US LLC Owned From Austria: Form 5472, Taxes and Filing

The US tax treaty with Austria and your LLC

Austria is on the IRS list of countries that have an income tax treaty with the United States (IRS treaty list). For an LLC owner, the treaty matters in two places.

Business profits and a permanent establishment

US treaties generally tax a treaty resident's business profits in the US only if they are attributable to a permanent establishment in the US, such as an office or a dependent agent. Taking that position on a US return is a treaty-based return position, disclosed on Form 8833; failing to disclose it carries a US$1,000 penalty (IRS Form 8833). Whether you qualify depends on the treaty's text, including any limitation on benefits article, so we read the actual treaty for your facts.

Treaty rates on Form W-8BEN

If a US payer pays you US-source income such as dividends, interest or royalties, the treaty claim on Form W-8BEN, naming Austria as your country of residence, is how you claim a lower withholding rate (IRS). Without a valid treaty claim, the general rate on that kind of income is 30% (IRS).

Documents for owners living in Austria

Most of what goes into the filing comes from the LLC's own records. The parts that come from you, as an owner living in Austria, are short.

For a resident of Austria, this is usually the tax number issued by your local tax office; Austria issues it only to individuals who are liable to tax (OECD tax ID sheet).

Treaty and law references for owners in Austria

Plain-language summaries; follow the links for the official text. Article numbers are from the treaty text on irs.gov.

Treaty

• The IRS lists the 1996 income tax treaty. General effective date (IRS Table 3): treaty Jan. 1, 1999 (IRS treaty documents for Austria; treaty text; IRS Table 3).
• Article 4 (Resident), which decides who counts as a resident for treaty benefits.
• Article 5 (Permanent Establishment), which defines a US permanent establishment.
• Article 7 (Business Profits), under which business profits are taxed in the US only if attributable to a permanent establishment.
• Article 10 (Dividends), on dividends.
• Article 11 (Interest), on interest.
• Article 12 (Royalties), on royalties.
• Article 16 (Limitation on Benefits), which sets the tests a resident must meet to claim benefits.
• Article 22 (Relief from Double Taxation), on relief from double taxation.
• Treaty benefits for income earned through a fiscally transparent entity, such as a single-member LLC, are decided under section 894 and Treas. Reg. section 1.894-1(d) (IRS Pub 515, Form 8833).

US law

• Form 5472: Internal Revenue Code section 6038A and Treas. Reg. section 1.6038A-1; final regulations T.D. 9796 treat a foreign-owned US disregarded entity as a corporation for this purpose (IRS Form 5472 instructions).
• US trade or business and effectively connected income: Code sections 864 and 871 (IRS Pub 519).
• Treaty disclosure: Code section 6114, Treas. Reg. section 301.6114-1, and the section 6712 penalty (IRS Form 8833).
• BE-13: 15 CFR 801.7 (eCFR).

The tax law of Austria itself also applies to you; check it with a local adviser.