident, depending on the type. A foreign tax, for credit purposes, is a levy imposed by another country that functions as an income tax and that you were legally required to pay. Consumption taxes, property taxes and most social contributions are not, however real the cost. Sourcing is decided by rule, not by which bank received it. See the foreign tax credit.
What happens if the two countries disagree about which of them can tax me?
The treaty has a procedure for exactly that. You apply to the competent authority in your residence country, which takes the case up with its counterpart, and the two negotiate a position that removes the double taxation. Some treaties add binding arbitration if they cannot agree. It is slow and it runs on documents, so the practical work is preserving the record and filing protective claims while the clock runs. See our treaty work.
