Advice with international tax structuring (UAE / USA / Poland)

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Hi everyone, just posting here looking to hopefully gather some advice on my situation. I’ll try my best to explain it as easy as possible.



Myself and my partner, own a USA LLC, it’s a e-commerce business. We also own a UAE mainland business and have been UAE residents for around 3 years or so. This year we have moved to Poland and will be there for more than the 183 days, therefore triggering tax residency there. (We have to be here for family so moving isn’t really an option).



Previously, due to the USA LLC pass-through tax, we have been fine as we have been living in Dubai. Obviously, now being in Poland that will be passed as Polish income (or so I believe).



We are happy to pay personal tax here as we only pay ourselves enough to live essentially. I will add we pay ourselves from our UAE company. That UAE does consulting for our USA LLC. It would be great if there was an option to not have to pay that either, but we are happy to do so.



Is there a way to navigate the USA LLC pass-through tax as that would be quite substantial this year? I did some research and the easiest way could be to pay the UAE business more so we will eventually have to pay tax, but not as much. Alternatively, I read that the UAE company could become the owner of the USA LLC as profits would be passed to the UAE business, therefore mitigating the USA pass through tax.



We are most bothered about USA LLC pass-through tax not so much personal.



Is it an option to literally not disclose the USA LLC to Poland as at the moment they have no idea that we have it. We only pay ourselves from the UAE business into our UAE personal bank accounts.



It would be great if anyone has any advice on this situation, honestly anything is welcome I’m all ears.



If there is anything else you might need to know about the situation I’ll do my best to answer!
 
Hi and welcome. There are a couple of problems with your setup.



First of all, you need to be aware that by working as director for any company while you are in Poland, you risk that the company builds a permanent establishment or becomes essentially a Polish company as the company has its place of effective management in Poland. Hence, it does not matter much what company you use, you will always have the same problems. Essentially, you can just incorporate in Poland and pay tax on your profits there.



There are some ways to migitate this, but there are caveats as well.



You could in theory incorporate a Hong Kong / Singapore company or use your UAE one. You will then need to hire directors in a jurisditction where this does not trigger any tax implications (or in the case of UAE, you just pay full profit taxes there). From there on, you can always add a US LLC for banking etc. should this make any difference to you. You will then have to become self-employed or hire yourself in Poland as engineer or whatever and then pay yourself a salary on the amount you need.



But then, you still have the CFC rules problem.


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As you can see, Poland is among the very strict ones and even if you are not the director of the company, they will still want money as you are trying to evade. Hence, you also cannot be the owner of the company. Maybe, your third friend is staying in UAE and can then own the company while you just get paid a low salary?



And then? What do you do with the profits amassed in UAE? You cannot take them back to Poland either. And even if you could, you would have to pay taxes on the distributed divdends.



Long story short, all others are paying taxes, so can you.
 
Last edited:
daniels27 said:






Hi and welcome. There are a couple of problems with your setup.



First of all, you need to be aware that by working as director for any company while you are in Poland, you risk that the company builds a permanent establishment or becomes essentially a Polish company as the company has its place of effective management in Poland. Hence, it does not matter much what company you use, you will always have the same problems. Essentially, you can just incorporate in Poland and pay tax on your profits there.



There are some ways to migitate this, but there are caveats as well.



You could in theory incorporate a Hong Kong / Singapore company or use your UAE one. You will then need to hire directors in a jurisditction where this does not trigger any tax implications (or in the case of UAE, you just pay full profit taxes there). From there on, you can always add a US LLC for banking etc. should this make any difference to you. You will then have to become self-employed or hire yourself in Poland as engineer or whatever and then pay yourself a salary on the amount you need.



But then, you still have the CFC rules problem.

View attachment 9212

As you can see, Poland is among the very strict ones and even if you are not the director of the company, they will still want money as you are trying to evade. Hence, you also cannot be the owner of the company. Maybe, your third friend is staying in UAE and can then own the company while you just get paid a low salary?



And then? What do you do with the profits amassed in UAE? You cannot take them back to Poland either. And even if you could, you would have to pay taxes on the distributed divdends.



Long story short, all others are paying taxes, so can you.

Click to expand...

I'm going to digest all of this and then come back to you with some questions if you don't mind lol, this is all new too me!
 
CyprusLawyer101 said:






I would assume that the e-commerce doea not generate incom3 from within the US? Is that the case?

Click to expand...

Yes it does - we sell our products in the USA
 
CyprusLawyer101 said:






Have you assessed tax implications in the US? Or you are already paying taxes there?

Click to expand...

Yes - we were told that we didn't have to pay taxes there by a tax firm in the USA as we don't employ anyone, don't have an office etc - the only thing we do have is a 3pl but according to the tax firm they classify as a contractor so they said the pass-through tax will be applicable.
 
Ok, planning may be available.

You need to consult an international tax lawyer if you wish to set up something solid. Let me know if you would like to talk on this.
 
The US side usually is not the problem. The main problem is your ties to Poland. You can engage in some sort of setups but they are basically all aimed very directly at tax evasion. I personally would not necessarily recommend it.
 
Poland has unique exemptions for a small number of corporate types (almost only US LLCs) but you have to discuss it with an international tax expert who is familiar with these laws
 
CyprusLawyer101 said:






Ok, planning may be available.

You need to consult an international tax lawyer if you wish to set up something solid. Let me know if you would like to talk on this.

Click to expand...

Absolutely, do I just send a DM?
 
daniels27 said:






The US side usually is not the problem. The main problem is your ties to Poland. You can engage in some sort of setups but they are basically all aimed very directly at tax evasion. I personally would not necessarily recommend it.

Click to expand...

Yep - that seems to be the case. Easiest option might be to change LLC into C-Corp, pay USA tax and then just be taxed personally in Poland. What do you think?
 
ilke said:






Poland has unique exemptions for a small number of corporate types (almost only US LLCs) but you have to discuss it with an international tax expert who is familiar with these laws

Click to expand...

What are the exemptions - do you know?
 
windsurfer said:






Yep - that seems to be the case. Easiest option might be to change LLC into C-Corp, pay USA tax and then just be taxed personally in Poland. What do you think?

Click to expand...



That's not how any of this works. The company has to pay tax where it is managed. If you manage it from Poland, it has to pay tax in Poland, like a Polish company.
 
JustAnotherNomad said:






That's not how any of this works. The company has to pay tax where it is managed. If you manage it from Poland, it has to pay tax in Poland, like a Polish company.

Click to expand...

Can it be double taxed or would it be either USA or Poland?
 
windsurfer said:






Can it be double taxed or would it be either USA or Poland?

Click to expand...

If you go to the IRS and ask to be taxed there, they will happily take your money. If you manage it yourself from Poland, they have the right to tax you again and most likely won't help you recover from what you already paid in the US.



I outlined some ways in my post before. You can hire a director in the US and then only play a minor role in the company as engineer. In this case, it is rightfully only taxed in the US if you structure it properly so that it fits the provisions in the DTA. If you manage the company yourself from Poland after all, they will tax it again. Better be careful.
 
Al4









daniels27 said:






If you go to the IRS and ask to be taxed there, they will happily take your money. If you manage it yourself from Poland, they have the right to tax you again and most likely won't help you recover from what you already paid in the US.



I outlined some ways in my post before. You can hire a director in the US and then only play a minor role in the company as engineer. In this case, it is rightfully only taxed in the US if you structure it properly so that it fits the provisions in the DTA. If you manage the company yourself from Poland after all, they will tax it again. Better be careful.

Click to expand...

Thats not exactly correct in terms of timing.



It could very well be that the tax treatment is confirmed in advance when structuring. Therefore virtually eliminating any risk of unexpected tax implications.
 
CyprusLawyer101 said:






Al4



Thats not exactly correct in terms of timing.



It could very well be that the tax treatment is confirmed in advance when structuring. Therefore virtually eliminating any risk of unexpected tax implications.

Click to expand...

Yes, he can get an advance ruling. But the problem with that is that he can apply for a ruling that the company is managed from the US and then only taxed in the US. But if he then effectively manages the company from Poland as I wrote, the ruling won't apply anymore and he will be taxed twice.



I guess you could probably help him set up a UK trust with a US LLC managed from Malta while he is hired as an engineer in Poland. That would probably make use of all loopholes but I guess it remains risky unless he really can entrust somebody else with management.
 
daniels27 said:






Yes, he can get an advance ruling. But the problem with that is that he can apply for a ruling that the company is managed from the US and then only taxed in the US. But if he then effectively manages the company from Poland as I wrote, the ruling won't apply anymore and he will be taxed twice.



I guess you could probably help him set up a UK trust with a US LLC managed from Malta while he is hired as an engineer in Poland. That would probably make use of all loopholes but I guess it remains risky unless he really can entrust somebody else with management.

Click to expand...

He could also get the advanced rulling in Poland.
 
CyprusLawyer101 said:






He could also get the advanced rulling in Poland.

Click to expand...

Yes, that's what I would advise in any case. But still, if he claims management in X in the ruling and then effectively manages from Poland, the ruling won't help.
 
Here are my 2 cents... (warning, long answer. I found your case interesting and really dove into it)



This is a fairly complex situation involving cross-border corporate structuring, personal tax residency, and transparency requirements, with three jurisdictions in play: USA (Delaware or Wyoming LLC, most likely), UAE (consulting entity), and Poland (tax residency and potential CFC exposure).





Current summary

You and your partner are UAE residents of ~3 years, now moving to Poland for >183 days, making you Polish tax residents.

You own a USA LLC (treated as a pass-through by the IRS), and a UAE mainland company (your operational entity).

The UAE company invoices the US LLC, and you personally get paid from the UAE company, not the US LLC.

You are primarily concerned about avoiding or reducing US LLC pass-through taxation, now that Polish tax residency could bring global income into scope.





Risks and Considerations



Polish Tax Residency

Once tax resident in Poland, global income becomes taxable under Polish law.

Poland does not ignore "look-through" entities like US LLCs. If you are the ultimate beneficial owner, Poland can tax that income.

Controlled Foreign Company (CFC) rules could be triggered if:

1. You control >50% of the UAE company or US LLC.

2. These entities are considered low-tax (which UAE likely still is).

3. Failure to declare foreign entities or income could eventually become a legal issue under the Common Reporting Standard (CRS), which Poland follows. UAE banks are now largely CRS-compliant.



LLC Pass through tax

As non-residents, if the LLC does not have US effectively connected income (ECI), you may not owe federal tax. However:

Sales into the US, warehousing, US-based employees or contractors, or other "US trade or business" indicators could trigger ECI, meaning the LLC must file and pay US tax.

Even without ECI, as pass-through owners, you are still required to file Form 5472 and maintain proper compliance. Failing to do so comes with significant penalties ($25,000 minimum).



Polish view of UAE payments

Poland may see UAE payments as a profit distribution or related-party transfer, especially if it is artificially reducing the US LLC’s profit.

They could apply transfer pricing rules or recharacterize the arrangement.





Your options



One; make the UAE company the owner of the US LLC



This is possible, and may reduce personal pass-through exposure.

Instead of personal ownership, make the UAE entity the sole member of the US LLC.

This way, the income passes through to the UAE entity, which is not taxed in UAE, and you draw salary from there.

Polish authorities may still apply CFC rules if the UAE company is 100% owned by you. However, this can create distance between personal and LLC profits.

Benefits:

Legally separates LLC income from your personal Polish tax base (at least in theory).

May reduce risk of US pass-through income being directly taxed in Poland.

Risks:

Polish tax authorities could still "see through" the structure under CFC or anti-avoidance rules.

Needs formal documentation and restructuring of ownership (US and UAE side).





Two; shift profit to UAE via service agreements



You already do this, but it must be at arms-length.

If you increase the payment from the US LLC to UAE company, you reduce US LLC profits.

Just be sure the UAE company is doing actual work (consulting, marketing, management) and you have proper contracts and invoices.

Again, transfer pricing principles apply, ensure this wouldn’t be considered artificial by Polish or US authorities.



Benefits:

Easy to implement.

Keeps LLC profit lower.

Risks:

Could be challenged by Poland or the IRS.

May increase visibility and audit risk.





Three; disregard/hide the US LLC



Poland is a CRS member, and UAE banks now report foreign ownerships and transfers.

The US does not share beneficial ownership details, but your personal transfers from UAE or US companies could trigger suspicion.

Failing to disclose a foreign entity or income source could lead to significant penalties and criminal exposure.



NOT WORTH IT.





What I would probably do if it was my situation



Transition US LLC Ownership to UAE Entity

Legitimize it as a corporate structure.

Polish tax might still apply under CFC rules, but you avoid personal pass-through.



Get Professional Tax Advice in Poland

Work with a Polish international tax specialist. They can help:

- Interpret CFC rules in your case.

- Review your UAE service agreements for transfer pricing compliance.

- Advise on filing/reporting requirements.



Do Not Hide the LLC

Polish tax authorities can receive data from CRS, FATCA, and EU cross-border reporting (DAC6).

Transparency now protects you more than secrecy.





I furthermore would likely research



Establishing a non-UAE holding company (e.g., in Singapore or Estonia) to own the US LLC and UAE company, further removing personal exposure.

Use tax deferral strategies like keeping earnings in retained earnings within the UAE entity, rather than distributing them.

Look into Polish expat tax schemes (if any) to reduce tax burden for new residents.



Your instincts are pointing in the right direction; ownership via UAE entity and adjusting profit flows are useful tactics. You are now in a high disclosure jurisdiction and should treat tax planning as a compliance first, audit proofing exercise. If this year is substantial income wise, even more reason to formalize things with help from someone experienced in Polish tax law for digital entrepreneurs.



The above is a your first step in the dozen or more conversations you soon will hold in the USA, UAE, Poland and perhaps in Singapore and or Estonia. Good Luck. This is not an easy quest and will cost you dearly. Afterwards you will however have a solid base which will work for at least 2-6 years provided you audit the setup every 2 years or sooner when substantial treaty or tax law changes are on the horizon. Question yourself if the extra and continuous cost for the setup outweigh the avoided tax.
 
CFC rules aren't the problem. If only I had a dollar for every time someone used the term CFC incorrectly...

And making the UAE entity the member of the US LLC is a really stupid move if there is ECI, because then there will be 30% branch profit tax.
 
JustAnotherNomad said:






CFC rules aren't the problem. If only I had a dollar for every time someone used the term CFC incorrectly...

And making the UAE entity the member of the US LLC is a really stupid move if there is ECI, because then there will be 30% branch profit tax.

Click to expand...

CFC can be a problem. Hence why I say to look into it. We dont have all the details from the Topic Starter so we can't rule out on whether they apply or not. I think it wont be the biggest problem based on info provided but do not know for sure.
 
JustAnotherNomad said:






CFC rules aren't the problem. If only I had a dollar for every time someone used the term CFC incorrectly...

Click to expand...

Exactly!











JustAnotherNomad said:






Yes, CFC rules can be a problem, but permanent establishment will be the real issue.

Click to expand...

Well, in his case. He can maybe avoid the PE issue no paper. But then, he will be stuck with CFC. See my frist answer: "Long story short, all others are paying taxes, so can you."
 
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