In Germany, founders usually hold their shares in a holding company. This has the benefit that at an exit event you only get taxed 5% if you keep the exit money in the holding company. You can make investments (angel, real estate etc) from your holding company. Only when you withdraw money from the holding company you have to pay personal tax.<p>I am curious do US founders do something similar? Does my situation change because I own a Greencard and will incorporate in the US? Most importantly has anybody recommendations for good German/US lawyers?
In which jurisdiction would you be starting the main company and the holding company?
You mentioned you’d incorporate in the us, but for which entity? Both? I strongly recommend against a US person including non-resident citizens owning a foreign company, especially as a holding company or similar because the compliance is effectively impossible to manage without thousands of dollars in accountancy (see IRS form 5471).<p>Does Germany tax non resident citizens (almost certainly not only the US does)? If so, ignore Germany if you’re planning on staying in the US for the next 10ish years. Germany and the US will almost certainly have a variety of tax treaties, and once you’ve paid US tax on the income it’ll be yours free and clear if you want to later return to Germany.<p>If you’re planning on returning to Germany before the company is likely to have exited, you will definitely need strong legal advice and this may cost $$$.<p>I am not a lawyer or financial professional this doesn’t constitute advice
If you have a green card (I do) you're subject to US tax laws and a holding company doesn't buy you anything. You may want to put them into a trust, though, however you can decide when you want to do that (if you are single it's in almost every case not worth it) because putting your assets into a trust for your benefit isn't a taxable event.<p>Incorporate your companies in the US. Since 2017 the US is a "low tax" regime for corporations and anyway, you'll presumably be actually doing business here so you'll need a US (delaware) corp. Don't make your life unnecessarily more complicated.<p>I have lived in Germany but only had to deal with German salary. I didn't need to tell them anything about my assets outside German. Of course tax law can have changed. But if you don't intend to go back to Germany then only the US tax case matters.<p>In general I make little effort to try to minimize my taxes. Instead I just live my life.
The answer is No (as you can easily confirm by googling this). You should hold the shares personally.<p>Holding your shares through a US entity is not an advantage. Holding your shares through a foreign entity will cause you to get penalized if you continue to remain a US tax citizen.<p>The only situation where I could see an advantage would be if shares were held through a foreign entity and you hold them there (without an liquidation event) until you have surrendered your greencard and no longer meet the substantial presence test for US tax purposes and the resulting tax situation for you would be better than it was when you were a US citizen for tax purposes.<p>For example, if you held equity through, say, Malta, Panama, or the Caymans and you leave the US permanently, surrendering your greencard, and become a resident of a tax-advantaged jurisdiction for long enough that you are no longer taxable by the US, and only THEN your company exits, generating capital gains that could/would be distributed to you would be tax advantaged.
Slightly offtopic, but in US how you should go if you want to do small investments in other companies or just assets? Like angel investing.<p>Should I set up an independent LLC just to simplify account on my personal taxes? Would be it be easier or more complex in this case? How it's taxed? How it's usually done?
Don't take advice from the internet. Talk to a lawyer who has experience with business start-ups and is willing to consult with an immigration attorney if that ends up mattering.<p>In general, having a Green Card making you the same as a citizen when it comes to taxes, liability, etc. So it's actually more a business-specific and personal finance specific question as a founder.<p>You probably want to establish a corporation regardless. California is pricey for LLCs but other states like NY are actually dirt cheap to establish. You can do more complex incorporation but only an attorney can really tell you what makes sense.
Unsure if it works exactly the same in the US, but in the UK there are ways to set up a holding structure via a share-for-share exchange and get pre-clearance of tax neutrality from HMRC (the tax authority).<p>If so, you can defer the decision on structuring to nearer the liquidity event when you should be able to get professional advice to implement the optimal structuring for you at the time.
The greencard doesn't really matter except for making it simpler to get a tax ID for your new company in the US. but its not really a hurdle or benefit or factor, since non-greencard non-citizens can be tax persons to the US, which is really the most complex part.<p>The holding company is just for limited liability, as well as being incorporated domestically in the US simply makes it more familiar for banks and the target companies to work with.<p>So should you? I think everyone should, just for the consolidating and separation of assets. Being able to transport a name and address that's not yours. (ie. you can be in Miami partying all the time, while your super serious Delaware holding company has the super serious Silicon Valley office address and upholds the stoic investing brand)<p>The US doesn't have those specific tax benefits for doing it, but there are many others, which may be enhanced by the holding company, but not necessarily.
other people are answering you with more knowledge than I have, but a slightly little off-the-wall suggestion, depending on where you need to be, there is a great tax incentive within the US to set your business up in Puerto Rico, but you need to spend a significant amount of time there. However, being an island in the Caribbean, that might be considered a bonus.