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

What the US treaty with Slovakia does for an LLC owner

Because Slovakia 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 Slovakia 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 Slovakia gets the treaty rate instead of the general 30% (IRS, IRS).

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

Documents for owners living in Slovakia

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 Slovakia, are short.

For a resident of Slovakia, this is usually your TIN if you are registered for business with a local tax office; most individuals in Slovakia do not have one, and the IRS instructions allow "None" when there is no foreign tax ID (OECD tax ID sheet).

Treaty and law references for owners in Slovakia

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 1993 income tax treaty. General effective date (IRS Table 3): treaty Jan. 1, 1993 (IRS treaty documents for Slovak Republic; 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 17 (Limitation on Benefits), which sets the tests a resident must meet to claim benefits.
• Article 24 (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 Slovakia itself also applies to you; check it with a local adviser.