# Moving from US to Italy with an LLC selling physical goods



## amont4 (Jul 11, 2019)

Hello,

My spouse and I are planning a move from the United States to Italy. We operate a business in the US that we hope to continue after we move to Italy. However, we're unsure of the right way to structure and conduct our activities. I've contacted multiple accountants and have received conflicting advice or no response. I'm hoping to see if anyone who has been there, done that could help shed some tips on how to proceed, or provide a recommendation for an accountant who could help.


 *Business entity:* LLC (Limited Liability Company) registered in the US
 *Only two partners:* myself (US-Italian dual citizen) and my spouse (US citizen)
 No employees
 No warehouses or offices; it's all home-based
 *Nature of business:* We sell self-manufactured electronic devices
 We anticipate that all *sales will occur via the internet* (through Amazon, eBay, our own website, etc.)
 *Inventory:* will be stored primarily in the US (at a family member's home, and at Amazon warehouses), but eventually we might like to store some at our apartment in Italy
 We will be living in Italy and *managing* the online business from our apartment there

Ideally, we would prefer to keep the business completely in the US and not have to open an Italian business entity. However, I'm not sure if this is officially possible, given that we as the management of the company would be residing in Italy.

Preferably, we would like to continue developing and testing new products at our apartment in Italy, repairing broken parts, storing some inventory to sell in the EU, etc. However, if these activities are enough to trigger the need for an Italian entity, we could try to do them only when we spend time back in the US.

Our objectives are to:


 Minimize any startup costs and taxes (especially possible double taxation, which it sounds like is a risk if we take dividends from the company)
 Avoid issues with having a "Controlled Foreign Corporation" in the eyes of the US
 Eventually be able to sell products in the EU market
 Have personal liability protection wherever the products are being sold

Here are some of the options we've read about:


 not registering anything in Italy, keeping everything in the US (one Italian accountant mentioned the possibility of changing the "Legal Representative," which in the US context I assume means the managing members, of the company to someone residing in the US)
 opening an Italian branch of the company (but this still seems to trigger the Controlled Foreign Corporation rules)
 opening a partnership (not a limited company) in Italy, and that company can sell products to my LLC in the US (but then, it seems like the fact that the management of the company resides in Italy may still be an issue)
 becoming a "contractor" of our own company while living in Italy and then using the Foreign Earned Income Exclusion (I read about this being recommended by Bevdeforges as an option for some people with similar situations, but if we're also managing the company, I'm not sure if this works)

Sorry for the huge brain dump, but hopefully it helps give context of what we've considered so far. Any advice or similar experiences to share?

Any help is much appreciated. Thank you!


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## Bevdeforges (Nov 16, 2007)

Face it, you're going to be working in Italy, no matter what sort of spin you want to put on it. You're going to have to register some sort of business entity in Italy in order to pay the appropriate taxes and social insurances - whether as a "branch" of the LLC in the US or simply as an Italian based business.

Whether or not you wind up being considered a "Foreign Controlled Corporation" depends on a very thorough reading of the relevant laws, regulations and form instructions - plus, how you choose to report your business results to the IRS.

I'm not familiar with Italy's business laws, but you may want to look into the possibility of registering your "branch" as a foreign employer in Italy. Then, you pay yourselves "salaries" and pay the necessary taxes and social insurances as required under Italian law. You would still be "working overseas" as far as the US law is concerned and your salaries should be subject to the FEIE provisions and, with the proper documentation, you could avoid the US "self-employment tax."


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## Nononymous (Jul 12, 2011)

I have no idea whether it would be useful, but I might explore the Estonian "e-residency" or similar if it could reduce the red tape and/or taxes owed.


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## 255 (Sep 8, 2018)

amont -- You may be able to mitigate some of the "Controlled Foreign Corporation" issues by forming a foreign corporation/branch, wholly owned by your US LLC, and designate it a "Foreign Disregarded Entity." This way, all income/expenses of the foreign entity "roll-up" to your current company. The new "deeming" rules in the new US tax law take away a lot of the US benefits of owning a foreign corporation, irrespective of any Controlled Foreign Corporation requirements. Cheers, 255


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