Set up Limited Company in UK - tax question

I have recently set up a Limited Company since moving to UK (I work as a consultant and setting up the compnay was by far by best option tax wise)

The question I have relates to how the IRS see any dividends I take out of my company once I have filled my UK HMRC returns.  I will take a basically salary and also cash out a significant amount of money/profit once my Corporation Tax liability has been assessed by HMRC.

Example base salary = $10K.
Expected dividend = $140k to $170k depending on contract work.

If the dividends are seen as pure income from the IRS standpoint I am thinking I will split my HMRC dividend by making my partner a shareholder in the company, with the aim to make sure we both hit the $85k exemption limit.  Does this make sense?

Any clarification on the above most welcome.

Thanks,

Simon

The short answer is --- NO

You have created a Controlled Foreign Company.  The dividend income is taxable in the United States at US tax rates applicable when paid.

There is no foreign earned income exclusion on these and as there is zero UK tax paid there is real US tax to pay even if this is tax efficient in the UK.

Who advised you on this structure?  It carries significant additional US reporting as well as larger US tax bills each year.

Guya,

Thanks for the prompt response.

I had no choice setting up the Ltd company as it is the only way the two clients I will work for will use subcontractors (mostly to do with professional indemnity insurance within the profession)

I will research into the Controlled Foreign Company status and deal with it the best way I can. 

Cheers,

Simon

Guya,

Thanks for the prompt response.

I had no choice setting up the Ltd company as it is the only way the two clients I will work for will use subcontractors (mostly to do with professional indemnity insurance within the profession)

I will research into the Controlled Foreign Company status and deal with it the best way I can. 

Cheers,

Simon

Simon
I'm in exactly the same predicament as you and wondered if you'd gotten anywhere with this issue..... Pls keep me posted!

Thanks