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

Documents for owners living in Malta

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 Malta, are short.

For a resident of Malta, this is usually your Identity Card Number if you are a Maltese national, or the 9-digit taxpayer reference number issued by the Inland Revenue Department (OECD tax ID sheet).

What the US treaty with Malta does for an LLC owner

Because Malta has an income tax treaty with the United States (IRS treaty list), an owner there has two tools that owners in non-treaty countries do not.

The permanent establishment test. Under US treaties, a resident's business profits are generally taxable in the US only when attributable to a permanent establishment there. An LLC run from Malta with no US office or dependent agent may have none. If a return relies on that, Form 8833 discloses it, and leaving it out can cost US$1,000 (IRS).

Treaty withholding on Form W-8BEN. For US-source dividends, interest or royalties paid to you, a treaty claim on Form W-8BEN naming Malta gets the treaty rate instead of the general 30% (IRS, IRS).

Neither tool changes Form 5472, which is due either way.

The legal sources behind this page (Malta)

The treaty articles and US provisions this guide relies on.

Treaty

• The IRS lists the 2008 income tax treaty. General effective date (IRS Table 3): treaty Jan. 1, 2011 (IRS treaty documents for Malta; 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 22 (Limitation On Benefits), which sets the tests a resident must meet to claim benefits.
• Article 23 (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 Malta itself also applies to you; check it with a local adviser.