Can a Non-US Resident Buy Stocks Through a US LLC?

In today’s article, we’ll be addressing a question that we frequently receive – the million-dollar question:

Can you, as a non-US resident, buy stocks through an LLC in the United States?

Let’s settle this once and for all.

Buying Stocks Through an LLC as a Non-US Resident

The answer: If a nonresident alien, also known as a non-US resident, establishes a US Limited Liability Company (LLC) exclusively for the purpose of buying and trading stocks, it is perfectly acceptable.

Generally, non-residents are required to pay income taxes in the United States for any income generated from a business engaged in the country. However, according to section 864b 2-a of the tax code, trading stocks through a brokerage is not considered engaging in a US trade or business.

Consequently, no income tax would be applied, assuming stock trading is the sole activity of the LLC.

Tax Implications

While no income tax is applicable in this scenario, it’s essential to note that the brokerage firm may withhold 30% of any payments to the LLC unless verification is provided that the individual is residing in a country with a tax treaty with the US.

In such cases, lower tax rates may apply. If there is no bilateral agreement between the US and the country of residence, the brokerage will withhold 30% for dividends or interest payments.

Final Thoughts

To sum it up, as a non-US resident, you can indeed buy stocks through a US LLC, provided that the LLC is exclusively engaged in stock trading.

It’s important to be aware of potential withholding by the brokerage and take necessary steps to provide verification for reduced tax rates if applicable.

Happy investing!

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